By Steve Garmhausen

One of the services that resonates the most with Rose Advisors' wealthy clients doesn't involve picking a stock or adjusting a financial plan. It is educating clients' children, and sometimes their grandchildren, about money. "The older generation were good savers and good investors," says Patrick Fruzzetti, who leads Rose Advisors, a Hightower Advisors practice in New York with $1.7 billion of assets under management. "They want to pass that along, and an advisor can do it effectively because it's not just mom or dad telling the kids what they should do."

Speaking with Barron's Advisor, Fruzzetti, who is among Barron's Top 100 Independent Advisors , describes the process by which he took the leadership torch four years ago from Pamela Rosenau, a Barron's Hall of Fame advisor who was retiring. He reveals why he is a fan of gold but not crypto. And he explains how having an ownership mentality can be a powerful career booster for young advisors.

Where are you from, and how did you get into the business? I grew up in a suburb of Boston, the youngest of six kids. My father read The Wall Street Journal at the kitchen table every morning, and that got me interested in the markets. My dad ran his own family business, but he was very much an investor, a very focused, long-term investor. My oldest brother was in the business, and he handed me a copy of One Up on Wall Street, by Peter Lynch, when I was around 11 years old. So it was just sort of in the blood. I went to Babson College in Massachusetts, a small business school that's very entrepreneurial in nature. And from there, I moved to Wall Street for my first job out of school.

Describe your role at Rose Advisors. I am the managing partner and the chief investment officer. I run the team, and I'm responsible for all business development and portfolio decisions. My entire career has been in the financial services industry. I started at Lehman Brothers and later worked as an analyst for a private family office. I've been at Hightower for almost 15 years. I initially worked with my now-retired partner, Pamela Rosenau, and in the latter years of her career we ran the practice together. We executed a successful transition plan for me to take over the business, and I've been leading the practice for four years now.

Who are your clients? We manage money mostly for high-net-worth individuals, although we do serve some nonprofits and endowments.

How did you prepare for your current role? At times, it was trial by fire. I was passionate about investing in companies, and many clients were interested in talking about the ideas in the portfolio. So I started to create relationships from there. I think once Pamela knew that I could advise clients, it took its own path. I managed the New York office, because Pamela was in another area of the country. I give her a lot of credit because she always said that you want the mentee to be more successful than the mentor. That's the sign of a good mentor, and I subscribe to the same philosophy. Ultimately our relationship was built on trust, and we transitioned the business over time.

How long was the whole succession process? The first five years was an incubation process, if you will: getting used to the clients, getting used to the business. After, say, year five, we began creating a succession strategy. From the very beginning, I wanted to be incented with equity. So I had an ownership mentality. We put certain succession planning pieces in place, but it honestly took on its own life as Pamela began to speak to clients about it. Even though she didn't necessarily know the timing, she'd say, "Patrick's my successor." As a [transition], it was seamless.

What size would you like the business to be in, say, three years? I look at the longer-term picture. So a great goal would be doubling the practice in the next 10 years. In three years, maybe it would be a third bigger or something along those lines. If I can double it in seven years, I'll feel even better. And we need to grow the team if we're going to scale. We're a team of six now, and are likely to add another head in the next 12 months.

Is human capital your biggest business challenge? It generally is. I do pride myself on employee retention. I feel like we're always lean, and that's OK. It's almost like a part of our all-hands-on-deck, wear-multiple-hats type of culture. Not every single person wears every hat, but we do have the mentality of being able to do that, and that's the culture I've built.

What would you say are a couple of the keys to your own career success? Having an ownership mentality is very important. You own the business and you manage it as such. Being intellectually curious. And apart from having a true passion for the business and capital markets in general, you need to be able to work well with people, both employees and clients. Another key is treating clients' funds and finances as if they were your own.

When you look at the market now, where do you see investment opportunities? We've seen the cost of capital drift higher, i.e., interest rates have moved up. So it has sort of reset the bar for a required rate of return. There are still opportunities in the equity market without a doubt, but whenever there's a change in the cost of capital, there's generally a shift in leadership in the market.

Given that, what kinds of stocks do you expect to become more attractive? Stocks that are currently generating predictable and growing cash flow. We are going to have continued inflation. So we generally want anything we own to be able to perform with balance in an inflationary environment. We want companies to be able to have pricing power.

You like gold for client portfolios. Can you talk about why? I've been long gold for the past three or four years, even when it was unpopular, and that has helped offset some of the risk in the equity portfolio. I think if you own stocks today, it makes sense to own some gold. I think you will increasingly see gold price in the volatility and policy uncertainty across global markets, including currency markets. I think gold helps alleviate that, not to mention that it helps hedge currency debasement over time. And we do also offset that public equity volatility and risk in the credit markets with public bonds, and to some degree, with private credit.

Crypto assets do seem to be finding their way into client portfolios. What's your position on crypto? I don't own it in client portfolios. I think it's still in a speculative phase. Just look at some of the examples -- the Donald and Melania Trump coins. It's also Dogecoin and everything else that just came out of nowhere. I do believe in blockchain technology, and think it's going to be a part of the future. And Bitcoin has a first-mover advantage, no question. When any client says, "Hey, should I own some crypto?" I say, "Look, I'm not going to purchase it for your portfolio, but if you'd like to take that risk, knowing full well that it could be extremely volatile, by all means do so." They have the freedom to open one of these digital wallets, invest, pay attention to it, and learn something about it. Most people who are speculating on crypto know nothing about it. They just think it's an asset that's going to continue to go up, and in reality, it's like going to the casino.

How has Rose Advisors changed over the years? When I started, there was very much a focus on the investment strategy: This is how we invest, this is why we're interesting. Over the course of my nearly 15 years here, we've developed so much around financial planning. We dig deep to develop really cohesive and well-thought-out financial plans for our clients.

Another development that has resonated with clients is that once we've built trust with the patriarch or the matriarch, we do a lot of education with the next-generation client. Next-generation advisors today should be educating the next-generation client; that's part of our practice and something we're really good at. Clients really appreciate it because they worry about how their kids and even their grandkids are going to be financially. The older generation were good savers and good investors. They want to pass that along, and an advisor can do it effectively because it's not just mom or dad telling the kids what they should do.

Are you mentoring a promising next-gen advisor as Pamela mentored you? Nick Rogers is a managing director and next-gen advisor with whom I've worked the entire time I've been at Hightower. I definitely recognize him as a co-manager of the business from a strategic standpoint. Hightower has a program called the Hightower Center for Leadership, which is about identifying next-generation advisors who could potentially participate in management of the practice down the road. It's an 18-month, simulation-based leadership program. The next-gen advisors in the program work as a hypothetical firm on case-study projects. I'm a mentor in the sense that I can observe what's going on and talk about it with Nick.

You have a demanding job. How do you relax and recharge outside of work? Well, I have five children. That keeps me busy, but it also keeps me energized. And while it may not necessarily relax me physically, it does relax me mentally, because it changes the mind-set. And I've always been an avid runner. I can go out for a run anytime of the day. I grew up running in Massachusetts on snowy winter days, and I can still lace up the shoes and go run four or five miles, no problem.

Thanks, Patrick.

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March 11, 2025 08:00 ET (12:00 GMT)

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