Welcome to the latest episode of our podcast
series for financial advisors.
Today's episode is
becoming the client's financial concierge,
2000000000 dollar U ups,
set their sights on being she for the
long term. It's a conversation with Russell Crowe
and William deal, partners and managing directors of
Beacon Point.
I'm Mindy Diamond, and this is the Diamond
podcast for financial advisors.
This podcast is designed for advisors like you,
who are interested in learning more about the
evolving wealth management
industry through candid dialogue with breakaway advisors,
those from the C suite and industry thought
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09:08
8791002.
I'm always so impressed by advisors who see
the handwriting on the wall. They recognize heather
clients needs are revolving, and they grasp how
the industry is changing.
As a result, they look at their own
businesses, the firms they work for and their
goals and ask themselves the important questions,
not just about the short term, but the
long term as well.
Russell Crowe, and William, or Billy deal
invested nearly 3 decades each in the wire
world,
most recently is managing directors at U ups.
They watched as the financial advice industry Morph
from which transactional model to 1 in which
advisors served a wide variety of clients.
That is
financial advisers were more embedded in the lives
of their clients.
With seats the table for decisions well beyond
the world of stocks and bonds.
They were now expected to be true
serving their clients
not just as a financial advisor, but instead
as a financial concierge.
It was a concept
that fit well into Russell and Billy vision
for their business.
Ultimately,
leaving the wire world in October of 2023
to join Beacon point advisors as the first
breakaway team to integrate with the firm,
In this episode, they share a compelling narrative
around the changes they saw in building their
extraordinary business
the evolution of their client's needs and how
each impacted their decision to transition to beacon
in point and not another warehouse or to
build their own R
themselves, and they offer actionable advice for other
advisors considering change
plus much more.
There's a lot to discuss, so let's get
to it.
Russell Billy, I am delighted to talk with
you today. Thank you so much for joining
me. We're glad to be here. Thank you
for having us.
Mindy, it's Russell. Thank you again. We're delighted
to be here. You bet. Alright. A lot
to talk about. So let's jump right in.
Let's start at the beginning. Tell us a
little bit about yourselves. I believe it was
a 24 year professional path to joining beacon
point in the summer of 23.
So why don't we start with you, Russell
and then we'll go to you, Billy?
Certainly, Mindy
Russell Crowe. I grew up in the hill
country of Texas and a very small town
of about a thousand people and Dallas was
always the shiny object, big city.
Out in the plains of Texas, and I
thought I would get there someday. And after
undergrad and graduate school,
finally got to Dallas, and then they promptly
sent me to Houston with Billy. We spent
a couple of years in Houston.
And then made our way back to Dallas
for the rest of our career.
And you, Billy? Yeah. Billy D grew up
here in Dallas add a little color to
what Russell said. We both went to business
school and our first firm, Morgan Stanley. We
met in the training program.
And as we like to tease sometimes, we
decided to be partners before we ever picked
up a phone.
And I think the cam over the last
25 years in the partnership has just been
a gods sound.
Russell has been a fantastic partner.
And I know that there can be complex
when teams are merging and splitting up. But
if I like to say,
0 splits very nicely down the middle 50
50. So we've been 50 50 partners
through thick and thin, the ups and downs
for our entire careers.
How wonderful.
Partnerships are a fabulous thing when they work,
and it sounds like you guys have really
nailed that so we'll get to more about
what makes it work or tick later. I'd
love for if you'd give our listeners a
sense of your overall business. So I know
you guys manage today about 2000000000 in assets?
Give us a sense of a couple things?
How many clients or client relationships do you
have And what kind of work do you
do for those clients?
Mindy, I'll take that 1. This is Russell.
We have approximately 2200000000.0
in assets
and approximately
50 families. Now when we say 50 families,
you could think of that as a pyramid
with the Patriarch,
let's say at the top, and you may
have numerous
generations. So there's a lot more than 50
accounts
but there's
approximately
50 top accounts
that make up that 2200000000.0
and we've been fortunate in a way to
operate like a financial concierge if you will.
When families are making decisions around their wealth,
whether that is loans or insurance or investments
or properties or various other decisions that involve
investing funds.
