1/29/16
Following the hearing last week, Mr. Hull stated that Valeo authorized him to inform me that you are again interested in discussing settlement, and that I should contact you directly. In further conversation, he also hinted that Valeo likely wants to just get paid something--a phrase I believe was used the last time settlement was discussed. My response is attached.
Aaron
FOR SETTLEMENT PURPOSES ONLY - NOT ADMISSIBLE IN ANY PROCEEDINGS (Just added this because their attorney did in any settlement conversations)
In the summer of 2009, I looked into a number of advisory firms outside my local market, including Valeo, to see if they might be a systems resource, so I could avoid having to build them from scratch. During a visit, I found that you had systems challenges of your own, as the server was down that morning. As I left, Trott stated that Valeo was not interested in outsourcing systems. But he reiterated from a conversation over lunch, Valeo’s interest in expanding to Michiana, suggesting we continue to talk. I agreed, especially as I would rather not compete against Valeo as a second fee-only firm in my market.
Assessing what would be required to successfully replicate Valeo in Michiana, without any specifics about your practice and operations, was not practical. So before I seriously considered any change, I wanted to know everything about your firm so we could discuss: if Michiana appeared worthwhile for you, if I was the right person, and what resources would be needed.
Explaining why he was not willing to share something I asked about, Wortman said that only the partners have access to that information. To you, I was a complete unknown that just showed up on your doorstep. He added that the partners have known each other intimately for years, and have a long work history together, so you know you can trust each other. Fair point. Yet, a productive discussion would be impossible without good information. As I had no interest in continuing to flirt, I figured showing my cards would either close the door or accelerate the sharing of information leading us to a decision about Michiana and me. So I requested a meeting with all partners (only Trott and Wortman attended) to disclose everything you could ever want to know about me and more:
- Personal financial details and history, net worth, needs, and goals
- Need $70,000 a year before tax for basic needs
- Goals attainable at $200,000 per year
- Practice financial information and client biographic details (excluding identifying information)
- Family details (disclosed specifics of questionable relatives)
- Health (disclosed Attention Deficit Disorder)
- Personality, work style
- Shared Kolbe A report of workstyles
- DiSC test. I had provided my own results, but agreed to take yours as well.
- Political beliefs
- Spiritual beliefs - My notes from that meeting. “Take my faith seriously, but in personal action, integrity, and life purpose and pursuit, not in outward displays or proclamation.”
Three factors convinced me to move forward anyway:
- As you know, prior to 2007, I was very active and recognized for efforts towards developing future generations of advisors. From the start of NexGen, I always tried to keep Nelson Henderson’s statement in mind, “The true meaning of life is to plant trees, under whose shade you do not expect to sit.” I was frequently impressed by the competency, initiative, and apparent commitment of younger Valeo advisors during my interactions with them. Each interaction further indicated that you were closer than anyone to solving the key challenge for our profession. I became increasingly interested in helping you develop younger advisors, maybe even reengaging professional involvement to bring exposure and more young talent to Valeo.
- I worried that establishing Valeo in Michiana with my very small understanding, could cost me and my family far more than reasonable or expected. And once started, I would feel responsible to see it through. Wortman said that I could not expect you to commit to anything on growing Michiana or compensation until you better understood the market and me. But he suggested I commit, and we would figure it out as we go. It seemed he was asking me to waive a right to request even the smallest validation, even if I paid an unexpectedly high personal cost and produced an unexpectedly large return for Valeo. We appeared to have reached an impasse. Wortman offered a compromise. He stated that if I ever believed the arrangement was no longer working, I would be free to leave and take any clients. I would only pay the removal fee for those clients that came to me as a result of Valeo’s investment in developing the Michiana market. As an example, he showed me a Valeo advertisement in a program for the Indianapolis Symphony Orchestra.
- Reading through the proceedings from Oxford v. Valeo et. al., I gained a profound respect for all of you. With the influence, resources, and personalities at Oxford, I was certain this was a painful learning experience, that you were also on a genuine mission to change the profession, that (unlike Oxford) money was the means not the end, and that I could trust you.
Over the next 5 years, I received the following compensation after health expenses (details attached).
As I shared with Fulk and Trott, my certain and immediate financial ruin in 2015, and a clear alternative through Obamacare (spurred by an approaching enrollment deadline), was the sole inducement to end my relationship with Valeo. Fulk was frequently updated on our health insurance expense issues and attempts to adjust over prior years.
- Approaching 2014, we knew our insurance premiums and recurring prescription costs would total $13,878. Kim picked up hours at work making her and the kids eligible for her school plan hoping to lower costs.
- Even with those changes, in late 2014, we learned that 2015 premiums and prescription copays would be $23,064, not including doctor or hospital visits, glasses, or dental.
- Looking at options, even when I assumed bringing in 3 new $10mm clients at 60% in Q1 (unlikely given my market and track record), we were almost certain to file bankruptcy.
