We are having a hard time figuring this one out. Every year On Wall Street puts together several ‘Top 40 Under 40’ lists and they are widely lauded across the industry.
Both the publication and the inhabitants of the lists are celebrated, as they should be. But this year, one particular member – and his assets to revenue ratio – stuck out in a way that didn’t hit right.
Eric Englund, a 36 year old advisor from RBC in San Francisco, CA comes in on the list at number 14. Well done Eric.
But there is a problem. Eric claims assets of $155,000,000.00. Fair enough. But he then claims (and this is essentially the deciding factor when it comes to being included on the Top 40 Under 40 list) annual revenue of $3.9M. Whoa.
So doing a bit of math, which albeit is a bit difficult for this scribe – it seems that Mr. Englund’s return on assets rings in at better than 250 bps!! Come again??
Not only does this raise the proverbial red flag for being named to a list like this – and the applause that come with it. But generally speaking, and ROA of 250 bps on any book at any reasonable shop is going to draw the attention of compliance and management – or at least it should.
At best, a reasonable industry standard for return on assets managed is 100 bps; but for the best in the profession it is probably closer to 65-75 bps. NOT 250 bps!!!
Far be it from us to be the last and only word on how Mr. Englund conducts his business, what he charges, and the types of fees the products he offers incur. In today’s current regulatory environment there is no mandated cap on return on assets. But… yikes.
It may make some sense, if he hasn’t already been approached by management/compliance, to ease up on the ‘juice’. It isn’t a good look.