UBS advisor Franco Estrada takes a unique approach to his profession: he wants fewer clients. While most financial advisors strive to expand their client base, Estrada believes in providing the highest level of service by limiting the number of households he advises. Currently managing a seven-person team and a staggering $1 billion, Estrada aims to further pare down the number of households to as low as 50 over the next decade.
“I see a growing need for catering to very wealthy clients who require a wide range of services,” explains the 42-year-old native of Venezuela, now based in San Juan, Puerto Rico. “These clients not only need assistance with financial matters but also value having someone to bounce ideas off of.”
In an exclusive interview with our publication, Estrada sheds light on his journey to establish client relationships, some of which involved traveling thousands of miles. He candidly discusses why he initially believed the financial advisor industry would slowly fade away and why he has since changed his perspective. Moreover, Estrada offers his insights on an often underestimated factor that has played a crucial role in the success of many advisors: luck.
Background and Career Path
Estrada’s early years were spent in Venezuela, where he experienced a prosperous and secure childhood. Born and raised in Caracas, he fondly recalls the melting pot of cultures that shaped his upbringing. At that time, Venezuela attracted immigrants from across the globe who were in search of a better quality of life.
Embracing a Distinctive Approach
While others may view a smaller client base as a hindrance, Estrada sees it as an opportunity to deliver exceptional service. By reducing the number of households he advises, he can allocate more time and resources to each client, catering to their specific needs and offering personalized solutions. With the ever-increasing complexity of financial matters faced by affluent individuals, Estrada believes that this tailored approach is crucial.
Reflections on the Industry
Having witnessed the immense changes in the financial advisory industry, Estrada once held the belief that it would gradually become obsolete. However, his perspective has evolved, and he recognizes the enduring value that advisors bring to clients. The human touch and expertise offered by skilled advisors cannot be replicated by technology alone, which makes their role irreplaceable.
The Role of Luck
In an industry often associated with meticulous planning and expertise, Estrada emphasizes the role of luck in shaping an advisor’s career. Acknowledging the element of chance can provide a humbling perspective and allow for a deeper appreciation of the opportunities that arise.
As Franco Estrada’s business continues to evolve, he remains committed to providing unrivaled service to his select clientele. With his determined focus on delivering personalized solutions and his unconventional approach, he has carved a unique niche for himself within the financial advisory world.
My Journey in the Financial Industry
After completing my education at Babson College, where I obtained a B.A. in finance and entrepreneurship, I initially had plans to return to my home country of Venezuela. However, circumstances had a different plan for me. It was 2002, and the Venezuelan economy was on the decline. As a result, I was compelled to find a job right after graduation.
I decided to join UBS, which was known as UBS PaineWebber back then. Initially, my intention was to stay in Boston for a short period of time, but little did I know that it would turn into a 21-year-long career with the same firm. Surprisingly, I ended up working in a field that I hadn’t anticipated being so passionate about.
Family Legacy in the Financial Industry
You may wonder if my family had any background in the financial industry prior to my involvement. Well, my father held prestigious positions as the president and CEO of a successful gas company in Venezuela. Unfortunately, the company was eventually nationalized.
Overcoming Challenges and Attracting Clients
Attracting my first clients was no easy feat, especially considering that I had a strong accent and was based in Boston. Despite these obstacles, I relied on my network of family, friends, and acquaintances both at home and abroad. Taking matters into my own hands, I began traveling independently to meet potential clients.
However, at the time, UBS did not provide any financial support for business development. It was solely dependent on the results I could achieve. With an entrepreneurial spirit, I took the initiative to cover my own expenses, including plane tickets and staying at my parents’ house while pursuing leads with friends, family members, and even connections through acquaintances.
My determination and resourcefulness helped me establish trust and build relationships in the early stages of my career.
Embracing a Unique Path
Looking back, my journey in the financial industry took an unexpected turn. Despite my initial plan to return home, fate had different plans for me. I found myself thriving in a field I had never imagined being so passionate about. This unexpected twist has proven that sometimes our path may deviate from what we envision, leading us to opportunities we couldn’t have foreseen.
As I reflect on my 21 years with UBS, I am grateful for the challenges I faced, as they taught me the importance of resilience, resourcefulness, and determination. These qualities have not only shaped my career but have also driven my unwavering commitment to the financial industry.
A Journey of Hard Work and Breakthroughs
My father, who had recently retired, played a significant role in my early career. He would drive me to the meetings, patiently waiting for me outside. After each meeting, he would ask, “Who’s next?” I spent countless evenings visiting prospects at their kitchen tables. This routine went on for about five or six years, with approximately eight trips per year. It was an arduous process. There were instances where I would spend an entire week, meeting with 20 prospects, only to see no tangible results. However, as with anything in life, perseverance pays off. The more hours I invested, the more opportunities started to come my way.
Finding a New Home in Puerto Rico
In 2009, my wife, who is a doctor, was assigned to complete her residency in Puerto Rico. Coincidentally, she was born and raised in San Juan. Fortunately, we already had an office in Puerto Rico, which made our relocation easier.
A Shift in Clientele
Initially, our practice had a more international focus. However, over the years, this has changed, and now we primarily cater to a domestic client base. Our core clientele consists of young, self-made entrepreneurs ranging from their mid-30s to late-40s. These individuals typically have a net worth of around $50 million and at least $10 million in liquid assets. They have aspirations for growth.
To provide exceptional service, we prioritize maintaining a manageable number of households and families that we work with. This allows us to offer a more personalized and attentive approach. Previously, we had over 100 families as clients, but now we have streamlined our operations to focus on 75 families. About 80% of our clients are based in the United States, specifically New York, Boston, the Northeast region, and Miami. Additionally, we have a substantial number of clients who have relocated from the States to Puerto Rico, primarily driven by the attractive tax incentives enacted here over a decade ago.
