Alexander "Lex" Zaharoff is Partner in the private wealth management firm, HTG Investment Advisors in New Canaan, Connecticut. Professor Zaharoff has worked for over thirty years in the private banking and wealth management field, including senior positions at Citi Private Bank, Roundtable Investment Partners, HSBC's Private Bank, and Bank of America U.S. Trust. Professor Zaharoff spent the first twenty three years of his career at JPMorgan's Private Bank including global responsibility for product development and advisory services. In 1995, he created the Advice Lab, a think tank that brought together a team of experts to solve complex investment issues for some of the world's wealthiest families. With his colleague, Dr. Ashvin Chhabra, Mr Zaharoff was granted a patent on computing probabilities of attaining multiple financial goals. He has published papers in the Journal of Wealth Management including, as co-author with Ashvin Chhabra and Ravindra Koneru: Modern Portfolio Theory's Third Rail: Achieving Wealth Mobility Through Idiosyncratic Risk. (Summer 2011), and Creating a Goal-Based Wealth Allocation Process (Winter 2008).
How did you get into the industry?
I never thought of private wealth management as something that would interest and challenge me. After finishing the training program at the Morgan Guaranty Trust Co., a large global commercial bank in 1982, I was asked to meet with the head of international private banking. “Why would a young Harvard MBA with no connections to wealthy families be interested into this profession?” I asked, realizing how little effort I had put into my prep work. Rather than ending the interview at that point, he answered: “Lex, advising the owner of a company has greater complexity than working with the company’s employees to fine tune the balance sheet.” I did not know at the time that it would be the start of an amazing journey of discovering the challenges of managing wealth and developing the tools and techniques to help people achieve their financial goals.
Any emerging industry trends?
We are slowly clarifying the distinction between selling investment products and providing client centric financial advice. It may sound obvious that someone should be able to know whether an investment is in their best interest or not. Unfortunately, there is a general lack of understanding of the financial markets, emotions lead us to make money management errors, and our profession has become more of a profit maximizing industry than a valued service. This is starting to change, helped by low cost index funds and ETFs and “robo-advisors” for portfolio rebalancing. As emerging trend is the separation of the cost of investing in markets (which should be low) with the cost of having a trusted and knowledgeable professional provide you with advice tailored to your goals and sensitive to your needs.
Any industry opportunities or challenges?
Recent improvements in artificial intelligence (AI) will provide wealth management with an opportunity and a challenge. Well done and fully tested, AI will someday be better than the average financial professional at recommending a financial strategy consistent with the client’s price sensitivity, tax situation, level of financial anxiety, etc. The challenge is whether AI can understand the emotional aspects of individual investors. Investment questionnaires don’t work. Will AI be able to see the body language or sense a client’s hesitation when discussing a course of action?
Inspiration for the business idea, and your vision for the Business?
Our vision for HTG Advisors is that it is not a business. We want our client families to view us as their trusted advisor. The inspiration comes from our profession’s past; a time banking and providing investment advice were respected occupations.
What's next for the Business in the near future?
We need just enough new clients to provide growth opportunities for all at HTG Advisors without diminishing the focus on our existing clients. Individuals need different types of financial services firms and while we are the ideal firm for some, we are certainly not the right firm for most. We need to help the right prospective clients find us.
Your key initiatives for the success of the Business?
Our firm’s added value is our advice but a critical first step is getting the personal financial data we need to input into our analytics. A key initiative is to minimize manual input securely and accurately link our clients’ financial information with our analytics to. Sounds easy but there are surprisingly few good solutions with the required attention to detail.
Your most difficult moment at the Business? (and what did you learn?)
At previous firms, the hardest moment has been pushing good people out simply due to a change in corporate strategy, not their performance. I learned the importance of having some control over a team’s mission and staff.
Ideal experience for a customer/client?
At HTG Advisors we want a client to truly understand and have confidence in their financial strategy and say “I feel much less stressed about my future.”
How do you motivate others?
I believe in communicating a clear vision, explaining how each of us can contribute, trust them to execute well and get out of their way.
Career advice to those in your industry?
In coaching others, I ask whether their primary interest is in 1) the financial markets, 2) clients, or 3) creating and marketing products? Some roles blend some of all three, but deciding which is most is most interesting will lead to greater career satisfaction.