- By leaving Valeo, and becoming eligible for ACA coverage:
- The minimum cost (insurance and prescriptions) would be $13,341 ($9,723 less),
- Our maximum out of pocket ($20,856) was still less than the minimum if at Valeo, and
- If 2015 income was worse than expected, I could change mid-year to increase tax credits resulting in lower premiums, capped at a percent of income.
Focusing so much on the financial repercussions of my relationship with Valeo is quite an enigma when considering how I came to a career in finance. At the end of my freshman year at IU, I had determined that if I couldn’t choose a major by registration, then I would return home and get a job until I figured it out. Late one night, I rollerbladed around campus sitting down outside each school I was interested in, to weigh the possibilities. Heading down the hill by the library across the road from the business school, I felt an urge to stop. Ignoring it, I continued down until reaching the corner by Collins where the impulse was much stronger. Reluctantly, I climbed back up the hill.
Sitting on a bench outside the business school I began to complain out loud. “I don’t want to be in business. My dad was cheated out of millions! All those people care about is money!”
I was surprised to hear God clearly say, “That’s why I need you here, because money is not your motivation.”
So if you didn’t believe my email in 2009, let me reiterate, money is not a motivation for me—making it or losing it. Yet it appears to be a primary point, especially in my discussions with Mr. Hull. Quality time with (and providing for) my family, obeying God, and my integrity matter. There are few people I respect as much as my father for the integrity he displayed when cheated out of millions. Even if he is never able to fully retire, he will always have my utmost respect.
At the beginning, I intended to propose a settlement. But God clearly and directly told me that I was to stop and wait and watch him fight for me (details in a future post). I knew it would result in a lawsuit, which brings us back to your interest in settling.
You may know that in Jesus’s day, the tunic was often used as a pledge by the poor against a lawsuit.
After much prayer and consideration, I believe God wants me to fully submit to his appointed authority on this matter, the Court. If the Court rules as I expect, I will, for the joy set before me, give you my cloak as well. After considering how your Oxford suit informed my opinion about you, I am not comfortable with what someone may assume about me if learning I was sued, we settled, and no other details exist. I would rather have all my actions publicly known, and face the necessary consequences for wrongs the Court finds I committed.
Lastly, I need to ask your forgiveness. I now realize I was never supposed to file a complaint with the EEOC. At the time, the deadline for filing a discrimination claim was nearing, I was feeling quite intimidated, and did not wait for direction from God when he already told me to stop and wait. I do not intend to follow up on it. I hoped that since I didn’t sign and return a paper from my initial interview that it never went any further. I am so sorry for any inconvenience, stress, or expense this caused, and am thankful that they chose not to pursue the matter.
Aaron
2009 Acceptance Email
To the partners of Valeo:
It is with great anticipation
that I offer you the attached signed employment agreement. Because of my
respect for what you have created, until I feel comfortable that I have an
intimate working knowledge of Valeo, it will be a few months of hands-on
learning before I am comfortable giving much input, unless carefully worded. Ownership
is the one issue I must address now. I have come full circle. At first, I was
unwilling to consider any organization without a clear ownership track to avoid
making someone else wealthy at my net expense. I relented when John Wortman
helped me understand that I can leave Valeo with clients should I ever feel I am
not treated fairly. But more recently, I am considering the implications if Valeo
experiences additional and extraordinary benefit from my contribution to the overall
entity above that of other advisors that cannot be bought out.
As a partner, each of you
understands. Contributing similar value to each of you above your client
practice would be unreasonable in my current compensation structure. As you
know, John’s wife was gracious enough to interrupt the sacred family vacation
to meet me in Moline. You do not expect John much less other advisors to make
similar sacrifices for potential hires. But John made the effort for your
benefit and his family’s.
Yet my personality will not ignore
opportunities to create scale, and connect like minded people to benefit others.
Because of my respect for Valeo, you will have the opportunity to take
advantage of me in this. If so, after making an unusual contribution for some
period, I will likely become discouraged and blame myself for not having an
acceptable incentive in writing beforehand. I could even become bitter, and
subconsciously subversive. For the health of Valeo you would need to get rid of
me, and I would understand.
The more positive alternative is
that once you are comfortable with me personally, you consider the value I am
providing as it happens and ensure ownership incentive is created that rewards
the current value and motivates further contribution. Financial reward is not
my motivation, even though it is the accepted measurement. I will view any
reward that has an appearance of inferiority as just that. As I shared with
Wortman and Trott, I am innately driven to pursue acceptance with the highest
level of the most productive communities that align with my values by an
understood standard. If I discover that the highest level is impermeable, I
have no motivation to exist in that circle at all. The bottom-line is (without
compromising my values) tell me what you want, and I will deliver it and more.
I would be concerned if
ownership or even the promise of it was handed out without merit. But I realize
with the attachment to this e-mail I am forever waiving my right to ask from a
position of equality, unless on a negative basis of threatening to leave, but
only with the right to buyout clients, not systems, reputation, other advisors,
offices, or markets. I have seriously considered growing Relevant to the point
where ownership would be an appropriate request when joining. So know this, my
assessment is the Valeo ownership community is worth pursuing, even at the risk
of inferiority, when deserving of equality.
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