We've been privileged to help op pine on
those decisions
and
maybe give them a sense of direction and
some analysis on how to do things in
the most efficient both from a cost perspective
and a success perspective for our families.
Yeah. And we'll... I wanna get to
how that approach of being a financial Concierge
financial quarterback for you're obviously Ultra net worth
clients
how that changed for you throughout your career.
So billing, you started out, you met in
the Morgan Stanley training program
tell us a little bit. I know that
you spend some time at Goldman during the
25 years, and then most recently, U ups
before joining Vegan point. We started at...
Morgan Stanley and Houston
eventually moved to Dallas that's where we knew
we wanted to be
after 3 or 4 years at Morgan Stanley.
We went through the
dot com collapse.
And we were part of the high net
worth group at Morgan Stanley, Morgan Stanley decided
to consolidate their Dallas office
back to Houston, then we had already planted
roots here in Dallas. At that time, word
got out that Morgan Stanley with closing their
office and Goldman gave us a call, and
we formed a partnership, and we moved over
to Goldman.
We are there for 7 or 8 years,
and then
during the financial crisis, we left
Goldman and joined U and spent a good
part of our career 14 years at U
most recently
joined
Beacon point, and that would have been August
of last year 2023.
It was kind of our first change getting
onto the fiduciary side of the business. That's
get in a nutshell. Thank you for that.
That's good orientation. So back to the business,
Billy, maybe you can continue a little bit,
Tell us a little bit about your investment
approach
and what your team looks like.
Sure. Let me start with team.
So we have a fairly simple structure. There
are 6 team members, Russell and I are
the investment partners, and then we've got 2
analysts, and we've got 2
client associates. And the way we kinda segment
responsibility,
projects,
trading,
managing various portfolios,
that typically falls under the analyst
bucket and we've got 2 very sharp folks
that work for us, Sarah stubs and Pierce
Hal.
They were collectively together sharing those responsibilities.
And then on the client associate side, they
are responsible for
handling day to day, items for clients, wires,
cash needs, funding accounts, opening accounts,
and they share those responsibilities
and with 6 people. We all work in
1 big room. So if you could imagine
3 different trading desks if you will, we're
all spread amongst of the 3 trading desks
which makes
conversation and dialogue very fluent. I need you
talk to Julie. I need to talk to
peers. We're all in the same room just
peek my head above the divider, and we
can have a conversation, peel off to the
conference room if it's gonna be a little
bit longer,
and so it's a very collaborative
dynamic
atmosphere.
Let me ask you a question. When you
say collaborative, I'm thinking about 2 things. It
sounds like you really value
working together. So not only with your team,
but collaborating amongst the 2 of you and
25 years together,
we see partnership in the last
decade or 2. The big firms have really
forced a lot of arranged marriages. And they
don't always last. So what do you think
the secret to your success is as a
partnership. What is it that's kept you together?
Mindy, I'll take that 1. At the core,
our experience has been that great
partnerships work
when the partners have very different skill sets.
And so 1 simple way to look at
billy and myself, I would put myself
60 percent in the E q
category,
and I would put billy 60 percent in
the iq category,
and 40 percent in the E q
emotional category. And so when you have that
kind of mix,
somebody might relate
to prospects and cold calling and
presentations,
60 percent,
and maybe the end internal math
equation, you all have to do, but maybe
that's 40 percent. Billy might be the flip
of that. And so
that allows us
to play to our strengths because we have
a partner that's then playing to their strengths.
I think if you look over our 24
25 years, that has been a relatively
unspoken truth that's just been apparent between the
2 of us. And I think that's really
helped us in tremendously over the years. Yeah.
And I think in my experience, I've had
the privilege now. I've interviewing so many successful
partnerships. And it's clear to me that the
very best ones are about
those that have complementary
skill sets where not everybody does all the
same things, but one's each you complements the
other's Iq and vice versa. So I love
how you said that, and thank you for
sharing that. What I would say to that
too, Russell took a little bit of a
dig on my e q. And that really
hurts my feeling, but I'll let that slide.
I'd say too. We've been through this, but
I trust Russell. I think he trusts me.
He's my friend, and we try to make
it fun. It's it's really as simple as
that.
Thank you for sharing that.
