The supercoach and author of a new investing book answers those who have taken ‘pot shots’ at him and his strategies
Robbins' new book, "Money: Master the Game."
In his rousing seminars, primo coach Tony Robbins spurs willing attendees to tread across a bed of burning-hot coals as a lesson in overcoming fear. Now he’s raking RIAs over the coals for taking “pot shots” at him.
Some advisors and others have mercilessly dissed Robbins’ new book, “Money: Master the Game: 7 Simple Steps to Financial Freedom,” as filled with inaccurate or biased information and said a portfolio model he hypes to the hilt is actually nothing special — or that he misunderstood the information he was given by the experts he spoke with. These detractors say he isn’t qualified to give financial advice. For the book, he interviewed John Bogle, Ray Dalio, Carl Icahn and Charles Schwab, among other notables.
In his tome as well as in press interviews, Robbins has given the unmistakable impression that he’s gearing up to step into the financial services industry.
Not true. Well, he was going to do that. But now his plans have changed, likely because of conflicts.
Indeed, Robbins had been in conversations to become a partner in Stronghold Financial, a new division of Stronghold Wealth Management, an RIA founded by his personal investment advisor of seven years, Ajay Gupta, that caters to the ultra-wealthy.
Stronghold Financial was created jointly by Gupta and Robbins’ compatriot Elliot Weissbluth, CEO of HighTower Advisors, which also specializes in an ultra-high-net-worth clientele. In contrast to its parent, SF is meant for people with modest assets.
Why did Robbins do an about-face? A look at SF’s Securities & Exchange Form ADV Disclosure Brochure dated Oct. 10, 2014, reveals: “Future Member of the Firm:…it is anticipated that Tony Robbins will also become a member of the Firm. A conflict of interest exists to the extent that Tony Robbins recommends the services of the Firm, or Stronghold Financial, and will be entitled to receive distributions or other compensation relative to his future ownership interest in the Firm.”
That section, however, was dropped completely, a month later, from an updated version of the brochure (Nov. 17, 2014). That ADV states that SF has three employees, zero clients and zero assets under management. Its minimum portfolio size is $25,000, and it charges an “asset-based fee” of 75 basis points (0.75%).
Also missing from the ADV is the name Josh Jenkins-Robbins, Tony’s son. According to FINRA’s BrokerCheck, he is registered with Stronghold Financial in San Diego. And his LinkedIn Profile links to three company websites: Stronghold Financial and two enterprises in which Tony Robbins enjoys joint ventures. In his book, the elder writes that Josh “has been in financial services his entire life.”
Robbins’ hefty volume is subtitled “7 Simple Steps to Financial Freedom.” But with plugs galore for the financially oriented companies he owns or has pieces of — or intended to partner with; i.e. Stronghold — it might as well be dubbed “656 Pages or So to Promote Stronghold.”
Sticking it to the financial services industry in general, he slams “the system” in which “the house reaps profits whether the clients win or not.”
He loudly trumpets fiduciaries, while fiercely denigrating brokers/financial advisors, dismissing the latter as “paid to sell” and under a conflict-of-interest cloud.
“Going back to your broker to help you save on fees is like going to your pharmacist to help you get off meds,” he says.
Robbins makes abundantly clear the types of investments — and providers — that he loves or loathes. “Beware of mutual funds,” he writes, citing high costs and taxes. “Nearly all mutual fund companies have a stacked deck. They are the ultimate casino.”
Instead, he tells readers, replace those mutual funds with index funds. He has it in for most variable annuities, too (“Nearly every expert I interviewed for this book agreed that annuities should be avoided”) because “most people lose money in variable annuities.” He makes exceptions, however, for Vanguard and TIAA-CREF VAs, singling them out as low cost and investing in low-cost index funds.
The charismatic Robbins, 54, who has counseled Bill Clinton and coached trader Paul Tudor Jones for the last 21 years, owns a dozen companies with combined revenue of more than $5 billion annually.
He now considers himself spokesman for the individual investor. His aim, he says, is to change the industry’s focus from wealthy investors to just ordinary folks.
The “superhuman” Robbins (that’s what Oprah Winfrey calls him) wants to help everyman — that is, investors who are abused by “the system” — especially the broker part of the system. He first wants to “steer” consumers to fiduciaries, then focus on RIAs with a Mastery Program to help them “get to the next level,” including coaching on how to brand themselves.
It seems that the premier coach feels ready to wield the same sort of influence with investors and RIAs that he has with his seminar-goers.
Hopefully, in this arena that’s new to him, he won’t spur disciples to march on hot coals.
Last Friday, Robbins spoke with ThinkAdvisor from his Palm Springs, California, home. His official residence is in Palm Beach, Florida, which famously has no state income tax. Apart from that, the California native seems to have a thing for palm trees.
ThinkAdvisor: Are you entering the financial services industry?
