Aaron J. Johnson has seen the hiring practices of other investment companies, and he doesn’t plan on replicating them now that he has his own firm.
Johnson, a 27-year-old black man with no college degree, has opened his own wealth management firm in downtown Hartford. He’s already amassed about 150 clients whom he advises on about $55 million in assets.
But thanks to the deeply grooved practices of hiring and developing young advisors, Johnson said it was close to never happening.
“You take a basket of spaghetti, throw it against a wall and see whether it sticks,” he said, describing the way wealth management firms look for new talent.
He was one of those strands of spaghetti, part of a class of 46 recruited at AG Edwards & Sons, the international brokerage firm being acquired by Wachovia Securities. Only nine eventually became advisors, a role he remained in for about four years until shortly after the acquisition was announced.
But he said it wasn’t necessarily the best nine that made it through, he said. It’s an insight he carries with him in trying his own hand at developing talent, looking for people with the right knack for investing — but not necessarily the traditional experience — to hire and train for his new firm, J. Capital Advisors. It is freshly landed at Linden Place, off Main Street in Hartford. It’s just getting off the ground, there is no furniture yet.
But he’s already made his first and only hire — an old friend and former Westinghouse engineer, Jared Flagg, 31.
“It’s more about personal characteristics and relationship skills than about knowing the business right away,” Johnson said.
A penchant for investing may not have been easily detectable in a young Johnson, though the entrepreneurship must have been.
Before he was of voting age he had already started and shuttered two companies of his own, a Web design firm and a pager repair service.
Still a teenager, he answered a job advertisement from Regent Retirement Planning, a financial firm now in Woodbridge.
Soon after, he got his securities license, and moved on to Gent Financial Group in West Hartford before joining the Hartford office of AG Edwards.
His new business offers fee-based consulting to individuals looking to invest in the $750,000 range, or institutions with portfolios of at least $1 million.
Ironically, his business plan is based on the same idea that Johnson believes keeps people like himself out of the investment business: that people want to invest with people who are like themselves.
It isn’t news that most wealthy investors are white men. The problem for aspiring advisors like Johnson, in his view, is that investors naturally prefer advisors with similar backgrounds. Up-and-comers who are non-white and non-wealthy are at a natural disadvantage.
Shallow Pockets
When young advisors are asked to go out and attract money, many of them begin by asking people they know from growing up in a wealthy neighborhood, or going to a nice college. Not so easy for someone who didn’t.
“I didn’t come from a lot of money. I don’t know a lot of people who have a lot of money. So you have a system of unbalance,” Johnson says.
That naturally weakens the hiring process, Johnson says, because rather than honing skills, new advisors look to bring in quick “pity money” from acquaintances.
And it leaves minorities and women out of the workforce, as evidenced by the recent discrimination suit brought against Merrill Lynch.
“People want to do business with people that are like them. It’s not a racial thing, it’s just the way it is,” Johnson said.
He plans to turn the model on its head by seeking investors who haven’t had the chance to invest with people like themselves.
One client, a black doctor with about $5 million under Johnson, had never gave him a referral at AG Edwards, but offered a handful of names of black professionals when Johnson went out on his own. All of them have become clients.
It’s not that he’s only seeking business from black clients, but he knows it is something that will come naturally.
“It’s something I really doubt would have happened if I hadn’t gone out on my own.”
