After 15 years in the industry as a financial advisor and the owner of a registered investment advisory firm that folded into Edelman Financial Engines, Adriel Tam is shifting gears.
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Tam started in the industry in 2007 with UBS before going independent with LPL Financial in 2009 and launching Bothell, Washington-based Viridian Advisors in 2014, according to SEC records.
"We appreciate Adriel's contributions integrating the Viridian team and helping to expand our tax planning services," Edelman spokesman Joe Loparco said in an email. "We wish him well in his new role."
Tam spoke with FP the week after AdvisorCheck unveiled his appointment as CEO.
The following conversation has been lightly edited for length and clarity.
Financial Planning: After the Edelman Financial Engines deal, you became head of the firm's tax practice. When and why did you decide to think about pursuing a new opportunity?
Adriel Tam: To be completely transparent, my intention was to never really to stay at Edelman that long. The first priority was to make sure that this was a great transition for our clients. Number two was, make sure this is a great transition for all my employees and shareholders. And then finally, make sure that the transition was in a place where I felt very comfortable to move on to the next project.
Because, personally, I'm a builder by trade. I love to make things and do things that impact. Nothing wrong with being in a large corporate environment. And I obviously came from that. Just, at this point, and in my interest, it's about, how can I personally have the most impact? And what can we do to change things? And that's why AdvisorCheck was a passion project.
I wish it was a nonprofit project to be totally honest with you. But what's great about AdvisorCheck is its consumer advocacy, the pursuit of transparency for consumers. And the reason why we're not nonprofit is for two reasons: One, it's harder to raise money for nonprofits. And, number two is that for-profits generally move faster. You can accelerate, move things faster, because your incentive is theoretically capital-based. So there's a lot of incentive for people to want to support that.
But to answer your question, originally, absolutely, the plan was to leave Edelman when the time was right. And the time was right for this. And the tax, I'm happy to say we did a lot of great work there. We hired a bunch of tax professionals. The tax team was handed over to
FP: What attracted you to the position at AdvisorCheck?
AT: It's the role and the mission. So, for me, I don't care about titles. I'm the CEO, which is usually the top title. The reality of CEO carries a lot of weight with it. Usually, people just say, 'Oh, this is the highest paid person.' That's not always the case. And this is the person who has all the fame and glory. And there's some truth to that. But the reality is, that person carries a lot of weight and has a responsibility that is beholden to all the shareholders and all the employees behind it. So I think it's a very hard position that requires the right type of mindset in order to represent a company and the people and the clients and the customers and employees correctly.
I do believe that the role is increasing the advocacy, so increasing people's understanding of just how un-transparent our industry is. I think there are so many examples. If you'd look at a broker-dealer, when I was at UBS we could create a product on one side of the broker-dealer, and then I could sell that product, I could sell it as a BD representative, as a registered rep, or, potentially, I could even wrap it in something when I was an RIA. There's nothing wrong with that. I just don't think people understand just how impactful these things are, for example, how does it affect your fees? How does it affect your performance?
Well, we know that performance is so vastly tied to fees, just from our industry knowledge. That 1% difference, 2%, 3% — those can have huge effects on overall portfolio performance over the long term. So, for me, the mission about transparency and consumer advocacy is amazing. I think that advisors, people I've worked with, they're all excited about it, because they want to shine this light on transparency and bad actors. The bad actors do not want that light shone on them. And I think that's a good thing.
I get as much fan mail as I do probably cease-and-desist because of the exposure we're giving. So I think that when you're getting both these strong positive and negative reactions, it just means there's a very, very strong reaction in total for what you're doing. I love that we're having that type of impact. And we'd love to see that accelerate more. I know there are others that want to increase transparency. I think the CFP Board, the CFA Institute and others are some of them. The American College of Financial Services definitely wants people to understand what a fiduciary is versus a non-fiduciary.
So I think there's a lot of education that comes along with it. And in some ways, it's overwhelming. So part of AdvisorCheck — this mission is not just transparency, but it's also to simplify this. So regular people can understand what we're saying, because the reality is, even we can't understand what some of our colleagues are saying. It's just going way over all of our heads, too.
FP: There are so many different kinds of disclosures, but the assumption is nobody reads them except for industry insiders, regulators and journalists. How correct is that assumption, and how can AdvisorCheck change that?
AT: I agree with you 100%. Every firm is supposed to have a
And number two is we over-disclose. So when you go to BrokerCheck, or IAPD, it's very hard to navigate, and it's lots and lots and lots of information. If you look at a Form ADV, it's at-minimum 30 pages and could be hundreds and hundreds of pages. So the problem with that is that, when consumers go, they have no idea, number one, what to look for and then, number two, what they're looking at. So for them, AdvisorCheck's mission seems to ring really true: 'Hey, we want to simplify this for you, help you find the information faster, help you understand it in a way that makes sense to you.' So when you look at our website and you look at our analysis of advisors, you can see things like client ratios, average account size. We're pulling that from public resources, so it's meant to help to make it easier just for the public to understand, 'Hey, what the heck am I looking at? Help me understand this.'
