In the five years since Wells Fargo & Company completed its acquisition of Menomonee Falls-based Strong Financial Corp, many of Strong’s former executives and employees have moved on to take prominent positions with other high-profile financial service firms in Milwaukee.
Several of these business leaders fondly remember their former employer, and many say they learned important lessons in business and leadership directly from company founder Richard “Dick” Strong.
Some of the best-known financial services firms in Milwaukee have significant numbers of former Strong Financial employees, including Marshall & Ilsley Corp., Robert W. Baird & Co., Northwestern Mutual Life Insurance Co., Stark Investments and others.
Wells Capital Management, a division of Wells Fargo, still employs hundreds of former Strong Financial employees.
Others have gone on to start their own companies.
Many of the former Strong executives still harbor bitter feelings about the accusations by former New York Attorney General Eliot Spitzer that brought down the company and sullied the reputation of its founder.
“If you look at what Spitzer was doing, he was going industry by industry, finding a really good target and hitting it hard. It would spread to other companies in that industry,” said former Strong executive Ane Ohm, now president of West Allis-based LaserNet. “The result was that a great company and great people were brought down so someone could be up for personal gain. It’s too bad, for lack of a better statement. Everything they said that happened, it all went through my area. I took this very seriously – and I can tell you we did nothing wrong.”
Dick Strong and the company never had a chance to tell their side of the story, largely because of the powerful public distrust of corporate management at the time, said former Strong executive David Braaten.
“There was such a powerful steamroller that was taking place with the headlines, the press, that you almost felt hopeless,” said Braaten, now president and chief operating officer of Partnership Community Bancshares Inc. in Menomonee Falls. “We didn’t have a fighting chance. No one was going to listen. It was tragic because (Strong Financial) was one of the most client-centric firms of its time.”
The firm and Dick Strong were accused by Spitzer of mutual fund market timing in the fall of 2003. Strong was accused of improperly personally trading in mutual funds that his company dealt with.
In May of 2004, Strong Financial Corp., Strong and two of his senior executives reached a settlement with the U.S. Securities Exchange Commission, in which Strong, the company and senior executives admitted to mutual fund market timing. The company paid $80 million in fines and disgorgements. Strong himself paid $60 million, and his senior executives agreed to smaller fines.
Strong and his two senior executives also agreed to lifetime bans from the financial services industry.
Strong resigned his position with Strong Financial Corp. in December of 2003.
By early to mid-2004, Strong Financial had reached terms to be acquired by Wells Fargo, and the deal was completed in 2005.
At the time of the acquisition, Strong Financial had more than $30 billion in assets under management and about 1,000 employees.
Strong Financial was known in the industry for finding, attracting and developing talented and motivated employees, and constantly challenging them to stretch their limits and learn new skills. Many of the firm’s former employees said the skills they learned at the firm have played critical roles in their careers.
“I feel really blessed to have worked with such a good organization, where you learned a great deal,” said Thomas Nolte, now senior vice president and director of institutional sales at M&I Investment Management Corp. “So many of my former colleagues have really made a big impact at their respective jobs because of what they took away from their jobs at Strong.”
Even when Strong Financial had almost 1,000 employees and many different departments, Dick Strong was known as a hands-on leader who spent time working with and in virtually all of the company’s functions. Employees who had ideas for new products or services were able to pitch ideas directly to him – and frequently would be charged with implementing them.
“It wasn’t an environment where you could coast through. It was challenging,” said Duane McAllister, now vice president and investment manager with M&I Investment Management Corp., who worked in the fixed income group at Strong Financial from 2002-06. “But with Dick, if you had an idea, you could have lunch with him, present it and bring it forward.”
Strong Financial also pushed high-potential employees into new roles and encouraged them to take on stretch projects that would help them develop into better leaders. Many employees were encouraged to spend time in different departments before taking on management roles.
For example, Corey Johnson, now head of equity trading with Wells Capital Management, was named assistant to the head trader at Strong Financial early in his career. While he did not believe he was qualified at the time, the experience was crucial in his early career development.
“I felt a little over my head, but in retrospect, it was the best way to learn and gain confidence in myself and figure what I could and could not do,” Johnson said. “The culture was one of throwing people into the fire, not coddling them too much. But there was a lot of training involved, kind of a sink or swim and see if they’re cut out for this kind of work and if they enjoy it.”
Many of Strong Financial’s former employees were able to land new jobs before the company was sold or shortly thereafter, which was a testament to the training they had received, said James Truog, now vice president and chief financial officer of Valuation Research Corp.
“I’d attribute that to the positive things they got to experience at Strong,” he said. “You were working around a lot of smart people. We were able to learn from those folks and apply those things in a post-Strong environment.”
A personal example
Dick Strong spent a significant amount of time working with employees on a one-on-one basis, said Leslie Lynch, now senior managing director of marketing communications and human resources at Chicago-based B.C. Ziegler & Co.
“(Dick Strong) told me that you should do something every day that makes you a little bit scared,” she said. “I remember that he said, ‘I am better tomorrow because I did something today that made me a little bit scared.’ What gets ingrained into you is this spirit of optimism – that we can do what we set out to accomplish, what we were trained to do.”
Geoff Mackey, now first vice president and private wealth management marketing director for Milwaukee-based Robert W. Baird & Co. Inc., agreed.
“When they identified someone who was hard working, energetic and did a good job, they gave you new opportunities in different areas that they thought needed new development,” Mackey said. “It was critical to making people good professionals because you never got stagnant. It’s reflective of Dick’s personality. He’s always pushing himself and others to try new things. He challenged you. He’d ask, ‘How do you do things better? How can we make the company grow?’ Strong taught us to think creatively and laterally, which has allowed me to work in marketing in other businesses and be able to adapt.”
Jackie Darr, now managing director of human capital and corporate operations at Stark Investments, only worked at Strong Financial for one year, but had several opportunities to connect with Dick Strong.
“Some of the things (learned) that I continue to use are the ability to identify and assess talent, what people’s motivations and desires are, and the ability to identify winners,” she said. “And, on the retail side, the importance of relationship management and focus on the customer.”
Other former Strong Financial executives say they learned important leadership lessons simply by watching Dick Strong in action.
“(Dick Strong) would call five- to 15-minute meetings. He would make decisions to move quickly and keep things going,” said Dennis Wallestad, now managing director and chief financial officer with Pershing LLC, a subsidiary of Bank of New York Mellon. “He always wanted to make every decision right, but he didn’t have a slow-moving bureaucracy. And professionally, the need to hire good talent and the impact of good talent cannot be underestimated. And when I find good talent, I go out and get them.”
Many former Strong Financial employees have gone on to start their own companies that have thrived since their former employer was sold.
In May, 2004, while Wells Fargo was finalizing its purchase of the majority of Strong Financial’s assets, Charles “Chip” Paquelet, a former portfolio manager of private accounts and hedge funds with the company, founded Wauwatosa-based Skylands Capital LLC, a firm that manages several hedge funds and private accounts, most of which were purchased from Strong Financial. The firm has nine employees. Eight of them are former Strong Financial workers.
Aside from most of its assets under management, many of the other operational aspects of Skylands Capital, from its marketing to client communications to office décor, came from Strong Financial, Paquelet said.
“Strong did such a wonderful job of screening people, and a lot of the leg work for what we have here was done years ago,” he said. “Dozens of things in here are right out of Strong – everything from the work stations to the wood paneling in (the conference room).”
Alan Krenke, who served as vice president of real estate development and corporate services at Strong until early 2005, was hired as president of NFC Consulting, a Milwaukee-based startup firm that offered continuing education programs for insurance agents and financial advisors. Krenke purchased the NFC Consulting that July and renamed it Quest CE.
Krenke said Dick Strong’s love for competition inspired him to run his own company.
“We’re a growth company,” Krenke said. “It’s about doing our best to fight, and always wanting to be the best.”
When Krenke bought the firm, Quest CE had five employees. Today, it has 26 employees and anticipates more than $2.7 million in revenue for 2010.