Tony Robbins: I’m not looking to enter the industry. I have no desire. Some advisors think I’m coming to take over their industry. They’ve taken pot shots. I have zero desire to take their business. It’s not even slightly where I am. I’m a coach. I’m not changing industries. I’m not here to tell people what to do [about investing their money].
Why do you say that RIAs are fearful that you’ll take their business?
I would never, never tell anyone what to do in terms of getting in or out of the market. I have twice in my life, but it was based on what the people I interviewed for this book said. At the time, they were extremely concerned that the market was overvalued. So I said, “Here are some factors that may have an impact on the market according to people that I interviewed.” If I did make a wrong call, which I did not, then [detractors] telling me that [they] wouldn’t listen to somebody because they made a bad call better not listen to Warren Buffett.
But you wrote a book about investing that intends to tell readers “how to master” the “game” of money.
Nothing in this book is my opinion other than the emotional side. Everything that is talked about financially comes from sources who are 50 of the smartest people in the world that I interviewed. I’m going to keep my day job.
Yet in the book, you write that you’re in conversations to partner with Stronghold Financial, an RIA created by your personal advisor, Ajay Gupta, and Elliot Weissbluth, CEO of HighTower Advisors.
I don’t own any interest in Stronghold Wealth Management or Stronghold Financial, nor will I ever. I’m not considering it for the future. Zero.
Well, that’s a change.
In the beginning, I was talking with them; but in the end, I decided I didn’t want to try to make money with individual investors. I want to educate and support them. I have no personal interest in selling something to them in any way, shape or form.
What was your original plan, then?
I would have been a third partner in the business. [Instead], they’re going to donate the profits they would have given me to the [Feeding America ] program on an annual basis. I’m not seeing any of that money whatsoever. I’m not receiving anything financial from it, and I will not.
When did you decide not to become a partner in Stronghold Financial?
At the beginning of this fall . But the book was already in process; so we couldn’t go in and change it, or we would have missed our deadline. Also, I wanted to make sure I published it in time to stimulate The 100 Million Meals Challenge [charity program] which is during the holidays.
So, do you now have plans to open your own advisory?
That’s the biggest bulls--- on the planet! “Oh my God,” [RIAs are fretting] “he’s coming to try to take my business!” No!
Are you interested in becoming deeply involved in any other part of the industry?
If I do something in the future, it will be on the institutional side. And I’m considering that because I think it’s a great thing for people to have more options.
What would you do on the institutional side?
Some individuals have approached me. One is Bob Caruso [founder-chairman, Impact Republic]. He was the COO of HighBridge [Capital Management] ,which they sold to JPMorgan. He’s approached me on potentially partnering with him, where he could bring in some alternative types of investments and make sure fees are stripped out of them — often they have a 15% markup, which I think is inappropriate — whether it be an REIT or private credit or senior housing. I’m in the early stages of looking at this as we speak.
You write that the financial services business is manipulative and non-transparent. At this point in your career, why would you want to get involved in an industry that you hold in such low esteem?
to show individual investors how to use the system, not to be used by the system. What you don’t know about this industry hurts you. Ignorance is pain. It’s not an evil system, and I don’t see it changing. It’s not that the system is horrible. It’s doing what it’s made to do. It’s just corporations whose job it is to maximize profits first. It’s not to maximize the profits of the individual investor. It’s to maximize the profits of shareholders.
You say you want to help RIAs. How?
I’d like to be one of the voices for independent fiduciaries. If highly skilled, they have the greatest opportunity to help people. [The industry] is certainly moving in the direction of fiduciaries, and I want to support that cause.
By doing what?
I can show them how to build their businesses more rapidly. Many of them are struggling, pushing hard. I can help them strengthen their businesses. I’ve worked for years helping businesses grow. The biggest challenge of most businesses, especially small and medium- sized ones, is that the owners are so busy in the business that they don’t work on the business strategically. I’m really good at helping businesses grow 30% to 130%. I do a business Mastery Program in six countries.
Anything specific that you have in mind for RIAs in the USA?
This year, when I started talking to so many advisors, I thought it might be really interesting to do an advisors’ Mastery Program, just for the industry — bring in some of the best names and some of my skills. We’ll probably do a program of this nature in the third quarter of next year.
Please elaborate on your intentions when it comes to individual investors.
I want to empower consumers to show them what choices there are, especially if they’re going to [invest on their own]. They need help. I don’t want them going to a broker; I want them to go to a fiduciary, who is legally responsible to put their best interest [ahead of their own]. But here’s my caveat: Some fiduciaries aren’t worth the money because they’re not highly sophisticated — they don’t have a lot of skill sets, even though they’re working really hard.
Elliot Weissbluth, of HighTower, has participated in some of your press interviews. How come? What’s your connection with him?
I have no interest in his company, and he has no interest in mine. But we both share the same views of the system: it’s not set up for the individual investor to win.
But why are the two of you introducing an online tool that allows investors to get full price transparency?
