The Managed Account Maven

Can major surgery be good for business? It can if you structure your book the way Harold Pomerantz did. Two years ago Pomerantz, now a senior vice president in the private client group of Ryan Beck in Hewlett, N.Y., underwent a kidney transplant. Though the operation knocked him out of commission for four weeks, in 2000, it turned out to be his most productive month ever. After he went back to work,

Can major surgery be good for business? It can if you structure your book the way Harold Pomerantz did. Two years ago Pomerantz, now a senior vice president in the private client group of Ryan Beck in Hewlett, N.Y., underwent a kidney transplant. Though the operation knocked him out of commission for four weeks, in 2000, it turned out to be his most productive month ever. After he went back to work, he cut back to two hours a day, three days a week for five months. Even so, the 59-year old broker was still the top producer in his branch for the year.

His secret? Separately managed accounts. Quite simply, Pomerantz is Ryan Beck's king of SMA, with $100 million in assets under management and an average account size of $700,000. When the surgery forced Pomerantz to step back, his existing clients kept working for him. “Hal produces a sizeable annuity from his fee-based business,” says David Levine, director of investment advisory services for Ryan Beck in New York.

It didn't happen overnight. Back in 1993, when Pomerantz joined Gruntal (which was bought by Ryan Beck last April), he had been for 15 years co-owner of a New York area real estate syndication business. But Pomerantz's expertise was in raising equity. When changes to tax laws in the mid-1980s disallowed tax breaks for passive real estate partnerships, Pomerantz resolved to find a new line of work. Since he owned a Series 7, which he had picked up when he was studying business administration at Pace University in New York, joining a brokerage firm seemed a logical step.

But Pomerantz wanted to find a firm that would let him do something that seemed novel at the time: use the separately managed account approach with individual clients. “I felt the traditional role of the broker was going to be greatly diminished and the role of advisor would become a lot more valuable,” he says. SMAs, Pomerantz reasoned, would be the next new thing.

So, when Gruntal offered him a job, he pounced. The firm, according to Pomerantz, was one of the few with its own department aimed at separately managed accounts. Pomerantz almost immediately focused entirely on SMAs.

Pomerantz says it was his attention to detail and due diligence that made the SMA practice take off. He personally visits each money manager he is considering, exploring everything from types of clients the manager handles to the amount of money he manages. He also asks that his top clients meet each of their managers. “I want clients to know who's managing their money, and I want managers to know whose money they're handling,” he says. In addition, he acts as a quarterback in dealings with attorneys, estate planners and accountants. On occasion, he fires managers who don't deliver. “Managed money is a process, not a product,” he says.

That philosophy has helped him attract a base of 150 high-net-worth clients. By satisfying these clients, he has created a self-perpetuating machine in which customers refer more customers.

Consequently, Pomerantz has grown into not just a major producer but a bona fide company resource. When Ryan Beck bought Gruntal last spring, “The first person I had dinner with was Hal,” says Levine, who was hired to expand the firm's SMA platform. He based much of his strategy on Pomerantz's recommendations.

In fact, to hear Levine tell it, Pomerantz is treated almost like a client, rather than as an employee. If, for example, Pomerantz finds a money manager he wants to work with, Ryan Beck will fast-track the due diligence and add the manager to its roster. Says Levine, “We created an infrastructure that would help Hal continue to serve and expand his business.”

Despite this success, Pomerantz's focus is still a relative rarity. Out of 550 Ryan Beck brokers, he is one of three or four who focus primarily on SMAs. Nationally, only about 10 percent of functioning brokers use SMAs, according to the Money Management Institute. This leaves the field wide open for people like Pomerantz. He says he's gained at least one new substantial client per month over the past two years.

“I believe there's a bonding process between clients and the managers they hire,” he says. And if you're doing your job right, nothing — not even an economic downturn and a six-month stint away from the office — should get in the way.

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