How a billion-plus RIA in upstate New York bagged top managerial talent from just down the street

Brooke’s Note: RIAs may face a crisis when it comes to filling rank and file advisory positions as they grow and need the bandwidth associated with it. That’s the bad news. The good news is that as they seek to add professional managers to their burgeoning practices, the pickings are not so slim at all. Lori Van Dusen’s hire of Kim Pugliese is exhibit A. We saw a similar move last week in Marty Bicknell’s Kansas City hire. See: Mariner Wealth poaches a chief investment officer from a big local mutual fund company RIAs may be small in size but they tend to be very big in profits and opportunity. This puts them in a strong position in competing for talent with large corporations.

It may be a leap on the HR chart between guiding the finances of a legendary but besieged camera company and managing an RIA, but that is exactly the industry switch Kim Pugliese is making as she steps in as the new managing partner and chief operating officer of Rochester, N.Y.-based LVW Advisors LLC.

Northern exposure

Pugliese spent 27 years — nearly her entire professional life — at the Rochester-based Eastman Kodak Co., shepherding its finances in a number of executive roles. Most recently, Pugliese was managing director of the Strategic Product Group Intellectual Property Support and director of IP Licensing at Eastman Kodak. Previously, she was vice president of the Kodak Ventures Group, overseeing mergers and acquisitions, negotiations and structuring of agreements, and portfolio management. Pugliese also served on the camera company’s investor relations group and was previously chief financial officer for Kodak’s digitization business.

Now, Lori Van Dusen, principal and founder of LVW, which advises $3 billion in assets, is confident that the skills Pugliese gained at the now-bankrupt company will be vital in building up her newly independent RIA — a company that Pugliese could someday lead.

“We’re excited to bring on board a strategic thinker and problem-solver of Kim’s caliber. As a veteran of senior positions in a Fortune 500 company, she has developed an impressive foundation of leadership and analytical skills. She’s a finance expert, seasoned in evaluating investment and M&A opportunities of all types,” says Van Dusen. “There’s a combination of skills that cross-over.”

Van Dusen, who has been in the business for 24 years, says she has no concerns about bringing on a COO from a bankrupt company, because it wasn’t Pugliese who was making the decisions that put Kodak into that position. In fact, while many Kodak employees are looking for work, Pugliese was so valuable at Kodak that she didn’t take a pay-cut to come over to LVW. “Quite the opposite,” says Van Dusen.

“She’s extraordinary, energetic, entrepreneurial and smart,” says Van Dusen. “They certainly didn’t want to lose her.”

The ability of Van Dusen to poach a desired Kodak executive does not surprise Philip Palaveev, who says that actually bigger RIAs are in a very powerful position for drawing — and paying up for — talent.

“They’re so incredibly profitable that they have no problem paying people in the $200,000 to $300,000 range when big corporations are scratching and stripping (compensation packages) down to the bone. Number 300 of the RIAs (are able to pay) what even the largest corporations can not so that’s why you see so many people jump over to the RIAs.”

Philip Palaveev: Executive talent is very
available and can be hired but
it’s not clear if the executive
is effective.

Portable skill-set

Van Dusen says her RIA had simply reached a point where she needed to bring in someone with different skills and an objective set of eyes. LVW broke off from Convergent Wealth Advisors LLC last October, though the team had originally come together under Citigroup in the late 1990s, and formed an independent RIA. The firm then sold a minority stake to Focus Financial Partners, LLC and signed on with Dynasty Financial Partners to use its outsourcing platform. See: Dynasty Financial wins the account of Lori Van Dusen’s new RIA through Focus Financial.

Pugliese’s strengths are such that Van Dusen may eventually turn over the helm of LVW to her.

“The person who founds the business may be different than the person who ultimately runs the business,” Van Dusen says. While Pugliese isn’t a partner yet, says Van Dusen, “I fully expect her to be.”

Still, Palaveev says that converting an executive at an S&P 500-type firm to a wealth management firm can backfire.

“Executive talent is very available and can be hired but it’s not clear if the executive is effective. I see it happen and they’re pulling out their hair in a few months.”