Team Structure and Growth at UBS
At UBS, our team structure is constantly evolving to ensure optimal performance and client satisfaction. As a business development professional, I have taken inspiration from successful teams within the organization and adopted an entrepreneurial approach for long-term success.
Initially, I operated as a solo practitioner but eventually built a team to enhance our capabilities. Our team currently consists of the following key roles:
1. Partner and Financial Advisor
I am fortunate to have a partner who joined our team through the Graduate Training Program. With experience across various divisions in New York City, he brings valuable insights and expertise. Currently, he serves as a financial advisor and is a full partner with a 10% stake in our practice—an ownership that will grow over time.
2. Team Administration
To streamline operations and ensure seamless execution, we have a dedicated team admin who efficiently manages administrative tasks and provides crucial support to the entire team.
3. Head of Operations
Our team benefits from the expertise of a skilled head of operations. This individual plays a pivotal role in managing daily operations, coordinating workflows, and ensuring efficiency in our processes.
Recent Updates and Expansion
In addition to our existing team members, we have recently welcomed a senior manager from UBS who has an impressive track record of 24 years within the company. With extensive management experience across multiple regions, including Switzerland, Singapore, Hong Kong, and New York, he joined our team as a financial advisor in March of this year. To complement his expertise, a member of his support staff also joined our team.
As we enter this pivotal phase for our team, we have high expectations for growth and success. Our focus on continuous improvement, combined with the valuable contributions of our team members, positions us strongly for the future.
Reimagining the Vision for the Business
Introduction
In the next five or ten years, our vision for the business is to work closely with a select group of clients. Rather than expanding our client base, we aim to maintain a smaller number of households, preferably around 60 to 50. Our focus will be on catering to the needs of affluent clients who require comprehensive financial services. While financial matters form a significant portion of our services, we also recognize the importance of providing them with a platform to exchange ideas. We firmly believe that adopting a client-centric approach and emphasizing teamwork in all aspects of our work will enable us to capture the essence of our business philosophy. With a wide range of services and investment options, including new loans, personalized private investment programs, tax planning, philanthropy, multigenerational planning, and risk management for market investments or private businesses, we aim to engage in meaningful conversations and maintain strong relationships with our clients.
The Challenge of Letting Clients Go
Over the years, we have made a conscious decision to shed approximately a quarter of our client base. However, severing ties with clients is a challenging aspect of our job. It is never easy to dissolve long-standing relationships. To address this issue, UBS has introduced the Wealth Advice Center (WAC), a dedicated platform designed to serve clients below a specific threshold. By embracing this initiative, we, as advisors, can focus on providing significant value to clients who can benefit from our expertise and personalized attention. The WAC has proven to be an effective solution for the majority of such cases.
Key Concerns for Clients
Many of my clients have historically focused on generating wealth, achieving a liquidity event, or building a successful business. However, once these goals are accomplished, there is often a new concern that arises. Ensuring that their money is not eroded by inflation or the continuous printing of money by the Federal Reserve becomes a major priority, especially with the increasing longevity of individuals. Addressing this concern has become vital.
Reassuring Worried Clients
When I first started in this profession, I harbored concerns about the potential decline of my role due to the rise of automated services that allow individuals to make purchases without the need of a middleman. However, as time passed, I realized that our financial decisions are often driven by irrationality and emotion. This realization reinforced the importance of having someone to talk to when it comes to money matters – someone akin to a psychologist rather than just a financial advisor. Consequently, my role involves providing emotional support and guidance to my clients during our phone conversations.
The recommendations I provide depend on the client’s personality and overall financial outlook. My primary concern is ensuring that they can sleep soundly at night. It is not solely about maximizing wealth but achieving a happy and balanced life. If I ascertain that a client has a rational perspective on market matters, I disclose my own investment allocation strategies. I express my belief in the long-term efficiency of equities and advise individuals our age to allocate 90% to 100% of their investments in this asset class, as long as they do not require immediate access to the funds.
Conclusion
By addressing the concerns related to preserving wealth and managing emotional aspects of finance, I strive to provide reassurance and guidance to my clients. My goal is to enable them to maintain a sense of financial security while leading fulfilling lives.
What’s Your Outlook for the Markets?
It is extremely difficult to make short-term predictions about the markets. As professional investors, we always focus on the long term, and I remain highly optimistic about the market in the long run. Equities have always been our belief, and while we have been primarily buying in the U.S., we are now gradually expanding our investments internationally. However, our strategy is to encourage people to stay invested in the market for the long term rather than trying to time the market. We may make some adjustments here and there, but ultimately, it all comes down to having faith in the efficiency of the markets.
Reasons Behind Our Success
I believe that our early success was partly due to some fortunate breaks. There were instances when we needed a certain amount of money by a specific deadline, and luckily, some clients came on board just in time. Timing and luck played a significant role in the initial phase of my career. Out of the 141 individuals in my class, from various regions across the country, only two of us remained after eight years. However, beyond luck, it all boils down to good habits—arriving early in the morning, putting in the hours, and consistently engaging with clients on a daily basis. It may sound basic, but achieving success in this industry is a marathon that requires perseverance and dedication.
How I Relax and Recharge
When I am not fully immersed in work, I make it a priority to spend quality time with my wife and children. My wife also has a demanding profession and works just as hard as I do. We find solace in unwinding together, often taking advantage of our proximity to the water in San Juan. We love spending time on our boat with our girls, allowing us to relax and recharge.
