Counseling the Newly Rich

Orange County Business Journal, Nov 5-Nov 11, 2007 by Beighley, Dan

Merrill's Binder, Once a Goldman Star, Taps Psychologists, Philanthropy Advisers

With new wealth comes new responsibility. That's where Mark Binder likes to come in.

As a member of Merrill Lynch & Co.'s private banking and investment group, he and three partners manage $3.5 billion for families with assets of at least $10 million.

The typical client for Binder is someone newly rich after selling a company for a large profit. They're usually not used to running their financial lives.

Of the 125 families Binder manages, about 20% are from Orange County. The rest come mostly from the Southwestern part of the country.

Different Needs

The rich have different needs, according to Binder. His clients aren't saving to put their kids through college.

Instead, they call for complex estate planning and coordination of philanthropy and tax issues, he said.

"They want to preserve their money while allowing it to grow," Binder said.

Binder puts his clients' money in cash, bonds, stocks and alternative investments, such as private equity and hedge funds.

The amount of risk taken is up to each client. A lot of time is spent educating them, he said.

"It's hard for clients to understand they don't have total control over investments," Binder said.

The children of clients also are taught about money.

Beyond a basic understanding of investments, Binder brings in psychologists and philanthropy advisers to help clients understand how money affects them in terms of responsibility and identity.

"We want to teach them to never be taken advantage of," he said.

Hails From Goldman

Binder came to Merrill Lynch in 2000, as part of a group that moved from Goldman Sachs & Co.

The move came after a change in compensation at Goldman Sachs after the investment bank went public in 1999. Other financial advisers also left Goldman around 2000.

Last year, Binder was awarded nearly $674,000 by a National Association of Securities Dealers arbitration panel in a dispute with Goldman.

After joining Merrill, Binder charged that Goldman refused to deliver his remaining vested stock from the company's initial public offering, plus $90,000 in withheld wages and stock.

Binder is married with three kids.