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Wealth Advisers Hold Hands, Seek Bargains

It hasn’t been an easy year for financial advisers.

A falling stock market has sparked fear among clients worried about where their account values are headed.

Yet many advisers say they see opportunity in the current market turmoil, as optimism remains the hallmark of the industry.

This week, the Business Journal looks at the top local financial advisers as ranked by Boca Raton, Fla.-based Winner’s Circle Organization, which recently was bought by Barron’s, part of News Corp.’s Dow Jones & Co.

The advisers on our list handle accounts for some of the county’s wealthiest who seek advice on buying stocks, bonds and other investments such as hedge funds.

Often praised by clients when things are going well, advisers are vulnerable to criticism when things aren’t.

Most investors have been rattled by the market’s sharp downturn on credit fears, hedge fund selling and a poor economic outlook. That has hurt returns.

The broader stock market has lost more than a quarter of its value this year, as measured by Standard & Poor’s 500 index.

“It’s not a time to glamorize this business,” said Tom Blanchfield, an adviser with Merrill Lynch & Co. in Newport Beach who ranks No. 5 on the list.

Merrill Lynch is being bought by Bank of America Corp. after it fell into trouble from bad bets on mortgage-backed bonds.

The list’s rankings are based on a number of qualities such as longevity, clean records, client stability, satisfaction and revenue brought in.

Interviews with the advisers and their bosses, peers and clients are part of the process.

But Winner’s Circle doesn’t release its exact formula for calculating its rankings.






Marshall-Pence with Pence Wealth Management: one of the few on list from an independent firm

The list includes registered representatives of investment banks or independent firms who “own” their relationships with clients. The list doesn’t include registered investment advisers who work on behalf of a financial services company.


No. 1

This year’s No. 1 adviser, Ralph Linzmeier of Citigroup Inc.’s Smith Barney in Irvine, is up from No. 2 a year ago.

Linzmeier and his partners manage more than $400 million for clients. He said they take a long-term view of the market.

The recent selloff is a chance to buy stocks on the cheap, Linzmeier said, with prospects they’ll rise in the next several years.

“Most are motivated to buy high,” he said. “People aren’t prepared to take advantage of situations like the one we’re in now.”

Linzmeier’s said his No. 1 goal is to preserve his clients’ wealth.

About a year ago, he said he began selling off riskier growth stocks as evidence of the weak market began to mount.

“It’s been a difficult market,” Linzmeier said. “But I anticipated much of this.”

The past year has been among the most difficult, said Mark Binder of Merrill Lynch’s Newport Beach office. He ranked No. 2 after placing at No. 5 last year.

Just about all of Binder’s investments have fallen in price, he said. That includes traditionally stable investments such as municipal bonds, Binder said.

Binder advises on more than $4 billion for clients, most of whom are newly wealthy.

He’s looking after about a half billion more than he was a year ago, thanks partly to new clients who came to him from referrals.

Binder’s clients vary from people in their 30s with hundreds of millions of dollars to people in their 70s who recently sold their businesses to retire.

Their goals,and tolerance for risk,vary, Binder said.

Market declines are most serious for older people who count on their money for retirement and have less time to make up for losses, he said.

The idea is to get the highest return for the least amount of risk people are willing to assume, he said.

Stocks and annuities are common holdings of Binder’s clients.


Cautious Outlook

Binder said he continues to remind his clients that the difficult times for the market could linger.

“We’re in for some rough sledding in the next six months,” he said. “But I’m an optimist. I think you have to be in this business.”

No. 3 adviser Laila Marshall-Pence with Pence Wealth Management in Newport Beach said she’s kept many of her clients sheltered from market declines with investments in annuities, which are guaranteed to pay a fixed amount each year.

“We’re hanging in there,” she said. “We’ve always had a strategy to protect.”

She’s also been active with real estate investment trusts, which allow holders to profit from rents.

In the past year, Marshall-Pence added about $100 million to the money she advises, which brings her total to $400 million. She’s up from No. 6 a year ago and recently opened an office in Torrance.

Mike Thompson of UBS Financial Services Inc. in Irvine, part of Switzerland’s UBS AG, is the No. 4 adviser, up from No. 11 last year.

The older Thompson’s clients are the more he recommends they invest in bonds, which pay a fixed amount of interest and tend to be more stable than stocks, which can swing wildly in price.

After seeing a couple of bear markets in his career, Thompson said he was somewhat prepared for the recent selling.

“Everyone asks me where the bottom is. But you never know,” he said.


Clients

His clients are mostly self-employed business owners with an average worth of about $5 million and an average account of about $1.5 million.

Thompson has $400 million under management.

Merrill Lynch’s Blanchfield and partner Alex Stimpson, No. 23 on the list, said they recommend clients have enough cash on hand to last six months to a year.

Last year the partners ranked a combined No. 2.

The duo said they play an active role in managing accounts for more than 100 wealthy families.

Clients have shown a lot of concern about recent losses, Blanchfield said. But they understand the problems are industrywide, he said.

“No one blames us,” Blanchfield said.

The partners hope to take advantage of lower prices, he said.

Their strategy involves scooping up stocks when they’re well below their average price to earnings valuations.

Healthcare and consumer staples, which traditionally do better in down markets, could be stocks to buy, Stimpson said.

Wherever stocks hit a bottom, it will likely set the stage for the next five to 10 years, he said.

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