• Edelman Staff, 2009
Values

One Face, One Voice: A Unified Philosophy on Investing

On a Friday afternoon in the summer of 1989, Ric Edelman made his first appearance on WMAL Radio in Washington, D.C., hammering home a principle that has remained a hallmark of Edelman Financial Services for the last 25 years — the notion that financial advisors like himself have an obligation to be teachers as well as advisors so investors can make the best financial decisions for themselves and their families.

His message resonated. After the show, Ric returned to his office to find Jean, his wife and business partner, with a stack of papers in her hands. The sheets contained the names of dozens of listeners who had heard him on the radio and were eager to talk.

It was a gratifying moment and a validation that Ric’s approach to investing — a strategy of long-term diversification that holds true to this day — had gained traction with everyday investors. But there was a problem: Every new client wanted to talk to Ric directly, face-to-face.

Early on, it was an exhausting but achievable goal. Ric handled every client personally. However, one day during one of his seminars, he lost his voice.

Forced to take a respite, Ric decided if he couldn’t meet with every client, he’d offer them the next best thing: A guarantee that every advisor he hired would subscribe to the same investment principles he advocated.

There would be no maverick advisors at EFS. Ric’s experience working for brokerage houses in the mid-1980s taught him that unsupervised, freewheeling brokers could harm a firm’s reputation and seriously threaten the life savings of everyday investors. He vowed to never let that happen at EFS.

The hiring process, then as now, occurs at a very slow pace, with advisors not so much screened as personally selected to join the EFS family. A commitment to the firm’s core philosophies is required, not to mention substantial experience and expertise. Few make the cut. Even by 2004, when Ric first made the list of Barron’s top 100 advisors,* the firm had only 15 advisors.

Even today, the recruiting process is more of a gauntlet than an interview. Candidates must complete a compatibility study created by the firm, then interview with at least eight members of the staff, including no fewer than four advisors — as well as Ric. Complete background checks occur as well, and then everyone involved gathers to discuss each candidate.

After hiring, the onboarding starts. A month-long orientation program fully immerses newly hired advisors (who typically have 7-20 years of experience) into the firm’s processes and procedures. But most of the training is devoted to the ideas and values that led to the company’s creation and the philosophy the firm brings to every financial planning topic.

The goal is to ensure that every advisor adheres to the same core beliefs so that each client enjoys the same excellent experience. Ric calls it “One Face, One Voice” — and the benefits of this approach have become obvious: The same principles Ric espouses publicly are applied to each client.

The method assures best-in-practice for all advisors of the firm and their clients. If one advisor discovers a new trend or approach, it will be vetted by the entire team — and if approved, every advisor in the firm will adhere to it. The result is consistency and assurance that no crazy, ill-conceived ideas ever reach any client. The “One Face, Once Voice” policy is a key component to the firm’s success and client satisfaction.

 

*According to Barron’s, “The formula [used] to rank advisors has three major components: assets managed, revenue produced and quality of the advisor’s practice. Investment returns are not a component of the rankings because an advisor’s returns are dictated largely by each client’s risk tolerance. The quality-of-practice component includes an evaluation of each advisor’s regulatory record.” The rankings are based on the universe of applications submitted to Barron’s. The selection process begins with a nomination and application provided to Barron’s. Principals of Edelman Financial Services LLC self-nominated the firm and submitted quantitative and qualitative information to Barron’s as requested. Barron’s reviewed and considered this information, which resulted in the rankings on Aug. 27, 2012/Aug. 28, 2010/Aug. 31, 2009.