Mike Schwenker, the producing manager for Sorrento Pacific at Four Points Financial, the broker-dealer unit of Farmers and Merchants Bank in Burlington, Iowa, signed on in March 2006 to resurrect a dying program of just $6 million in assets. That's just one reason he is known in his community as the guy who'll lend a helping hand—and have fun doing it. Here's how the advisor takes his charitable spirit to the no-investor-left-behind philosophy of a brokerage program that wouldn't exist without him.

When Schwenker signed on to lead the program, the bank's existing advisor quickly left, taking as many clients as she could with her. To make matters worse, Schwenker wanted a paperless office and the bank's third-party marketer at the time, Investment Centers of America (ICA), didn't yet have that full capability. These dual upheavals halved the program's client list to around 100. "I was new here, I was changing broker-dealers and I had the former rep taking accounts," Schwenker sighs. "I had to spend a lot of time talking to clients about what was good and being honest about what was not so good," about the program.

A $6 million book of 100 clients isn't much for a third-party marketer (TPM) to get excited about, but Sorrento, which was then only a year old, offered the technology Schwenker wanted and took the bank on. "I needed a lot of help and attention and I knew I'd be a project for someone," he says. "I wanted a paperless office and to be able to interface between trading screens, customer notes and calendars. I didn't make the change just for the sake of it." Schwenker interviewed eight or nine TPMs and Cambridge, a large broker-dealer. "Everything we were looking for Sorrento had," he says. "If we went to them today with $6 million, I don't know if they'd be interested, but they were starting from scratch at the time too."

Over the next five years, Schwenker has increased the program's assets by some $10 million a year, to $46 million, despite the financial crisis, with the help of just a junior advisor, Brandon Kipp, a licensed banker and a sales assistant. He's projecting that the program will hit $100 million by 2016. By contrast, the bank's trust department has managed a little under $100 million since 1961.

The brokerage now has 600 clients, although many accounts are small. "I have an awful lot of people with small accounts, although I'm just as passionate about $50 monthly contributions as I am a $1 million account," Schwenker says. His client demographic varies, from small-business owners to young couples to families, blue- and white-collar workers and a handful of millionaires. Mostly though, like Schwenker, "they're good, hardworking Midwesterners who tell the truth in good times and bad."

A Wage Slave?
That folksy bonhomie is a mainstay of Schwenker's success. He landed his job through community involvement on a number of boards including the Lion's Club, where he met his current boss, John Wagner. (The Wagners became good friends and introduced Schwenker to his wife.) "He told me he wanted to revive this dying patient," Schwenker says of the program. Drawn to helping those in need and wanting to work with Wagner, he took the job. Schwenker previously spent a decade at North Western Mutual and was manager of Catholic Financial Services' Iowa territory.

Another attraction of the job for Schwenker was a steady paycheck. Brokerage is part of the trust department, which Wagner runs. Both Schwenker and his junior rep are paid salaries as employees of the bank, with the prospect of an annual bonus depending on how the entire group performs. "In a small community it can be tough to be on commissions," says Schwenker of Burlington's 20,000-strong population. "A salary plus an annual review is what works for us in Southwest Iowa!"

While they sell commissions, the revenue goes to the bank instead of to Schwenker. "Many banks have tried this unsuccessfully, but for us it works. We're motivated not by the dollar, but to do the right thing by our clients, and that wears well with them."

That has also helped abate the usual territorial rivalry in banks between the trust and the brokerage departments. "Maybe a trust client will be more suitable for us and maybe we have a client who needs help paying bills or passing on assets," Schwenker says. "Many brokers would hang on to those clients, but we're salaried, so if a client needs trust, we'll move the client to trust. We don't have the ability to pay clients' bills or help get them into assisted living, but trust does."

For example, Schwenker had a couple in their seventies who had run a successful farm and rental business. The husband kept his stock certificates in a lockbox but was past following their progress. Their bigger concern was how to pass on their significant assets to their five kids. Schwenker referred the client to Wagner, who formed a limited liability limited partnership (LLLP) for the family and set up a series of trusts.

"Little did we know that a few short months after re-titling and moving all these assets that John [the husband] would pass away," Schwenker says. "Now several years later, we are still working with Carrie and she has started to have some health issues of her own and so we are working with her and her son Don to make sure we are providing the proper amount of money to take care of her needs and to keep the funds invested for all parties to the LLLP. We hope to work with them for many years to come."

Another client was a small private school running on a tight budget that pays staff less than they would earn at a public school. It didn't have a retirement plan in place either, but Schwenker and Kipp worked out a way for it to offer a low-cost 403(b) plan for all full-time staff. "With the size of the salaries, and of the school, this plan is not a significant source of revenue for our firm, but we continue to help because, like all of our clients, these school employees deserve the best service we can give," Kipp says. "They now have fund-raising efforts that have enabled the school to match a part of the employee contributions."

Schwenker has a diverse product mix: 44% mutual funds, 19% stocks, 15% bonds and CDs, 12% variable annuities, 5% money markets, 3% fixed annuities and 1% life insurance and long-term care. "We research Morningstar to find the best of the best and then we buy a lot of it," he says. "That way we can spread risk across the lot for clients' diversification."

While Schwenker's clients weren't immune to the downturn, they didn't do that badly over "the Lost Decade." "Franklin Templeton and American Funds have actually been making money overall over the past 10 years," he says. "Quality investments and a long-term outlook can insulate people somewhat in a market downturn."

Schwenker's ongoing community work stands him in good stead with clients. He set up the Octoberfest celebration in Burlington 11 years ago. "A lot of us here have German heritage and it's a way to raise money for the needy," he says. They gathered $100,000 for various local causes.

A big fan of Jimmy Buffett, Schwenker also set up a local Parrot Club. "We now have 50 members, so I get together with other Buffett people and engage in environmental causes, like river cleanup. I try to be a leader and make a difference, and my clients certainly don't look down on that." While he doesn't solicit business through his community projects, "people would rather invest with a good person than someone who they're not sure what his motives are," he says.

It's also key to have fun. Last summer, Schwenker hosted an old-fashioned cookout in the bank's parking lot, inviting the entire client base for burgers and hot dogs. "It was nothing fancy, but it was heartfelt," he says. "At the one we had last summer there wasn't a place to sit!"

Schwenker plies his clients with treats in meetings too. "I'll bring jelly beans to annual review meetings and they'll try three or four." He says the marshmallow and popcorn varieties are particularly popular. "We don't want customers who are solely interested in returns, but rather clients who value us as much as we value them because they know we'll put them in quality investments and do the right thing for them," says Schwenker. "If a customer leaves, I don't lose sleep. But if I lose a client, I'd be very concerned. We don't lose clients!"

Name: Mike Schwenker
Bank/TPM: Farmers and Merchants Bank/Sorrento Pacific
2010 production: $212,000
2009 production: $170,000
2010 AUM: $46 million
2009 AUM: $36 million
Product mix: 44% mutual funds, 19% stocks, 15% bonds and CDs, 12% variable annuities, 5% money markets, 3% fixed annuities and 1% life insurance and long-term care
No. of clients: 600
No. of branches: 5

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