We taught people how to grow money.
We forgot to teach them how to get paid.

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Why the Money Orchard Exists

From THE MONEY ORCHARD: MONEY MAKING MONEY by Dennis Zaderaka

I spent forty years in the financial services industry. I am not an outsider with a complaint. I was inside it.

I knew Dick Schilffarth personally. He was on the E.F. Hutton team that built the wrap account, and in the industry he was known as the father of it. What I know about what the wrap account was, and what it was built to do, comes directly from him.

Hutton built it. Dick carried it everywhere else — out to the regional broker-dealers, and then to the independents. I worked at IAS, the firm he founded, and I watched the machinery up close.

So when I tell you what the wrap account was, I am not guessing and I am not theorizing. I knew the men who built it.

Here is what it was. For most of the industry's history, a broker was paid by commission — when the client bought or sold a stock or a bond. The bear market of 1973 and 1974 exposed the flaw in that. People stopped trading, and Wall Street's income stopped with them.

The wrap account solved it. One annual fee, a percentage of everything the client held, charged whether the client traded or not. Income became smooth and predictable. It was presented to clients as a breakthrough — an alignment of interests. We only do well when you do well. But it was built to solve Wall Street's income problem, not the client's.

And there was a second feature, one taught plainly as a selling point to stockbrokers. The wrap account placed a professional money manager between the broker and the client's money. When results disappointed — and given enough time, results always disappoint someone — the broker did not have to be the one who had failed. He could replace the manager. Fire him, and keep the account.

Stop for a moment and think about what that arrangement does. The person who sold you the plan is never the person who has to answer for how it turned out.

Eventually the wrap account got a bad reputation, so the industry stopped calling it that. It is a fee account now. Same structure, same fee, new name. Cerulli reported in March 2025 that more than 72% of financial advisors are compensated through fee-based models. Nearly everybody has one.

When I was selling these accounts, the fee bought something. We wrote an investment policy statement. We searched for a manager and matched one to the client — to how that particular person actually behaved about money, not just what he owned. The client had access to the manager. That was work, and the fee was the price of the work.

Look at what the same fee buys now. A model portfolio, built before anyone knew your name, assigned after a short questionnaire. The work left. The fee stayed.

So the question is not whether the fee is too high. It is simpler than that, and I cannot answer it for you: are you getting value for your money?

A client told me once: I want your advice, but I don't want to have to buy something in order to pay you. Some financial decisions have no product attached to them at all. So I charge a fee for advice. The plan is yours — you can take the plan anywhere to put it into effect.

My book The Money Orchard is a different way to look at investing — a story about an apple orchard that explains capitalism and investing. The orchard trees symbolize working capital, and the apples stand for income. We plant apple trees to get apples. Managing an orchard or an investment portfolio requires the same skills of knowledge, patience, and time to produce the fruit you want.

It organizes a person's whole financial life — not into products to be sold, but into something that can be understood: trees that protect, trees that earn, trees that grow. An orchard, tended, so that a person's money finally matches the shape of the life they are actually living.

That is the whole of it. That is why the Money Orchard exists.

Dennis Zaderaka
The Money Orchard: Money Making Money