Rivals say they are working to pick off Convergent Wealth Advisors clients following the apparent suicide of its former CEO and reports about irregularities at an outside fund he managed.

"The sharks are circling," says one competitor, who asked not to be identified.

"The feeding frenzy has started. It doesn't take a lot of blood in the water for that," said another competitor, who also would only speak anonymously. "Are we making calls? Yes."


No clients have left the firm, insists Convergent CEO Douglas Wolford, who replaced David Zier after he was found dead at his vacation home on Oct. 15 in an apparent suicide.

"Obviously, our competitors are always welcome to call" Convergent clients, Wolford says -- but adds that there have been no defections. "Although you'd expect some of that, our clients are pretty comfortable."

The firm has been communicating with each of its clients about Zier's death and the fund he managed, he says.

Wolford also says the fund did not contain any assets of Convergent clients. Yet in an interview earlier this week, Convergent Chairman Steve Lockshin said it was possible some clients might also have had some additional money in Zier's separate fund.

Potomac, Md.-based Convergent, a division of privately held City National Bank, has $8.4 billion in assets under management.


Wolford says firm executives became concerned in early October after a routine review by compliance teams at both Convergent and City National detected irregularities in Zier's trading activities in a fund he ran for families and friends. Wolford says he believes that fund, Zier Asset Management, held less than $20 million.

"We just saw some discrepancies in some of the trades," Wolford says, adding that all trading in the firm's accounts and in its employees' outside business activities are monitored on a daily basis.

He adds that the problems with Zier Asset Management "could be any variety of things. It could be just a pattern of irregular trades, more frequency of usual trades or trades in securities that aren't regularity traded."

Wolford says that because Convergent does not manage that fund, it isn’t aware of the precise nature of the problems, and has turned all relevant information to state authorities, the FBI and the SEC.

"They have the authority to investigate what we cannot," Wolford says. "As is our duty, we disclosed all of this to them. [The authorities] were very complimentary of the fashion in which we handled the situation. One thing I am very proud of in this company is our compliance procedures are no respecter of persons," he adds. "There's no tolerance of anything that's not regular."


Overall operations at Convergent are solid, Wolford says. "Convergent is a healthy company with health profit margins," he says. Those margins have been helped in recent years by new technologies that have improved the firm's efficiencies, he adds.

Wolford also stressed the firm's ability to function in Zier's absence. Ever since Lockshin, the firm’s founder and former CEO, sold the company to City National in 2007, the firm has been evolving into an organization that relies on teams of advisors to serve clients, Wolford says. Although Zier was a lead advisor for many clients, he was part of a team, he says.

"It's been a conscious decision over the past couple of years to really build a company, not a set of personalities," Wolford says. "You do that because it's good business hygiene. You don't do that because some unusual circumstance like this comes along, but when it does, you are prepared. There's a collateral benefit for that."

Read more:


Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access