Dan Wiener steps back from the $15B RIA he co-founded

Daniel Wiener has long been a fan, if a highly critical one, of Vanguard funds.

That led the former personal finance writer for U.S. News & World Report to start a newsletter in 1991 that became the independent authority on the fund company’s investments, The Independent Adviser for Vanguard Investors. The success of that venture led to creation of the RIA Wiener co-founded, Adviser Investments, which has grown to represent $15 billion in client assets.

This week, in the latest milestone in his unconventional career path, Wiener announced that he is stepping back from his role as chairman of the Boston-based RIA.

“I’m an entrepreneur. Between Adviser Investments and two different publishing companies, I’ve co-founded three businesses,” said Wiener, who's remaining at the RIA as a board member.

Earlier this year, Adviser Investments announced it would acquire another big firm, Ropes Wealth Advisors, which resulted in a combined entity with a staff of 200 and $15 billion in assets.

“By its nature, it requires a more corporate structure, and I’m not really comfortable in those structures. I’ve got my own ideas. I’ve got my own way of doing things,” Wiener said.

“I don’t have a role to play there that suits my temperament and personality. Being a board member is good enough,” he said, adding that he remains there in part to keep tabs on his assets. He invests through the RIA, and he is the biggest single shareholder in the firm.

WORDS MATTER

As a journalist in the ’80s, Wiener was writing about mutual funds, something the general public was scarcely knowledgeable about at the time.

He saw an opportunity with Vanguard, which lacked any sort of helpful communication for independent investors, he said. “All you could get from Vanguard was sort of blather. They couldn’t make recommendations, and they didn’t really speak to the investor other than speaking to millions at once.”

The newsletter quickly got the attention of DIY investors, some of whom reached out to him with recurring questions, and he realized there was a place for him starting up an RIA.

“It was a little symbiotic. Because you’re writing a newsletter, you’re thinking about how you explain all the issues surrounding investing,” Wiener said.

Across both of those ventures, his approach has been to communicate in plain English and to invest in the same products that are recommended to clients.

“He calls it ‘eating your own cooking.’ It’s the idea that you should invest alongside your clients. That literally has meaning in terms of, we own the same funds as clients,” said Jeff DeMaso, who has been writing for the newsletter with Wiener for more than 10 years. That changed last year, when the publisher shuttered it. In January, DeMaso effectively took over, launching an online-only version called The Independent Vanguard Investor.

Part of the reason the newsletter appeals to everyday investors is that it avoids jargon, of which there is no shortage in financial services, DeMaso said. Early on, Wiener told him to start every first draft of a letter to clients with “Dear Mom” at the top.

“Dan’s been one of my two mentors in my career,” DeMaso said, describing him as “very tough but also very fair.”

“He would call it like he’s see it,” he said.

That meant that the relationship with the investment giant wasn’t easy.

CORPORATE GADFLY

“I had a very cordial relationship with [Vanguard founder] Jack Bogle until I started my newsletter — and then it became very adversarial,” Wiener said. The asset manager sued him in the early ’90s, and he agreed to change the name of the publication from its prior title, Vanguard Adviser. Ironically, the suit brought more attention to Wiener and the newsletter, turbocharging his career, he noted.

And for years, Wiener prodded Vanguard to disclose executive and board member compensation, as well as the ownership its leaders had in Vanguard funds.

However, “the minute that” Bogle left the company’s board amid an ongoing clash with then-CEO John Brennan, “we were friends,” Wiener said.

“I have had very little direct communication with Vanguard’s leadership since Bogle left. They really didn’t want to have anything to do with an independent, non-ad-supported information source,” he said. “We were the only independent source, and they couldn’t control us.”

Of course, he believes in a lot of Vanguard’s products. Adviser Investments’ own 401(k) plan has “a high percentage” of its menu built with Vanguard’s funds, both active and passive, much like the recommendations the firm makes to clients. The firm also recommends and uses investments managed by companies including PrimeCap, Wellington Management, Baillie Gifford, Fidelity Investments and Artisan Partners.

Vanguard did not respond to a request for comment about Wiener.

Today, Wiener dismisses the focus on ETFs and index funds, which he described as “just an easy out for asset managers.”

“They don’t want to do the homework or communicate to clients about why they’re choosing a particular path,” he said.

Wiener can come off as prickly, DeMaso said, which comes with the territory of being critical about a high-powered fund company. But DeMaso recalled an early interaction with him years ago, after the RIA he worked at was acquired by Adviser Investments. DeMaso relocated from Boston to New York City, and in passing mentioned a fun indoor light that also functioned as a tomato-growing stand. Wanting to help DeMaso feel settled in his new apartment, Wiener found the light and had one sent to him.

“Once you’re in Dan’s corner, he has your back,” DeMaso said. “He is so supportive.”

NEXT CHAPTER

Speaking from his backyard in Brooklyn’s Park Slope neighborhood, Wiener said he hasn’t taken off more than 10 days at a time since he started in the business.

“I’m going to sit back and think for a bit … I’ve got an idea for a book,” he said. “I’ll find a way to make my opinions known. I think there is too much complacency in the industry.”