Steve Lockshin is founder of AdvicePeriod.
Steve Lockshin is founder of AdvicePeriod.

Convergent Wealth Advisors' former chairman, Steve Lockshin, was one of the investors in an outside fund run by the firm's late CEO -- a fund that Convergent officials say is under investigation by regulators and the FBI.

Convergent CEO (and longtime Lockshin friend) David Zier committed suicide on Oct. 15, after learning of the outside investigation into "irregularities" at the ZAM fund, which Zier had run for years as an outside business activity.

In addition to Lockshin, an undisclosed number of Convergent clients were investors in the fund, separate from their investments in Convergent itself. And Convergent never recommended the fund to any of its investors, Lockshin insists.

Lockshin discussed the fund and other matters leading up to Zier's suicide in a wide-ranging conversation this week that covered his reasons for stepping down as chairman last week, his own outside investments, the question of whether Convergent clients will follow him to his new venture and forces that may have driven his close friend to end his life.

"My skin crawls when folks sensationalize this," Lockshin says.

Convergent has long disclosed Zier's management of ZAM in its SEC filings, multiple sources say. It was an internal compliance review that detected the alleged problems, new Convergent CEO Doug Wolford has said.

Over the course of the conversation, Lockshin spelled out a number of things he says he wants people to understand about Zier, Convergent and his own activities. Among them:

1. Avoiding the appearance of a conflict is easier said than done.

Several of the firm's advisors who have left the firm, speaking anonymously, have said that they viewed ZAM as a direct competitor to Convergent that amounted to a conflict of interest. Some also expressed similar concerns about Lockshin's own outside business activities -- including AdvicePeriod, an advisory firm Lockshin launched this spring that serves ultrahigh-net-worth clients.

"I think it's easy for people to be critical in hindsight," Lockshin says. "To me [outside ventures are] akin to a person deciding they want to buy a small apartment building nearby and getting a couple of friends to invest and being a manager of an LLC."

"The simple answer in hindsight," Lockshin says, "would be to say you can't do any of this stuff."

It's worth noting that Convergent's parent company, Los Angeles-based City National, fully embraced the conflict between AdvicePeriod and Convergent.

"We both agreed," says Cary Walker, a City National spokesman, "that we would be friendly competitors and, at the same time, we would be partners because in some cases people want more than one advisor."

Walker declined to answer questions about the ZAM fund. Convergent accounted for roughly 20% of the more than $40 billion in client assets attributed to City National's wealth management division.

2. Lockshin was officially given a long leash.

"I have a ton of outside investments," he says.

A few years following the 2007 City National buyout, Lockshin became legally free to pursue competing opportunities. He and City National agreed that he should stay on as chairman, serving a select number of Convergent clients, while he also launched outside firms.

Lockshin says he was allowed to launch outside startups because none of the parties wanted Convergent to lose large clients upon his departure. That, he says, "would have benefitted nobody," Lockshin says.

City National's spokesman Walker did verify Lockshin's assertion that his relations with City have been "positive and constructive" from the start of their alliance.

"I'm generally an agitator," Lockshin adds, of his drive to work on so many things simultaneously. "I like to push the limits of our industry. It's why I tend to move more quickly than most folks are comfortable with. The best opportunity for me is to be unshackled from a traditional business approach."

3. He himself bet on Zier's fund.

One of Lockshin's outside investments was in Zier's ZAM fund, he says -- although he says he doesn't remember precisely when he sold out of the fund or for what amount.

"I was out before this year," he says. "I don't recall being upset [about the returns]. The performance that was communicated was not bad."

Zier already was running the fund for his "family and friends" before Lockshin -- Convergent's founding CEO -- hired him as an advisor in 1997; Zier took over as CEO in 2012.

4. Other clients made their own decisions to invest in ZAM.

Lockshin declines to say how many investors had money both with Convergent and with Zier separately, but says, "It was very clear that their investments in ZAM predated their relationship with Convergent and was specifically excluded in their investment policy statement."

He argues that it's simply not possible to control every line item in every client's portfolio.

"Those were not managed assets," Lockshin says. 

Whether or not any impropriety occurred in Zier's management of the fund remains to be seen. A forensic accounting is still underway, Lockshin says.

The SEC and FBI do not confirm when they are in the midst of ongoing investigations, but Wolford has said the case was referred to both bodies.

5. With hindsight, he thinks he saw signs of trouble -- but with Zier, not ZAM.

In ZAM's case, Lockshin says he had no inkling that anything was amiss. But with Zier himself, Lockshin now says he picked up warning signs a couple of months back.

"We checked in on each other frequently, almost every day," he says. "Like any good friend, at some times you would sense some stress. I had expressed some concern and Dave told me everything was fine. He was an extreme optimist."

Nonetheless, the news of his death came out of the blue, says Lockshin.

"Dave and I were very, very close friends and very good partners," he says. "The Dave Zier who I know and love always chose well whenever we had questions of conflict or we had difficult decisions. I never knew David to be anyone other than a person that I admired, so it was a shock to lose him in this manner."

6. Lockshin left on his own terms.

Lockshin says he decided to step down as chairman -- nearly two months after Zier's death -- because, with his friend gone, he saw no reason to remain.

"Dave was my super close connection to the company," he said. "I felt it was more appropriate that I let the new management install their own culture. I actually had suggested the change in leadership shortly after Dave's passing."

City National confirms that the choice was Lockshin's own.

Coincidentally, the announcement of his departure came the same day that it was announced that most of Convergent's ultrahigh-net-worth team -- four advisors led by Steve Aucamp -- was leaving to start a new office in Washington for Presidio Group.

The departures brought to at least seven the number of advisors who have left Convergent since Zier's death.

7. Some Convergent clients may follow him.

When asked if he planned to take Convergent clients with him, Lockshin said, "That's not how I roll. I honor agreements."

But he did say that some Convergent clients have expressed interest in coming with him. It's understandable, he says. In some cases, clients had worked with both Zier and Aucamp, both of whom are now gone.

8. He believes 'shame' motivated Zier's suicide.

At the time of Zier's memorial, friends who had been invested in the fund discussed how their investments might have played a role in their charismatic friend's demise, Lockshin says.

"Everybody said, 'I would have walked away from the investment,' or 'If Dave said, "It's going to take me 10 years to pay you back," we all would have accepted that,'" he recalls.

"The truth is if he had done something that had legal consequences, I still think he would have emerged with a lot of friends and supporters," he says.

"Being a friend was probably the No. 1 thing in life that he tried to excel at," Lockshin says, adding that he wishes Zier had shared his troubles instead of keeping them to himself.

"Almost everybody in the fund were his friends, which is probably why he felt so much pressure, not to let his friends down," Lockshin says. "I think shame got in the way."

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