Before we talk a little bit about get
into the business itself and the decision to
join Beacon point. I wanna just ask you
about life in the wire world. So 3
firms. You were young in the business and
only at Morgan Stanley a short time. But
if we look primarily at U b where
you spend 14 years and combine that with
your time at Goldman, how do you think
life in that traditional space changed over time.
That's a really good question. I would say
looking back at the start of our careers,
you would look up to the folks that
were 3 or 4 years ahead of you
that had made it. Right? Had gone out
there and attracted
enough clients to where they were self sustaining.
You would identify with those because that's what
you aspire to be because you had to
make it to that rung on the ladder
to continue.
And so there's a lot of pressure originally
getting into the business to make it to
that first rung. And there's a clock ticking
for you to do that.
And when we looked at the folks that
were
successful, the business, I think was a lot
different than. It involved listening to a research
call in the morning, calling clients on individual
stocks and bonds,
maybe ventured a little bit into some hedge
funds or some private equity
But when it came to a state planning
and tax and really
getting your hands around the full financial picture
those were kind of other people's responsibilities that
didn't really fall into our bucket so to
speak. And 25 years is a long time
didn't happen overnight, but like the proverbial frog
and the and the pot.
Over time, you've shifted to where if you
wanna have a seat at the table for
client you have to be willing to do
more.
And that really evolved into being full circle
as Russell said, anything that involves a dollar
estate planning, helping with tax,
talking about and thinking about decisions within private
companies, dynamics with family members,
generational wealth. You really get pulled into a
lot more deeper discussions with clients. It's interesting
to think what day 1 and the business
would look like if I got in today
it'd be very different than what it looked
like 25 years ago. So I'd say there's
been a lot of change.
In the last 25 years. I wanted just
ask you a follow question about that, Billy.
So it became apparent that we wanted to
do more for clients. And that's the whole
notion of becoming the financial concierge, which is
a term I love.
Was the decision to eventually leave that the
traditional space, U ups at the time. Because
you wanted to do something you couldn't or
you were at U ups,
or more driven by frustrations you're feeling at
U ups. I would say, just a har
back to something Billy alluded to a second
ago, and then move into your question a
little bit. 25 years ago, the business was
about a
transaction
for a client,
today, the business is is maybe completely opposite.
It's primarily fee based for most advisors in
the high net space. It's primarily fee based
and it's much more financial concierge.
And I think that
transition began to happen
in the
industry,
Wall Street Firms
recognized that as well. They are the smartest
people in the room, they're cutting edge
they're nobody's fool. They saw exactly
how that was transitioning in the industry.
What maybe they missed was the increasing rise
of the R
model, that may have happened somewhat on the
stealth. But the idea that advisors were moving
from the
transaction of the day, the stock of the
day trade
into an environment where you're
advising like a consultant like a financial Concierge.
I don't think Wall Street missed that for
a minute. And in fact, they began to
do internal
education Concierge as far back as 10 and
12 and 15 years ago to encourage it
more than that, even 15, 18 years ago
to encourage
advisors to begin to move into those places
that could add more value than just a
transaction
stock trade on the screen, which really what
the environment was when we started was much
more of just a straight up transactional call
to buy or sell a stock or a
bond.
Mindy, you asked about the transition from U
b to beacon point. So U changed a
lot in the 14 years that we're there.
And I would say for the most part,
all for the better, The high net worth
platform was built out and was strengthened over
the 4 teen years that we are there,
and I would tell you our I experience
there was fantastic.
The managers that we had were there to
help They did help. They did listen.
And the platform when we left is an
extremely strong robust platform more. They're a formidable
competitor out there and they're good people and
teams that work at that firm. So we
left with nothing, but the utmost respect for
U
and I would say that it wasn't that
we were running away from a problem.
We were very happy at Dbs. We were
running towards something
versus running away. So if you were asking
me, okay. Great, Billy. What were you running
towards,
we were running towards a your
fiduciary model,
and it wasn't that our clients were saying,
hey, I want you a bit it be
a fiduciary because they were clients they knew
us, and we had great relationships with them.
But Russell and I did find that when
we would go and
meet and interact with new prospective clients, the
question would come up, are you all a
fiduciary.