In 2005, Braaten, former director of U.S. and international trading and a member of the office of the chief executive of Strong Financial, and David Massart, former vice president of Strong Private Clients, the firm’s private wealth management division, founded Next Generation Wealth Management, which manages funds for high net worth individuals and families.
“Next Generation wouldn’t exist without my employment at Strong,” Massart said. “The amount of intellectual capacity that we saw in that building was incredible. I had never experienced anything that prior to it, and I don’t think I will ever experience it again.”
Jody Lowe, former communications manager at Strong Financial, left the firm in 2002 to start Lowe Communications, a Wauwatosa-based public relations and communications firm specializing in financial services clients. The boutique firm now has two additional employees, including Stephanie Truog, who became Strong Financial’s communications manager after Lowe left.
“I wanted to take my experience to the next step, to take what I loved and create something of my own,” Lowe said.
Susan Kessler-Scholl, a former manager in the human resources and 401(k) retirement plan departments at Strong Financial, founded Trails to Bridges, a fair trade business that sells goods made by artists and craftsmen in Third World countries, after she left the firm on Dec. 31, 2004.
“When I heard that Wells was buying the firm, I had a strong sense that God was calling me in a different direction,” she said.
Strong Financial emphasized hard work and keeping the customer at the forefront of the decision-making process, many former employees said. While the firm constantly pushed its employees to improve themselves and the firm, it also worked hard to make the company a good place to work.
“Dick was an egalitarian and everybody came along,” Lowe said. “When we took trips, it was everybody. Everybody who worked hard was given opportunities to succeed. We had access to all of the resources in the world. And if (Dick Strong) read something, and he thought it was important, he’d share it with everybody.”
The company had a monthly speaker series, featuring nationally known entrepreneurs and other dynamic people. All of the company’s employees were invited to listen to the speakers.
“Attendance was extremely high,” Massart said.
“Dick used to set ridiculous goals – beyond stretch goals – and sometimes we didn’t make them,” Ohm said. “I remember being disappointed and talking to him afterward, but how proud he was at how far we’d gotten because we stretched ourselves. By setting these crazy goals as a way to accomplish something, it gave us confidence knowing we can (accomplish things) because we’d done it before.”
Strong Financial also created opportunities for some employees to make lasting connections outside of the office.
While he was working at the firm, Michael Kops, now vice president of sales-private accounts with Heartland Advisors Inc., was named to Strong Financial’s Sales Leaders Club, a small group of high-achieving sales staff. The club members were invited to Strong’s cabin in Colorado.
“We spent the weekend talking about leadership and how you conduct yourself, where we got a feel for his attitude toward the client and the business,” Kops said. “I still use that stuff now.”
The corporate culture at Strong Financial was a unique environment that has not been recreated elsewhere, Paquelet said.
“From a guy who studies companies for a living, Strong was the most talent-rich organization I’ve ever seen,” he said.
Strong model lives on
Between 600 and 700 people still work in the former Strong Financial building in Menomonee Falls as employees of Wells Capital Management, said Jon Baranko, chief equity officer for the firm. Baranko started working at Strong Financial in 1992 and eventually was named its head trader.
“When Strong was acquired, we had $30 billion in assets under management,” Baranko said. “We grew across fixed income, money market and equity products to about $250 billion by Jan. 1, 2009.”
Since Wells Fargo acquired Evergreen Investments with its Dec. 31, 2008, purchase of Wachovia, Wells Capital Management has about $380 billion in assets under management.
“The Milwaukee office is one of our largest hubs, and Strong has been a critical component of Wells’ success,” Baranko said. “We have investment teams in 13 different cities that we manage out of Milwaukee.”
The building is divided into two service lines – Wells Capital Management and Wells Fargo Advantage Funds, the firm’s mutual fund entity.
Aside from the richly landscaped campus and many of the employees, the investment philosophy that Baranko learned at Strong Capital Management also remains in place.
“The investment model that (Dick Strong) established, the decentralized multi-boutique investment model is what we’re still carrying forward five years after the transaction,” Baranko said. “The idea is that if you get 10 smart people into a room, that’s better than 100 people trying to centralize everything. When we think of trying to put forth outstanding investment performance, that’s the model we use.”