‘Debt Whisperer’ Quits Morgan Stanley to Launch Securities-backed Loan Firm
A high-producing Morgan Stanley advisor has abandoned his brokerage career to start a business helping advisors understand the value of personal debt in client portfolios.
Thomas J. Anderson, 41, who said he generated some $3 million in trailing-12 production on about $300 million in client assets before resigning in April, has launched a Chicago-based firm called Supernova.
It sells “educational” software elucidating the hows and whys of how low-rate, non-margin loans backed by securities portfolios, as well as emerging-market and selected other forms of debt, can enhance returns for most investors and also is assembling a platform of financing connections with banks to fund the loans.
“This is a big shift in the industry,” Anderson, who had worked at Morgan Stanley’s Cedar Rapids, Iowa, office since 2011, said of brokerage firms’ urging advisors to service the liability side of customers’ balance sheets (loans, insurance and other debt) in addition to helping them grow their investment assets. “This is the fastest-growing, most profitable segment in the industry.”
He concedes that his somewhat contrarian view on the virtues of debt, which he has spelled out in two books titled The Value of Debt and The Value of Debt in Retirement, may be a hard sell in today’s Consumer Financial Protection Bureau-influenced environment.
Moreover, he is making his push just as Massachusetts’ state securities division has charged Morgan Stanley with sponsoring illegal sales contests to drive the sale of securities-backed loans. In an unsought dollop of publicity, the state’s complaint noted that Morgan Stanley encouraged its advisors to read The Value of Debt, which it said highlights how debt can be good for senior citizens.
“That’s kind of a curve ball that’s come along the way,” said Anderson, who declined to discuss whether Morgan Stanley, whose parent is a bank holding company, has been paying him through book purchases, or in other ways, for coaching the field on his theories.
Massachusetts regulators did not interview him in preparing their complaint, he said.
A spokeswoman for Morgan Stanley, which has said it will defend itself against the state’s charges, declined to comment on how it has been working with Anderson.
Supernova is initially aiming its sales efforts at regional and independent firms that are not owned by banks, such as Robert W. Baird, Edward Jones and LPL Financial, Anderson said.
Anderson insists that he is a level-headed proselytizer, saying that portfolio-backed loans and similar debt must be used conservatively and should never exceed 50% of a portfolio’s collateral value. “It’s a product that has to be used responsibly,” he said. “It needs guardrails around it for the advisor and for the consumer.”
His true personal reward will come when portfolio-backed loans have become so pervasive that Supernova will be able to pool them into securities for sale to hedge funds and institutions. “It’s the only captive asset class” left that has not been securitized, he said.
A University of Chicago MBA graduate with an undergraduate degree from Washington University in St. Louis, Anderson began his brokerage career in 1996 working with his mother, Julianne Smith, an A.G. Edwards broker, according to a 2014 profile of him in “On Wall Street” magazine.
He became an early adopter of securities-based loans when jumped to Merrill Lynch in 2002 at the start of a nine-year stint, realizing that his customers could save four to five percentage points by borrowing against their portfolios than by taking out a traditional bank loan, he said.