I have no economic interest in it, other than that I helped fund it. I invest in what I believe in. I’m the one that started it. I came to Elliot and said, “This needs to be done.” So he and I brainstormed. I said, “If we can do this, it will empower people; and some of these individuals will appreciate the help you’ve given them and become clients of yours.
That tool has been described as robo advisor-like. Is it?
It’s not a robo-advisor. I don’t believe in robo-advisors by themselves. A robo-advisor can’t look you in the eye and sense what the hell is going on in your life, what scares you, what excites you, what your dreams are, what your hurts are.
What else do you like about Elliot? He wrote the foreword to your book.
Elliot and I are tight. I love what he’s done with the system. I know he’s not loved by everybody in the industry [laughs], but he has the fifth largest investment advisor in the world. Who else has a system to make all the banks compete and take that profit and put it back into the hands of the investor? It’s the only system I know of that’s been able to get the giant wirehouses to compete with one another and strip off all the fees. Right now, they’re only doing that for wealthy people. But my hope is that putting the attention on what needs to be [done to benefit] individual investors will bring a change.
So your interest is to let average investors know how — and where — they can get a fair shake?
Yes. Oftentimes fiduciaries who are highly sophisticated and have a lot of skills and options are extremely expensive. The reason I got involved with HighTower is because I thought, there has to be a way to give average consumers who can’t afford you guys' high-level advice.
You promote Stronghold quite a bit in your book. It seems that you had an agenda to plug it as much, or more, than giving readers an impartial “7 Simple Steps to Financial Freedom.”
Ajay Gupta of Stronghold is my guy. So if somebody asks me personally, I recommend Ajay. But I have no interest in Ajay’s business whatsoever.
Do you depend solely on Ajay in terms of what you invest in?
Yes. I’m not in the advice business.
What’s in your own portfolio?
I have a significant portion in the All Seasons Portfolio that Ray Dalio has, and which I wrote about in the book. I believe in that. I have a significant portion of my assets in senior housing. I think of that [need] as a demographic inevitability, and the supply isn’t there for the number of people retiring. I want to invest in places where I feel emotional reward and where I believe there’s great economic rewards, and where income and equity growth are available.
Where else are you invested?
I’m a partner in Planetary Resources, which is focused on how to get resources out of asteroids. We’re building rockets that will be able to mine. I’m doing that and other [high-tech] things with a tiny part of my portfolio because they have the opportunity to impact the world. If they succeed, of course they’ll be extraordinary financially. If they don’t, I have put some of my money in a direction that I think really matters.
I have a lot of private credit. I love the idea of aligning with demographics, the economy and opportunities. I’m always digging. I’m pitching and catching with Ajay.
Before he went on his own, he was a broker with UBS and before that with Merrill Lynch.
Right. And quite frankly, I was frustrated with [some] of what he brought me [while at UBS]. He was involved with fiduciary and looking out for me; but he was still a broker, and what he brought me were very limited choices. But I stayed with him because I felt that he was working for me.
Then he broke away from UBS.
The day he decided to become independent, I transferred all my money over to him. We spent three hours that day talking about things he wanted to bring to me but couldn’t because there was no way UBS was going to let him do that.
What was one major investing lesson that you learned from all the financial experts that you interviewed for the book?
That these people are committed to not losing. They have a system, an asset allocation for doing that. Most of them are committed to asymmetrical risk/reward: How do I take the least risk with the most possible reward.
You say that you’ve turned around companies. How did you do that — by motivating the CEOs?
I’ve never been a motivator! I’m a strategist. But the reality is that if you’re not motivated and don’t have a strategy, you’re worthless. I help diagnose business owners’ challenges. I found that the chokehold on growth of any business is the leadership.
So it all goes back to the head.
There are two parts to the chokehold: the psychology of the leader and the skill sets of the leader. Leaders get overwhelmed; they hit the threshold of what they can deal with, and they just can’t handle it. So the organization suffers.
Where do you come in regarding a company’s financial picture?
If you’re a great marketer but you don’t have true financial skills — I don’t care how good your CFO is, if you have one — you’re not running the show. So you can have a bit of a surprise. Most people don’t know how to take financial information and convert that into financial intelligence they can make decisions on. So I educate people on the financial side, the strategic side, the marketing side, the innovations side.
That’s quite a lot.
This isn’t motivational bulls--- pump-up. If you think these people pay me seven figures a year, plus a piece of the upside, to “motivate” them, you’d better take a look at who I’m working with and see if that makes sense. Of course it doesn’t.
Finally, do you think individual investors will ever really wise up?
Yes. When the millennials come into economic power. They’re going to educate themselves on a very different level and aren’t going to put up with [non-transparency]. Right now, the flow of funds is going more to investment advisors [vs. brokers], but it’s a trickle. This new one will be a generation of people that has been taught to think for themselves, and go online and take the time to dig underneath and understand what’s going on. That bodes well for those in the business long term.
--- More by Jane Wollman Rusoff on ThinkAdvisor: