During the quarter, Dan Wheeler, a financial advice industry pioneer passed away. Wheeler had a large influence on changing the financial advice industry for the better, not just in his native US, but across the world. The things that Dan did had an an influence on us and our colleagues. There were many obituaries written and the UK Financial Times picks up Dan’s early life:
Wheeler grew up in a working-class neighbourhood in East St Louis, where his mother was a nurse and his father an accountant. He drifted into studying history at a small liberal arts college before volunteering for the Marine Corps in the middle of the Vietnam war — a typically jarring change.
After returning from Vietnam, Dan bounced between jobs before being offered a position as a stockbroker.
Merrill’s brokers seemed clueless. Wheeler thought they basically just ripped off clients by churning money to generate trading commissions. But then he discovered the works of Gene Fama, the University of Chicago professor and father of the efficient markets hypothesis. It all suddenly makes sense, Wheeler thought.
As a present to himself on his 40th birthday, Wheeler quit Merrill to be an independent financial adviser. Rather than being paid through commissions, he chose a “fee only” model. That meant Wheeler for the most part bunged his clients’ money into the Vanguard 500 index fund, one of the few cheap passive funds broadly available to ordinary American investors at the time.
Later Dan founded the financial advice services side of investment manager Dimensional Fund Advisors. Over his career Dan coached many dispirited advisers who’d only been trained to see clients as a dollar sign or to push high-cost funds on them, this from our US colleague Jeff Troutner:
I met Dan at a low point in my career. I had already escaped from the sales side of the industry as a stockbroker. I then joined a market timing firm that failed me and my clients after two years. And, finally, my attempt to build an advisor profile service failed after I realized most advisors were misrepresenting their performance and I couldn’t be part of their lie.
Three strikes. I was well on my way out of the investment business.
But as fate would have it, Dan understood where my head was and took the time to share with me his personal story. His journey in the industry was so similar to my own—and the alternative he suggested was so compelling—that I was immediately filled with new optimism and ambition.
I honestly didn’t think people like Dan existed in the investment industry. He gave me another chance at the plate and showed me how to hit a home run: eliminate conflicts of interest, don’t pick stocks and time markets, and report client performance clearly and accurately at all times. Let markets work. Be patient. Be strong for clients.
From US adviser Eric Nelson:
One story I remember Dan telling sticks with me to this day. A large new client, recently divorced, came to him to invest her money. Her life was not in good shape; she was drinking too much and not in a place where she could make the best long-term financial decisions. Dan could have invested the money and earned an advisory fee, but instead, he told the client that she needed to work on herself, go to alcohol rehabilitation, and when she got clean, he would be there to help her take positive steps forward. In the meantime, Dan put the account in T-bills and never charged her for his time and advice. That’s a bold thing to tell someone, but when you care about them, you stick your neck out like that. There is a saying that “people don’t have money problems; money has people problems.” That’s what personal financial advising is about, and what you need to appreciate to truly help people with their money. Dan never failed to remind us of that simple fact.