LVW had been contracting out a number of COO, compliance and financial functions since its start last fall. While some of those will continue be contracted out, it was time to bring in a full-time person and have the main operational consultant “work herself out of a job,” jokes Van Dusen.

Lori Van Dusen: The person who
founds the business may be different
than the person who ultimately runs
the business.

Pugliese has filled just that role, complementing Van Dusen’s experience in investment management and client services. And, as Pugliese learns the ins and outs of the new industry, the hope is that, in addition to operational management, she’ll also move into the investment side of things.

“Ultimately, if she wanted, she could run the business,” says Van Dusen.

The right kind of town

Rochester, in upstate New York, six and a half hours from New York City, would seem an odd place for a large RIA to be based and an odder place still to find homegrown talent like Pugliese. But, says Van Dusen, the town is a hotbed of innovation, education and wealth. “It was like the Silicon Valley in the ’70s,” she says.

Along with Kodak, which is based in Rochester and which filed for Chapter 11 bankruptcy protection in January, Bausch & Lomb and Xerox were started and are still headquartered in Rochester, as is the Gannett Co.

Despite the number of large companies in town, Van Dusen says only 25% of the firm’s clients are actually located in Rochester. The rest of the private and institutional clients come primarily from upstate New York and New York City, with a few significant accounts in Europe. Kodak, itself, is “not a significant part of our business,” says Van Dusen.

Favorite daughters

Both Van Dusen and Pugliese grew up in Rochester and moved back there with their families after college. Pugliese returned to academia to get her MBA from the University of Rochester in 2000 after graduating from Colgate University, in Hamilton, NY, in 1982.

At one time, Kodak was the biggest employer in Rochester, and it still has around 5,000 employees. Although the bankruptcy has put a damper on the town, for Pugliese it also made for a good time to reflect on her career. “Certainly, the bankruptcy factored into my decision to some degree,” Pugliese says.

But there were other factors that prompted her industry-hopping move, namely, wanting to join a fast-growing firm with a smaller and less-bureaucratic environment and one that she felt had integrity. LVW, she says, fit the bill on all counts.

That said, Pugliese has no regrets about her time with Kodak, where she gained valuable experience in many different positions.

“I should be thanking Kodak,” she says.

Rochester is pretty remote.

In a man’s world

A woman at the helm of a large RIA is a rarity; two women, even more rare. In fact, men hold all the other executive positions at LVW and, Van Dusen says that, aside from Pugliese, the rest of the people she interviewed for the COO job were all men.

But Pugliese and Van Dusen agree that gender isn’t relevant in the hiring process. The important thing wasn’t that Pugliese was female, says Van Dusen, but that she was the right person for the job.

“I’ve never really thought about gender much,” says Van Dusen. “We have men and women as clients.”

Pugliese agrees. “I’ve worked for men most of my career. It doesn’t make anything different.”

But it was at the only women’s business retreat Van Dusen ever attended that she met Pugliese 10 years ago. They hit it off and kept in touch through the years.

Now, Van Dusen and Pugliese are ready to head up LVW’s first full year in existence, which they promise will be full of growth.

Incentive for growth

When LVW was a unit at Citigroup in the late 1990s it experienced 20% annual growth regularly, says Van Dusen, and she’d like to see it get back to that. The unit left Citigroup to join Convergent in 2008.

LVW has more than $5 billion under advisement, says Van Dusen, with about 15 employees (the number depends on whom you count; Van Dusen says her mother, for example, does some work for the firm.) At the same time, the institutional side of the business is growing,

But the real growth LVW is seeing is in the ultrahigh-net-worth space, and in that segment business is up about 20%. LVW typically deals with clients who have more than $10 million in liquid assets.

Because the firm provides a range of services — from putting together a bond deal for a college to dealing with estate-planning issues for a family — Van Dusen wants to “be careful about growth. “A growth plan has to be tempered by an understanding between the clients and the firm and by the growth of the operational capabilities at LVW — something Pugliese will be instrumental in overseeing. In fact, part of her compensation package includes incentives for growth and added business, says Van Dusen.

“The reason Kim is here is because we have a growth plan,” says Van Dusen.