And I think there's a big part, which is education, which is just because an advisor has a disclosure, that's not a bad thing. And I've had advisors with disclosures, and I've seen many, many types of disclosures. It's the education of, you know, just because, as a disclosure, maybe that advisor was drinking underage, you know, when they were 15. Did we do bad things when [we] were 14 and under 18? I think we all did. So is that forgivable? Yeah. I don't think that really is a big deal at all. Whereas, other disclosures, were they accused of stealing from an elderly person? That is a very red flag, that's something to be aware of. Or were they terminated from a firm and then signed up with a new firm and have a history of signing up with other firms? That's definitely a very red flag. So we want to educate the consumers on, what does this mean?
Just because someone has a disclosure or even more than one, it's not necessarily a bad thing. And just because someone doesn't have a disclosure also does not necessarily mean they're clean. So that's one thing that we provide an AdvisorCheck is the monitoring tool, and right now we call it AC Plus, which is a background check tool. So it allows the consumer to go in for free right now. We're allowing consumers to try it for free. And it pulls a background check on the advisor which pulls up simple things like public information; whether they have a criminal record at the federal, at the state or the local level; if they have any type of prison record, if they have multiple Social Security numbers, that's for identity theft, potentially, if they have an [Office of Foreign Assets Control] listing; a few other measurements. And that's really just to give the consumer extra peace of mind.
You've already made the decision to give someone potentially some of your money or maybe all of your money. And you want to have some basic background information — yes, we do expect that if you hire someone at Merrill Lynch, or at UBS, or an Edelman, that they have HR, and they're screening to take care of that — but you don't get to see that report. So why not just have the ability to see the information for yourself and monitor that advisor through your relationship?
And I'll just end on one more piece, which is what we've found with our research, and I'd love your feedback, Toby, on this too. Bad actors don't happen instantaneously, they happen over a period of time. And so, why is the monitoring important? It's because your relationship could start off great. It could start to go through some ups and downs, just like every relationship. But if you're able to understand when this advisor is starting to perhaps not perform as well, or they're not rebalancing on time, or they've gotten maybe a little lazy, or they're starting to do some strange transactions in your portfolio, that's where it's nice to have the monitoring service and to be able to have an independent third party to validate and say, 'Yeah, this is all within kind of normal operating procedures,' or, 'This is way outside. And you should probably think about questioning what's happening here.'
So, I really think there's a lot of value in the monitoring, kind of like how we talk about financial planning. But once we create a financial plan — that 100-page document that no one ever reads — once we create that snapshot in a moment of time, the real value is, how do we execute on that plan? How do we adjust to the things that change that plan — life situations, divorces, marriages, college education changes, those types of things? So that's really where we see the value in the continuous movement of the relationship.
FP: What else should financial advisors and other industry professionals know about AdvisorCheck?
AT: Number one is, we are consumer advocates. We want to bring transparency and financial literacy to consumers. Number two is, we want to raise the industry. I've come from the industry. I'm a huge fan of it. I built a company with great people. I exited that company. It has been fantastic to me. And I continue to believe strongly in the value of a financial advisor and their team. They can add so much value beyond simply portfolio construction and portfolio management. When you talk about the complexities that they start to integrate of estate planning and tax planning — tremendous value that is not just measured in dollars and cents, but it's also measured in emotional well-being. So your ability to sleep well at night, the ability for you to feel comfortable with where your finances are, so that you can use that mindfulness to apply to other things in your life that you care about — time with family, pursuit of your career, etc, etc.
Now I sound like a financial planner. But I truly believe in that value. And so the ideal is that there are about 145 million Americans who are investors, and there are only about 40 million, 45 million or so that work with financial advisors in some capacity.
I love that the impact for us is that we, number one, advocate for our consumers and bring a new level of transparency. But, number two is we also elevate that number of people working with advisors, because we see so many do-it-yourselfers where an advisor — when they start to have the right conversations, and they start to have the right questions — really demonstrates the value that that advisor can bring to that individual or that family.
So I'm sorry for the long answer. But, again, just wanting to raise the whole industry, wanting to increase the number of financial advisors that are working with clients. And I think I read a report that we have so many financial advisor listings looking for advisors, and we understand that it's hard to find them because good advisors, good people are hard to find. But there's such a demand, there's such a need for it. I think we're going to just keep accelerating that, and I'd love for AdvisorCheck to be a big part of that.
