Voices: Joel Gemmell, on Advising High-Tech Executives – Wall Street Journal

Voices is an occasional column that allows wealth managers to address issues of interest to the advisory community. Joel Gemmell is a wealth manager at McLean Asset Management Corporation in McLean, Va.

aI started my career working at Oracle in the late 1980s, so my first work experience was in tech. I became a financial adviser in 2010, and when I started in my firm, I realized I brought my 25 years of contacts in IT to the table. I could define myself in the niche market of high-tech sales executives.

I began by doing a study to learn about how these clients lived and what they wanted from life.

In general, this group is in their forties or fifties. They’re still working at selling hardware and software; they haven’t retired. They’re married. Most of them have accumulated at least $1 million in investable assets; some have accumulated up to $15 million. They have sales executive positions working for large companies like Oracle and EMC.

High-tech sales executives have a number of behaviors that make them different. As you might guess from their high-risk, high- reward positions, they are risk takers.

Also after working in an industry where closing deals immediately is unbelievably important, this niche is less enamored with the idea of delayed gratification and saving for the future. So it can be hard to get them to consider converting to a Roth IRA, for example, because they have to pay taxes now in exchange for paying no taxes in the future. As an adviser you have to recognize this tendency and then try to curb the behavior.

Another thing that makes this group different is the way they make their money. They earn money in large chunks based on sales commissions. If you close a $5 million deal you get a pretty sizeable commission check. On top of that, they get equity compensation based on the value of the company’s stock.

This compensation structure rewards the executives for having concentrated positions in a stock. Not only that, their job is with the same company too. Having made money with concentrated positions, it can be a real challenge to get them to diversify. I like to tell them they’ve already won the game. So now it’s time to diversify.

Most of these people will admit that they are lucky to be working in a profession that richly rewards success. They aren’t cocky, but they know they are good. They also know that when they report to work the next day, someone above them will be asking, “What have you done for me lately?”

They appreciate what they have, and I like to help them get to a point where they can do what they’ve always wanted to later in life without the same pressures they had as sales executives.


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