David Lerner Associates: History of the Company

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David Lerner

David Lerner was born on June 14 in 1936, a time when America was in the midst of a severe economic depression. Many people had resorted to soup lines, charity and welfare in order to survive. His father, Al Lerner, was a house painter, but work was hard to come by and he did whatever he could to keep the family housed and fed.  He shoveled snow, drove cabs, did odd jobs. They lived in a succession of fifth-floor walk-up tenements in the Bronx until 1941 when they moved into an apartment in Queens, which they shared with Al’s brother and his wife.

Although he was only five years old in December 1941 when Pearl Harbor was bombed, Lerner has vivid recollections of the incident and the shock and seriousness of the moment: America was at war.  The war created plenty of jobs and Al Lerner started work at the Brooklyn Navy Yard. The Lerner family’s financial situation improved and in 1942 they moved back to Bronx, where they lived for 17 years. 

Lerner was an extremely active boy, involved in sports and a rabid baseball fan. While he was playing baseball one day when he was 14 he started to feel weak and his legs gave out on him.  By that night he could no longer walk – he was diagnosed with polio.

Lerner was transferred by ambulance to Willard Parker Hospital on East 16^th Street where he stayed for a month.  Unfortunately the treatment for polio at that time was fairly rudimentary.  After the month he went to Blythedale Children’s Hospital in Valhalla, NY for rehabilitation of the affected muscles and attempted to regain some of the mobility he had lost from the disease.

Lerner resisted the idea of crutches or a wheelchair, but it was here at Blythedale that he realized he would have to adjust – the damage from the polio was permanent.  He determined to become adept at using the chair, and he did.  He even played basketball in it. Eventually the doctors decide that his muscle strength was good enough to put him in a leg brace and although it was difficult at first, he mastered this contraption too. It wasn’t too long before he was in a half brace, which made life easier.  However, his ankle had been most severely impacted by the polio, and it was only after surgery that Lerner could eventually walk without a brace at all.

During his later teenage years Lerner worked at several jobs after school and weekends.    In his senior year he began to plan his future and decided to go to college – the first one in his family to do so.  Influenced by his history teacher, Lerner decided to become a high school history teacher and thought that this would be his life.

Lerner achieved that goal and in 1960 he was teaching high school history and earning $4000 a year as a teacher.  He got married and soon realized that he would have to earn more to make ends meet.  His first avenue for extra income was teaching English to immigrants and second language English speakers. He also taught summer school that year.

In 1961 his wife Lois met a man who worked at First Investors, a mutual fund company, who suggested to her that if her husband was interested in earning extra money, he should come and see him.    Lerner’s initial reaction was negative – he was not interested in being a salesman. But that year extra jobs were scarce, so he went to the interview.

By the time the presentation was over Lerner could see the value of the mutual funds and he was excited.  He knew he could sell this.  He underwent training, got his license and started contacting people.  It took a while before he made his first sale, but he was on his way.  Lerner was mentored by Ben C. Kirsch, one of the successful managers at First Investors, who taught David that you don’t sell with knowledge, you sell with understanding.

By the late 1960s Lerner was teaching during the day and selling investments at night and he felt that he has taken the initiative and was working hard to reach his goals. He noticed that many of the teachers he worked with were unhappy with their situation, but did not take any steps to improve it.  This led to his philosophy that there are two kinds of people: those who make things happen and those who complain when things are not handed to them, but do nothing.

David Lerner Associates

David Lerner Associates started out as one man working from a basement office out of his house, progressed to a single office in Jericho and is now a company of roughly 400 employees with two buildings at its Syosset headquarters with satellite offices in Princeton, Teaneck, White Plains, Westport, and Boca Raton.

Lerner was teaching during the day and operating the business from his basement office. In the fall of 1975, Lerner decided to leave teaching and go into the investment business full time.  On January 16, 1976 David Lerner Associates opened its doors at 390 N. Broadway in Jericho, NY. The business was started with $2500 borrowed from a credit union.  Once the office was established, he began recruiting people to work as investment counselors.

Market conditions in the late 70s led Lerner to re-assess the value of mutual funds. “The late 70s taught me a very important lesson: I realized that the stock market is no place for your rent and grocery money,” says Lerner.

After much thought, and thorough investigation into results and performance of various investments, Lerner decided on tax-free municipal bonds.

By 1980 the firm had grown so much, they could no longer cope with the regulatory load in-house and they outsourced this work.  Security Pacific, a bond clearinghouse, was one of those third-party firms they depended upon to help meet regulatory requirements and do business effectively.  Unfortunately Security Pacific did not follow the rules and got into financial trouble.  This put David Lerner Associates at risk.  Lerner called the NASD and reported the problem with the clearing house.  It was a tough time and David Lerner Associates was facing a major legal battle.  They retained the services of Deloitte and Touche, as well as a specialist in bond securities.  After months of intense activity and investigation the issues were resolved.

By the mid-80s David Lerner Associates was becoming a significant firm in the securities business and the firm began to develop the idea of a family of mutual funds.