Dennis Gibb's business with Native Americans keeps growing, and so do his ideas about how financial advisors should be paid.
Two or three years ago I wrote an article about
Dennis Gibb, a financial advisor in Seattle who specializes in
financial planning for American Indians or, as Gibb says, "Natives."
The story examined the many ways that planning for Natives differs from
planning for those of us who now call ourselves Americans, chiefly
because of the treaties and other specific rules that apply only to
Natives. As a side issue, Gibb talked about how he was working on
setting up a new compensation model using retainer fees.
Is there a planning market for Native Americans?
Some individuals receive annual payouts of $100,000 and more from
shares in casino operations. As a group, they own 43.7 million acres of
land in the United States, land they're eager to develop if only they
can find business partners that will respect them, understand their
priorities and cut them a fair deal. Given the potential opportunities
here, Gibb's knowledge seems to me a scarce and valuable commodity.
Gibb has been developing his specialty since the
early 1980s, when he worked for Morgan Stanley in San Francisco. He
helped the Coville Confederated Tribes in Nespelum, Wash., get out of
some ill-advised mineral leases and get the money it was due from an
oil company. Gibb never got paid for his 100 hours of work. But William
White Dirt, a shaman of the Northern Cheyenne, designed a logo for Gibb
because Gibb had earned distinction as a warrior by "counting coup,"
that is, bravely standing up to the enemy.
When I came across Gibb's firm-Sweetwater
Investments-on the Internet the other day, I felt curious about how his
Native business had grown and took a look at his Web site, represented
by the logo William White Dirt designed so many years ago. Below it
were these words: "This is a representation of a Native American
warrior's shield cover. The blue arrowheads containing the eyes
pointing to the nexus of the four cardinal directions represent a
person always seeking harmony. The four feathers indicate coups or
great victories. The logo was presented to the firm as a remembrance of
work during a complex financial transaction."
It was the only mention of Natives on the site. Why?
Had Gibb given up on the Natives? Not at all, he says. Of the $1.5
billion he manages, $1 billion belongs to them. "It's a major part of
the business, but I don't want to put the flag up because then everyone
in the world wants you to help them sell swampland in Florida," Gibb
says, explaining that for marketing guys, the old axiom, "There's a
sucker born every minute," applies doubly to Natives. Because they are
outsiders to American society, and often naïve about how the financial
markets work, Natives are the perfect pigeons. Or so thinks the type of
salesman we all know, who believes the perfect target is someone who
doesn't understand what he's buying-the better to eat you, my dear.
Few Americans who try to work with Native tribes
understand their culture. "We value individual work and achievement,"
Gibb says. "Native Americans come from a spiritual continuum, an almost
communist environment where daily life and the sacred are not separate
but the same." When Americans try to introduce a Calvinist culture, it
can clash severely with this view.
Gibb cites the example of a mining operation
developed on Indian land in Alaska that came to a screeching halt when
the workers took two weeks off to go whaling, a cultural and spiritual
ceremony that is part of their calendar of celebrations. "They just
want to go and get drunk," the mining officials told Gibb. But the
tribespeople were willing to give up the entire deal rather than give
up their whaling ceremony. The event is part of who they are, part of
their sacred tradition, says Gibb. Ignoring or failing to respect
Native American culture results in the failure of many attempts at
economic development.
Gibb thinks it's possible for Natives to develop
their land and still keep their sacred traditions. The major problem is
that both sides needed for such projects to go forward-U.S.
corporations and/or developers, and Native tribes-believe that they
will change the other. "General Motors is not going to change its ways
for a Native American tribe, and the tribe will not give up 25,000
years of culture," he says. Instead, he suggests that each side
identify its own strengths and weaknesses.
Natives make decisions differently, too, often considering the tribe
first rather than the individual. They possess intangible or unusual
wealth in the form of family traditions and artifacts that hold great
value and must be passed on properly to the next generation rather than
sold as collectibles.
Gibb sees protecting his Native clients as part of
his job as advisor. When a salesman calls Gibb and tells him that he's
found the perfect product for his Native clients, Gibb typically
responds: "This is great for Indians because they're stupid, right?"
Then he asks how much money the salesman has raised from outside
capital. Typically, the answer is "nothing."
Gibb gets mostly hostility from non-Indians when
they learn he works with Natives. "I've had people tell me they don't
want to do business with me because I do business with Natives," he
says. One politician asked him: "Why can't they just accept that they
are conquered people?" What most people know about Indians comes from
Hollywood, from Tonto and Chief Dan George. "They've never met a
native, or they picture someone falling down drunk," Gibb says.
But now Gibb reminds me that when we first began
talking some years ago, it was about how advisors can best rationalize
their business and get paid for their accumulated knowledge and
expertise as well as the work they do. Gibb doesn't believe the
assets-under-management fee accomplishes that. That's because the way
to increase revenue from AUM fees is not to gain knowledge or
expertise, it's to increase assets.
A better model, Gibb says, is to offer highly
customized advice covering a broad spectrum of topics. "But though we
set ourselves apart from investment managers in the range of services
and value we offer, we pay ourselves based on their commoditized
model," he says. The fee level is constantly under pressure and the
client relationship is at risk of being dependent on investment
performance. So Gibb has devised a hybrid model, which is based chiefly
on retainer fees.
He keeps track of tasks he performs for a client
over a year. Perhaps the client wants to know if a 529 plan is the best
way to save for college. How does it affect the child's ability to get
financial aid? Then he wants you to speak with his mortgage broker.
Gibb uses a software program called Qlockwork, which provides a
calendar that lays over the top of Microsoft Outlook and shows, for
example, whom you spoke with on the phone at 2:30 p.m. on March 26.
When he meets with clients at the end of the year, he says: "Here's how
much time I spent on you. That's OK. That's what I'm here for."
Gibb says that his job is "to eat other people's
stress, and I think I should get paid for it." He wants to be a
fiduciary, to be looking at each client's situation and researching
what is best for him. Although his business resembles what many
advisors call a "multifamily advisor," Gibb likes to call it a "trusted
family advisor."
What's next for Natives? When Gibb began working
with them in the early '80s, there was no Indian gaming. There were no
casinos on reservations. Native unemployment was 50% to 90%. Of every
dollar that came onto the average reservation, 97 cents left. Natives
lived "a pretty spotty existence," he says. "No one wanted to work with
them."
Now they are riding high with 500 casinos and gaming
revenues of $25 billion. "Some states say it is here to stay," Gibb
says. "Other states fight gaming, and the tribes are fighting with each
other." There is well-funded opposition to gaming, he says. "It is a
big enough income source so you have management issues." Some of the
questions he asks: "Are we facing saturation? How do they
reposition themselves? What are tribes going to do with the money?"
Gibb says he sees tribes getting more sophisticated.
"But I don't see the kind of investments I would make if I were sitting
on this huge cash flow."
Mary Rowland can be reached at
[email protected]. She has been a business and personal finance
journalist for 30 years and has written six books, including two for
financial advisors.