Top 40 Under 40: Building a Practice Through Close Community Ties

No. 18: David Lugo

Firm: UBS

AUM: $893.28 million

Location: Guaynabo, PR

Age: 39

Note: This profile is part of a special series devoted to On Wall Street’s Top 40 Under 40 ranking for 2012. Every day we take a look at an advisor who made the list to find out the secrets of their success.

UBS financial advisor David Lugo struck upon his career in wealth management while selling school uniforms as a distributor of a clothing line to retailers. In Puerto Rico, where Lugo works, public schools and most private schools require students to wear uniforms.

Among the people he met in the course of this business, one offered him a job at a local bank’s brokerage division. Lugo says he spotted the potential the opportunity had immediately. “Once I started, I feel in love with helping people as their financial advisor,” he says.

Lugo says he has carried over certain lessons he learned while selling clothing into the area of dispensing financial advice. “It’s important to understand what the client wants, and also to understand their needs,” Lugo says. “The best way to get this understanding is to listen to what your clients are saying.”

In practice, Lugo has found that his clients say they want fixed income. “They’re looking for investment income to help meet their expenses,” he says. “Therefore, they tend to hold fixed income issues, mainly from Puerto Rico.” The interest from Puerto Rico bonds is exempt from all federal, state and local taxes; they also tend to have higher yields than other municipal bonds.

Clients’ finances are “the second most important thing” in their lives, Lugo says, trailing only the health of themselves and their loved ones. To help clients reach their financial goals, Lugo urges them to diversify their investments, with equities as well as the fixed income that many clients favor. “We offer access to excellent money managers,” he says, “and recommend a substantial allocation to the stocks these managers select.”

Clients tend to accept his advice, Lugo says, because of the relationships he has developed with them. “This is a small island,” he points out. “Many clients know someone who is related to you, or you may be know someone related to them. This helps to build trust, while creating more responsibility to work closely with clients, treating them in a way to keep your reputation.”