And we wanted to have a hard
answer to that. Yes, our entire firm as
a fiduciary
and it seems like that question is coming
up more and more. So
again,
Gb is a fantastic place. I have a
lot of friends there. The the the people
that ran the division. I can still consider
friends and have nothing negative to say, we
just felt like we wanted to go on
a different direction and pursue the fiduciary model.
Love that, Billy. I thank you for sharing
that because the truth of the matter is,
I think that the very best and most
successful advisers. Move not because they're running from
something. There's almost always some frustrations or things
you might like to better But for the
most part, the best advisers
are looking at things opportunistic.
They're not running towards something, and they're not
running away from something. And the other thing
I think that's really interesting what you said
is that in the last, say, 10 to
15 years,
the term
fiduciary. Went from being the fiduciary standard went
from being something that only those in the
wealth management who worked in the wealth management
industry new. It wasn't really a mainstream term.
The average American,
we all assume that our advisers were acting
as fiduciary. And it wasn't I think until
the financial crisis in o 8, that term
became more more mainstream. So
tell me a little bit about that? What
were you hearing from clients? What did they
know of your not being a fiduciary of
U b? And what were they looking for
when demanding or asking if you were 1
now?
Mindy, I think it can be summed up
in maybe something that is gonna seem too
simple.
I think if you went to Google and
typed in, how should I hire a financial
advisor or what kind of financial advisers should
I hire? What should I consider?
I think you'll find that a plethora of
email sites will come up saying, you need
to hire a fiduciary. Someone who is bound
to put the client interest above the firm
above themselves, etcetera.
I don't think that really existed 20 years
ago that you could well the Internet may
not have been exactly the same, but you
really wouldn't have gotten that answer. I think
you're right that coming out of 0 8,
this concept of Fiduciary became more important. But
as the Internet began to pick that up
and more fiduciary independent R firms, as I
mentioned earlier, the rise that almost stealth rise
of this R
ecosystem took off
I think the concept that these people are
held to a standard that parts mind you
of Wall Street are held to, but not
all
And so I think that became
almost
ingrained in people's minds that if that's the
gold ring, but the top of the heap
that I've hired of the fiduciary, and that
gives me the greatest sense of comfort,
and the greatest sense of trust that my
advisers on the same side of the table
as I am,
that, I think has become more and more
ingrained
in not only wealthy families, but anybody looking
for a financial adviser that opens the Internet
and says, how do Hire 1
I think that's just become sort of second
nature, And billy and I began to hear
that question
over the last 10 years more and more.
And you'd have to be really dense not
to go. Wow. This is... There... There's a
change of foot, and we better pay attention
to it,
Let me ask you a question. Did you
not think of yourself office to do Sherry
Wall at U b or at Goldman Sachs
or at Morgan Stanley. So that's what's curious
to me. I ask this question a lot,
and I'd be curious what your answer is.
Office that right, as long as you are
an additional brokerage firm, you are held to
the suit ability standard, not the fiduciary standard.
But I haven't met too many successful advisors
that didn't think of themselves as fiduciary. They
would always have put their clients interests. Ahead
of their own. They would always have wanted
to do right by their clients. So how
much of a difference?
Does it actually make
truly being a fiduciary and thinking of yourself
as 1.
That's a really good question, Mindy. I guess
how I would respond
is that when we called clients and told
them about the move and the fiduciary most
clients
responded with... I thought you were a fiduciary.
Yeah. The second thing that I would say
when we brought our clients over,
we brought all strategies over
same strategy, same fee, same structure, same everything.
Did not have to change anything about how
we function as a team. Now, obviously, we
had different systems and different things that we
had to kinda mold our operational efficiency into.
So we had to change how we do
things, but we were essentially the way we
like to think about it
running a fiduciary business inside of a wire
or a Wall Street firm. So yes, we
couldn't call ourselves,
but we were working with and engaging with
clients as if we were.
And that's why I said, really it wouldn't
that important for existing clients because they knew
us.
