The Only Financial Institution Where Not Everyone Is Good at Golf

The finance guy in the polo

Everybody knows the type. They have a firm handshake. Nice suit. Better tan. They're usually gone on Friday afternoons and, if you're a big enough client, you get invited to golf with them. Relationships get deeper with each hole. Deals happen on the back nine.

This... is not us.

Don't get us wrong, some of our advisors do play golf (and some are even pretty good at it), but this stereotype has always felt a little strange to us. Why, exactly, did being good at golf become part of the cultural job description for managing someone's life savings?

As it turns out, there is actually a pretty good answer. The relationship between money, business and golf goes back more than a century, to the rise of the American country club. And once you understand where it came from, the financial advisor stereotype makes a lot more sense.

It also explains why we think the profession has outgrown it.

Where the golf thing actually came from

Golf showed up in America in the late 1800s, at almost exactly the moment the country club was becoming an institution, and it moved fast. In the spring of 1895, there were about forty country clubs in the US with a golf course. A few months later, there were more than a hundred. And the people filling them were mostly not old-money aristocrats. They were the newly rich. Businessmen who had just made it and wanted somewhere to be around other people who had just made it. The historian John Steele Gordon makes this point: the club was never mainly about golf. It was where you socialized with the exact people you might hire, sell to, borrow from, invest with, or do a deal with.¹

So people started doing deals on the course almost immediately. In 1901, Charles Schwab (the steel one, not the finance one) used a round of golf with Andrew Carnegie to move along the deal that sold Carnegie Steel to J.P. Morgan and created U.S. Steel.² That was, give or take, the biggest deal in American history to that point. And part of it happened between holes!

After WWII ended, the US gave birth to suburbs, corporate expense accounts, and an enormous golf boom, all at once. TIME ran a piece in 1955 called "Business Follows the Golfer," about companies buying club memberships for their executives, because clubs were good places to find prospects, entertain clients, and make sales. Our favorite detail from it: a Denver investment banker figured about half his business came from people he played golf with. Half.³

Enter the customer's man

The ancestor of today's financial advisor was a stockbroker, or an insurance salesman, or what the industry unironically called a "customer's man." The job description at the time was essentially "solicit business, advise customers, and maintain friendly relations with them."⁴

In 1966, Merrill Lynch had 2,800 of these "customer's men", and they were responsible for 65 percent of the firm's business.⁵

So, putting two and two together, we have:

• A relationship salesman whose living depends on finding wealthy people.
• A club that is, by design, full of wealthy people.
• Four uninterrupted hours together with said wealthy people.

That's the whole recipe. The "financial guy who golfs" stereotype wasn't an accident, nor a personality quirk. It was a business model. And for about a century, it was a very good one.

This is not our business model

Now, we have nothing against golf. Golf is great. We hope those who like golf get to retire and play a ton of it! And again, some of our advisors truly love to play too.

Our problem is with the business model, because that model was built primarily to acquire clients, not necessarily to do the work of taking care of them.

A round of golf takes about four hours. If the person looking after your money spends their afternoons on the course, there's a decent chance their real job is just being a salesperson, ahem, "relationship manager." They may have the licenses. They may be able to sound intelligent when talking about what's moving the markets this week. But we HIGHLY doubt they're the ones building your thirty-year tax projection, or modeling how the sale of your business changes your income taxes, your estate plan, your charitable strategy, and what eventually passes to your kids.

So, a confession

Not everyone at FEFA is good at golf. Some of us are fine. But most of us are bad. For many years, we hid this as an insecurity of sorts, because it felt like something a typical financial firm shouldn't admit. Then we realized that, given everything above, we didn't really want to fit that mold anyway.

If golf was representative of the old sales model, being bad at it is a pretty sharp way of showing that we're built around something else. We believe people deserve better. We want to spend every hour we can doing the work that counts:

• Lining up every account and every benefit you have, from your employer and everywhere else, against what you actually want retirement to look like.
• Keeping the taxes you and your family pay to a minimum, strategized purposely, over decades instead of one April at a time.
• Making Social Security, Medicare, taxes, investments, and estate planning work together instead of treating them as separate problems.
• Running the "what if" scenarios before life runs them for you.
• Working as a team, so the best answer wins and your plan doesn't live inside just one advisor's head.
• And showing up. Every year. On the calendar. With your file already open.

If you do golf

Retirement should have more golf in it, not less! We'd rather be the reason you can afford the green fees than be the people you play with. Come tell us what you want the rest of retirement to look like, and we'll go do the unglamorous part while you're on the course. And if you ever drag one of us out there, we'll happily drive the cart.

Talk To FEFA

Sources

1. John Steele Gordon, "The Country Club," American Heritage, September/October 1990. Gordon counts "some 40 country clubs" with golf courses by the spring of 1895 and "more than a hundred" by that summer, and notes that "the upper middle class of successful, often self-made businessmen, loved golf." ↩
2. Ron Chernow, "The Deal of the Century," American Heritage, July/August 1998. Schwab "sounded out Carnegie, who was golfing at the St. Andrews Golf Club in Westchester County"; Carnegie handed over his $480 million asking price the next morning. ↩
3. "Country Clubs: Business Follows the Golfer," TIME, August 8, 1955. The Denver investment banker is Harry Buchenau Jr., who "estimates that fully 50% of his business comes from friends who enjoy playing golf with him." ↩
4. Merriam-Webster defines a customer's broker (customer's man) as "a broker's employee who takes buying and selling orders and seeks to induce trading by advising customers and maintaining friendly relations with them." The Random House Unabridged Dictionary dates "customer's man" as an Americanism from 1930 to 1935. ↩
5. "U.S. Business: Wall Street: A Long Look Upward," TIME, August 19, 1966. TIME describes Merrill Lynch's "Front Office" as "2,800 registered representatives, or 'customers' men,' who retail stocks and account for 65% of Merrill Lynch's business." The firm took one of every 15 sales applicants and trained them for seven months. ↩