IF THAT HAD BEEN ALL WE FOUND, it would simply have been a slip-up, and a lesson learned, by a top-notch research organization. But there was more to the Wanger OmniWealth story, and Wanger wasn’t the only listing that raised questions.

Wanger OmniWealth, it turns out, paid FOX for its profile. FOX members who were on the list received a four-screen Internet profile for free; nonmember firms with less than 50 employees paid $4,000 for this “extended” visibility; firms with more than 50 employees had to pay $6,000. The Wanger firm paid a pre-launch discount on the $4,000 profile.

All firms on the list could get a “basic” one-page profile for free, but a trawl down the list reveals that the few firms that did not buy an ad — or weren’t paid-up FOX members — were shunted to the back of the list. The paying customers were listed alphabetically. Nonpaying customers were tacked on at the end of that list with little more than their address, telephone number, and Website posted.

In fact, two-thirds of FOX’s leading advisors are FOX clients. Hamilton originally told us it was natural to start the new list with firms that had a relationship with FOX, but it was her hope that, over time, other firms would submit to the rigorous vetting. Firms definitely did not have to be a FOX member to get on the list. “I didn’t build this tool to make a lot of money,” Hamilton says. “I built this tool because wealth owners need this information.”

Yes they do. Vogel Consulting is a multifamily office that is solely owned by Rhona Vogel; it sells independent financial advice. The firm is a paid-up FOX member that made the Leading Wealth Advisors list. According to its April 2012 regulatory filings, Vogel Consulting had $1.09 billion under advisement and some 50 clients at year-end 2011. Over at FOX, meanwhile, Vogel Consulting is claiming $2.5 billion assets under advisement as of the same date.

Now, a brief word to the uninitiated: The family-wealth industry is rife with squishy definitions. Some numbers quoted are regulatory, defined as “assets under management,” or funds actively managed on behalf of clients. Other times firms talk of “assets under advisement,” which can mean a number of things. Some firms define assets under advisement as any amount of wealth the client owns, whether managed by their firm or not, on the theory some advice the firm might give one day, directly or indirectly, could lead to a change in the client’s overall wealth. This distinction between assets under management — which is real — and assets under advisement, which can be theoretical, is very important when sizing up a wealth-management concern.

Back to Vogel Consulting and its FOX-reported assets under advisement. Hamilton, when pressed, said that Rhona Vogel advises a lot of business owners with large chunks of their wealth tied up in their firms; the “assets under advisement” that FOX reported on its list was in fact the “total net worth” of all Vogel’s clients, not to be confused with her reported “assets under advisement.”

But wait. Richard Kollauf, director of both client services and compliance at Vogel Consulting, tells us “total net worth” is not right either. The FOX published assets under advisement for Vogel Consulting is actually the figure for their clients’ “closely held companies that we advise on,” a rather loose definition that to our ears also sounds like it is open to many interpretations.

Houston, we have a problem. This is more than just a funny-numbers game. It’s about the transparency of a major segment of the financial world, about investors having reliable information. In the end, Hamilton agreed the FOX-reported Vogel figure was confusing. In the future, she said, “we will put more footnotes in” to explain what FOX’s asset numbers are actually representing.

But assets aren’t the only problem. Claims of negligence against Vogel and her firm were filed by clients Robert Reinhart and two trusts of the Gerlach family, who separately and independently in 2009 and 2010 claimed the Wisconsin-based wealth advisor had put $2.75 million and $1.15 million, respectively, into Greenwich Sentry and Rye Broad Market Prime, firms feeding assets to Bernie Madoff’s fraudulent hedge funds. The Gerlach trusts ultimately settled with Vogel in April, after the case was dropped without any admission or denial of wrongdoing. The Reinhart case is pending.

“Anyone can sue anyone at anytime for anything,” says Vogel’s Kollauf. In the pending Reinhart arbitration, he said, “we expect no liability to be ascribed to Vogel.”

DOUG BLACK, FOUNDER OF SPRINGREEF PARTNERS and the former chief operating officer of UBS Private Wealth Management in the U.S., is an independent advisor who helps families pick through these sorts of quagmires, teaching wealthy clients how to ask the right questions of their asset managers and advisors. He is alarmed by cases like these: “It’s certainly not something we see among great advisory firms.”

He adds that FOX, publicly presenting its “certified” list as the careful result of rigorous screening, “absolutely should be held accountable for the quality of the firms on the list and the accuracy of the data they present.”

Hamilton defended Vogel Consulting’s position on FOX’s list of leading advisors. “The investment process that was used by the Vogel organization” at the time of the Madoff-related claims has been completely “re-engineered” with the help of an outside advisory firm. “They have corrected the problem,” said Hamilton. Vogel confirmed it had changed its processes.

Becoming a top-notch multifamily office is a work in progress, requiring constant course corrections. But before singling Vogel out as the best of the best, it seems prudent to wait a significant period of time to ensure that its new monitoring system has really proven itself to be reliable. That’s what an experienced family would do.

FOX could best serve its important industry role by demanding clarity on behalf of the families it serves. GenSpring FamilyOffices, founded in 1989, is also a FOX member. Its FOX profile on the starred list claimed the firm’s assets under management were $10.3 billion, assets under advisement $20.7 billion, and it had a three-year compound annual growth rate in assets of 39%. According to GenSpring’s regulatory Form ADV, and Financial Advisor magazine’s 2009 ranking of independent advisors, we calculated the U.S. firm (not including its much smaller international affiliate) had a 3% fall in assets over three years, not a 39% jump.

When Penta spoke to Hamilton back in June, she told us her team carefully scrutinized wealth advisor firms’ assets in an effort to determine their financial stability. FOX was looking to see “how much is going out the back door as well as coming in the front door” before deciding if firms were good enough to go on the FOX list.

Our calls again prompted some scrambling. “Since we submitted the numbers to FOX,” a GenSpring spokesman wrote us, “our compliance and finance departments have recently changed the way we internally calculate AuA and AuM based on SEC guidelines.” GenSpring now says that as of May, 2012, the two firms have $17.8 billion in assets under advisement, 14% less than the $20.7 billion it previously reported to FOX.

Which gets us back to FOX. More unsettling about FOX’s list is a small-print disclaimer on its Website: “The listing of any firm in the Advisor directory, as well as any related profile, presentation or other information on this site, does not constitute a recommendation or endorsement by FOX of any firm listed therein.” So what about all that vetting and qualitative analysis? Hamilton says that the disclaimer was posted on the insistence of her lawyers, and we shouldn’t read too much into it. Whatever.

Barron’s struggles with the messy issues of these lists all the time; it’s easy to make mistakes. But, in this case, there is a blatant and built-in conflict of interest. The lengthy FOX profiles of the firms — appearing to the general public to be intelligence culled from FOX’s careful and “editorially independent screening” — are in fact little more than purchased ads, in one form or another. They should be labeled as such. Hamilton now says she will put a little box at the top of the list’s page that says something to that effect. Chalk that up as one small win for the transparency movement.

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