But I think it is important because as
Russell said, if you're talking with the new
family. They probably are looking at some point
on the Internet. What should I consider when
I'm hiring a new financial adviser, and that
is you know, number 1 or number 2
things to consider, and it was clear that
that's something that was in people's minds. And
so the questions really came up from a
prospecting standpoint, we felt like we needed to
be with the firm that was, you know,
fiduciary top to bottom. Now if we had
this call in 5 years, and you asked
me, hey, what are some of the difference
that you see whether it's culturally
platform
being at a fiduciary versus being at a
wire.
I probably had have a better answer for
you then,
but we felt, you know, we already had
a sherry business and it made sense to
align ourselves with a firm that was up
fiduciary top bottom it. So in the time
in your tenure, let's look at just U
ups. The last place you were the 14
years. Were there ever things that you couldn't
do for clients that you wanted to do,
like you mentioned tax planning? But you can't
give tax advice as long as you work
for a warehouse firm. But you say that
the platform was
outstanding, and it was a great experience, which
is amazing.
So were there any things you were not
able to do or it was really truly
just about wanting to become a to do
fiduciary. Yeah. Mindy. Really think if you peel
the onion completely, there was something we could
not do.
At U b that we can do at
beacon point. Now, there are nuances. The mouse
traps are set up a little different the
way the systems are built are a little
different,
But I would say to you that the
big Wall Street firms are who they are
for a reason. That they've owned wealth management
for
50 75 years, and since the existence of
the business itself, they've owned that space, and
it's only been in the last 10 to
15 years that you've seen the rise of
schwab and the independent R a's and the
custodian
that now
are amazingly even larger than some of the
Wall Street firms as on an individual basis.
Look, I I think Billy and I would
not be
answering the question accurately if we told you
that if we had some sense that Wall
Street
doesn't analyze this industry and know exactly where
they wanna be. Let's face it. You've got
some of the most forward thinking, thoughtful, smartest
people.
That have been in the industry in businesses
that have existed for over a hundred years,
they know the space
just
inside and out.
But I do think that the size of
Wall Street in those firms
preclude
some functionality and some kind of grassroots
capability
and for billion ought to have some influence
on the direction of the firms.
And the size of the institution just doesn't
allow for that kind of flexibility
and influence. And so I would say we
left
to fully en wrap ourselves as series. But
I don't think I'd look and say there
was something
I can't do it... Or couldn't do at
Goldman or U b that I can do
at Beacon point. It's just a function of
real ease and
simplicity
and
setting our course for our business as a
fiduciary that attracted us.
Outside of Wall Street. I would add and
say this, U b is a multi billion
dollar global
financial firm with the fantastic
reputation and an extremely long history. The firm
does a lot of different things. And when
you're attached to wealth management,
you don't necessarily tap in to all
the
expertise and different line items that a large
global bank like
Does.
But the 14 years that we are there,
they did a fantastic job building out
a high net worth the vision that would
give us the tools to handle the complex
needs for clients.
The challenge was not... We went to a
independent firm to do things that we couldn't
do at U b. The challenge
was how do we find a fiduciary firm
that will let us do everything that we
did at U b? That was the challenge.
Wait. Well, so that's my next question.
It sounds like for you, it was independence
or bust because the only way for you
to be at true fiduciary was to join
the R space.
So at 1 point, how long
into
your tenure at U ups, did you begin
to
get curious?
And how did you go about getting educated
on all the different ways to enter the
R space. Mindy, that's a really good question.
I would say that the full process of
rough and I look at each other in
making the decision. We need to be at
a fiduciary firm
to the time that we showed up at
beacon point was about 2 years.
And I don't think it necessarily takes that
long. That's just how long it took us
to figure out the right place, so we
explored starting our own firm for a good
bit, and we closed the door on that
after about a 9 month process reason being
Russell and I really enjoy working with clients
and with 6 people if we started our
own firm, 1 of the 2 of us
would have to shift our responsibilities
to running a firm
and not working with clients. And that didn't
really found appealing because we really enjoy doing
what we're doing. So we shut the door
on that and then started exploring,
joining the firm, but like I mentioned, the
challenge was with However, many independent firms out
there that we could probably join with, how
do you find a firm
that's got the platform
that can address and have a good depth
in the areas that we need.
And would eventually led us to
beacon point. And when we are looking, we
made an outgoing call to Beacon point,
they had built up a pretty strong platform
that allowed us to step in and literally
do everything that we need to do and
clients want us to do that they've got
accustomed to at U b. Mh. So you
bring up a very good point that that
sort of the 2 subsets or the 2
ways to enter the R space. 1 is
to build your own, you looked into it.
