Convergent, rocked by suicide of CEO, announces replacement

A little over two months after the firm's chief executive, David Zier, died of an apparent suicide, Convergent Wealth Advisors has appointed chief operating officer Douglas Wolford as its new CEO. Mr. Wolford, who had been operating as interim CEO at the $8.4 billion registered investment adviser, said the firm will emerge from the tragedy stronger and is ready to embark on an aggressive growth strategy to help build what he calls “Convergent 2.0.” The plan, which involves accelerating mergers and acquisitions, expanding family office services and adding more nontraditional investments for the firm's ultrawealthy clients, could double assets in five years, he said. “The circumstances are what they are,” Mr. Wolford said. “But any time there's a change in the CEO position, you're stepping into a situation where you have an amazing opportunity.” In mid-October, Convergent was rocked by Mr. Zier's death and a regulatory investigation revolving around a private fund Mr. Zier, 44, had been running called Zier Asset Management. The fund, which was fully disclosed and approved as an outside business activity, included at its peak around $10 million from around 10 individuals, including Mr. Zier's friends and family, according to Mr. Wolford's estimates. The money was held in a personal account away from the firm, but all trades in the account were reported and monitored by the firm. Convergent's compliance department began to ask Mr. Zier questions about the fund after it noticed trading in restricted stocks, according to Mr. Wolford. The firm prohibits its advisers from dealing in stocks associated with certain clients, for example, to avoid any appearance of insider trading. Convergent's compliance department was “not able to satisfy some of the questions that we had” and reported the trades to regulators prior to Mr. Zier's death, Mr. Wolford said. Mr. Wolford said that he believed that there were also undisclosed losses in the fund. The full details, however, are hard to determine since the funds were held in a personal account, he said. “As far as we can tell, it seemed like there were losses in that fund, and he was reluctant to tell his friends and family that those monies had been lost,” Mr. Wolford said. “It's just kind of a sad story personally, but he was a guy of very high standards, and knowing him as well as I did, if he felt like he let people down, I think that was probably something he would have had a difficult time with.” The Securities and Exchange Commission spent several days at the firm requesting information following Mr. Zier's death, but no charges of rule violations have been filed. A spokeswoman for the SEC, Judith Burns, declined to comment. Mr. Wolford said that the firm had properly supervised the fund, reported issues to regulators when they were discovered, and that policies had “worked as they were designed.” “But that doesn't mean that we can't improve them,” he added. For example, that the firm may prohibit similar outside money management, Mr. Wolford said. In addition, he planned to bolster the management structure. Steve Lockshin, who founded Convergent in 1994, and is currently chairman of the firm, was listed on the firm's SEC filing as Mr. Zier's supervisor. Mr. Zier, in turn, was listed as Mr. Lockshin's supervisor. “That's an artifact of a founder-led company, because you have relative few people at the top of an organization,” Mr. Wolford said. “One of the things now is that we'll have a much-more-clearly defined chain of command, and that's one of the things that you can do when you put in place a professional management structure, which we're doing in the next five years.” Mr. Lockshin, who founded another registered investment adviser, AdvicePeriod, this year, said he did not supervise ZAM and had not been involved with Convergent since 2012 beyond serving a small number of clients. “Since 2012 I have not been involved in the day to day management of the company,” he said. “I have only served in a board capacity and working with a select number of clients that I otherwise service at convergent.” Mr. Wolford said there was no evidence that any Convergent employees had invested in the fund. He said none of the roughly 45 advisers have left the firm since Mr. Zier's death and client losses have been “minimal.” The firm reported it had around 400 clients in SEC filings submitted earlier in the year. But at least three SEC-registered advisers left Convergent in November, including Denis O’Sullivan, Max Meltzer and Gregory Blake, according to licensing records and announcements from the hiring firms. Mr. O’Sullivan was a managing director at Convergent, according to his LinkedIn profile, and is now with Hemington Wealth Management. Mr. Meltzer was an investment management associate, according to his new firm, Highline Wealth Management, and Mr. Blake will be a senior client adviser at WMS Partners and was a director at Convergent, according to his LinkedIn profile. Mr. Wolford maintained, however, that those who left were not advisers and were “business development people,” who were “engaged in bringing in new relationships.” “We don’t have roles like some companies,” he said. “We have some people that are hired for business development and people hired for advisory, and they’re separate and distinct here.” He added that their departures were not necessarily connected to recent events. Two of the three declined to comment. Mr. O’Sullivan was not immediately available to comment. “People join companies and leave companies,” he said. “We’ve also hired people in the past couple weeks.” “We feel like, from a company point of view, we have behaved in a model fashion,” Mr. Wolford said. “Our policy has been to tell clients everything we know as quickly as we know it,” he noted. “The fact that Dave Zier's personal activities were confined to his personal life and did not cross over the firewall into the company gave clients reassurance.” In the aftermath, the firm had also maintained a good relationship with City National, a bank which is a majority owner in Convergent. “That relationship is a very solid one,” Mr. Wolford said. “They have been unbelievably supportive.” Bill Bancroft, an executive director, will be moving into Mr. Wolford's previous role as chief operating officer and president. Other executive functions will remain the same. Looking ahead, Mr. Wolford drew a comparison to Apple Inc., whose stock has more than doubled in price in the aftermath of the death of its founder, Steve Jobs. “Apple is the perfect example,” he said. “There's always opportunity to chart a broader course in a new era.” This article has been updated to include comments from Mr. Lockshin and clarify his role at Convergent.