You are right. It is the heaviest lift
large
ecosystem born to support the breakaway adviser.
It still means there's a heavy lift not
only in building the firm, but running it
over time. And so the second option is
to join an established firm.
The upside of that is not having to
build something from scratch and leveraging a 20
year history that's already been built out. The
downside for some is the notion of
not owning a hundred percent of the pie
of giving up equity of giving
name brand of all of that. So how
did you reconcile that part? Mindy, it's interesting.
Billy and I have always
served at the pleasure of the king and
queen of our clients, and we've always served
at the pleasure of the firm that we've
worked for
I don't think honestly it ever crossed our
mind.
We didn't have this ego notion that we
needed to have our name on the
or we never branded our team inside of
Goldman or U ups, which 1 of the
things you asked earlier was how's the business
changed. You see all these teams now have
their own
website and their own names. We just really
never focused on that. We just focused on
building the business. And so
I don't think honestly, it ever crossed our
mind
that we needed to have our own
name brand. I think we were delighted to
fold in with a great group of equity
partners,
really like the people that was a huge
part of the decision
Matt Cooper and Billy and I spent a
lot of time together. And then we got
to spend time with Shannon Uc,
And so those things made us feel great
about all for 1 and 1 for all,
not the billy Russell show. I don't think
ever even
really crossed our mind that we needed to
have something with our name on the outside
of the building. Yeah. And plenty of people
do by the way. So
in that particular instance those folks would not
go in the same direction you did. But
for you it worked. So let me ask
you a couple of questions about that. As
moving from Goldman to U b or with
it from 1 traditional firm to another usually
comes attached. To a significant
transition package. How did you reconcile a rationalize
joining a firm with a short term upside
would be considerably less
than what you could have gotten if you
moved to a traditional firm. I think the
wealth management business when Billy and I started,
and I think
even today, there's a number of young people
that come and spend time
talking with us occasionally saying how did you
build your careers
the entire business
is driven by entrepreneurs.
Now they may not think of themselves so
much is entrepreneurs because you're working for Goldman
or U ups from Morgan Stanley. You think
you're taking a job with a big firm
until you get to the seat and the
office manager says there's the phone and and
there's your spreadsheet of all the people you
think you might wanna call on, go to
work. And you've got 24 months to be
self sustaining so get after it.
You quickly realize this business,
is long term in nature. The people that
do the best have a very long term
perspective on their career and they have a
long term perspective
at least in our opinion on their success
that you build it over decades,
not over a few years.
And so I think it was very natural
for billion I in the Beacon point
transition
to think about it. 1 more time in
our career as a... We spent 14 years
at U ups. It's not like we jump
every 2 or 3 years as you can
tell. So
once we had really thought through that decision,
pick the right firm, pick the right partners
and people,
and
could become fiduciary, the idea that we would
take a long term perspective on success with
beacon point, honestly, was pretty natural because our
whole career
has been this very long term
entrepreneurial,
build it over decades and time, and and
you will do well along with your clients
doing well. So I think that actually is
for the most part in our view a
very natural
success perspective.
For wealth management people that are in the
business generally for decades upon decades.
Yeah. And I know that equity
is a big part of the Beacon point
deal.
How did you think about that?
Yeah. So Mindy, it's a growing firm.
We like the people here. We like the
people that we met, and it felt like
the group that we attached ourselves to wanted
to put clients first and grow the firm.
We like the idea of being equity partners,
and the only way our equity does well
is if we do well by our client,
because they're all at will. Right? If they
decide they wanna do something else, they have
the freedom to do so. And if we
service our clients well and the firm service
is clients well. It's gonna attract more clients
and that would obviously be good for the
equity. And we like the idea that our
incentives in compensation are completely aligned in that
regard. Love it. Matt Cooper was on this
podcast
along with a representative of of KKR,
who backs speaking point. So maybe it's a
good time now. Let's take a step backward
and just in a couple sentences
share us what the Beacon point value proposition
is because to make a statement that you
believe that the platform and the resources to
serve your High net worth clients was really
robust at U ups. And that Beacon points
platform was able to allow you to do
everything you needed to do and then some
they must be doing something right. So tell
us a little bit about that when if
the k k backing
impacted your decision at all. Yeah. Mindy. Beacon
point is as you probably already know, really
burst itself in the institutional space. That that
was a heavy part of the background.
And that
institutional consulting world is is an extremely
sophisticated
and
must be by nature product, heavy
development because you've gotta have every section of
the institutional consulting world
mapped out with managers and private equity and
alternatives and all different types of independent
managers around the country. And my managers I'm
referring to that you bring to your clients
as the consultant.
So I think Beacon point already had a
very deep history in the institutional world that
they then brought to bear on the wealth
management world that has obviously grown pretty dramatically
over the last 22 years.
As the schwab and the fidelity and the
other big custodian of the world and asset
managers of the world have become so much
more prolific
in the last 15 years, 20 years, So
as Beacon point, Michael Dow running the investment
team, we we have a full fledged
Wall Street and more offering
to include even more grassroots
investments that maybe Wall Street, typically wouldn't dip
down into as much. I think that was
just really born because the firm was so
institutional by nature early on, very sophisticated catered
and then developed wealth management over the last
20 years that made us feel extremely comfortable
about the platform and the systems and the
capability
that the beacon point has.
And tell me about the K backing. Did
that enter your thought process at all?
When you've got a bunch of different firms
that you might engage with. So, Mindy I...
Leaving a warehouse
Russell and I. We're concerned that maybe
the firm at large would hear that we're
looking around, and it it could be detrimental
to our careers, although,
I, I think the folks over there at
B are well intention,
and we were good friends with everybody, but
you're concerned about the that Right? You don't
go necessarily announce to everybody that may be
changing firms. And so you gotta be very
careful about how you engage and dialogue with
different firms.
You know, the fact that there are 20000
plus different firms out there of various size
across the country a smaller subset that are
coast to coast and and larger and even
a smaller subset
still
that have the resources in the infrastructure that
would match what we utilized on a daily
basis at U.
The fact that they partnered with the firm,
like
s history like KKR,
and KKR
partnered with beacon point with the same equity
class as all partners. It's not a different
equity class with super voting shares or pick
shares or
financial hurdles that could back to a larger
ownership and the overall company. They're a minority
shareholder
equity partner in the firm, which gave me
a lot of confidence that a large private
equity firm
felt
good enough
in the platform and the people that we're
here to put themselves
in the capital stack in that fashion.
And that said a lot of. Yes.
Okay. Let's talk a little bit about the
transition.
So
was it difficult?
Like, who supported it? How did your clients
respond, what went particularly write anything that went
wrong. Tell us a little bit about that.
Mindy, great question. Every adviser that may listen
to this is gonna feel our pain.
Whether you're moving from Morgan Stanley to Goldman
or Goldman to U b or U b
to beacon point or anybody else.
That 1 year period of transition is
extremely
difficult.
First off, you you have to be
impeccable at following every legal rule
that that there is because you you just
can't afford to ruin your career with a
silly mistake.
And then you've got to be incredibly
confident that when you sit down with your
clients who you've not talked to about this,
and then you do talk to
about this that you think they're gonna have
a positive reaction. Otherwise, the entire deal can
fall apart and so can your career.
So from a stress standpoint,
from a legal standpoint
from a
conversation with client standpoint.
And then finally, Mindy, you've got to go
to your significant other spouse,
kids and say,
guys, look... You're probably not gonna see me
for the better part of 12 months here.
Because this is gonna take weekends and nights
and early mornings and travel and I'm gonna
make platinum executive Platinum on American and etcetera,
etcetera. That that is the reality
of a successful
transition. It is a full on commitment
for that, let's just call it approximately a
year period,
even though we had not transitioned in 14
years,
But we had done it a couple of
times before billy I were in no lies
in the dark, about how hard that was
gonna be.
And I I think the that maybe the
the fourth or or fifth if I can
component of a transition that's always tricky.
Again, whether it's to Morgan or U b
or wherever you're going,
you do have to learn an entire new
system. The trading systems are different. The billing
systems are different. Just pretty much everything's gonna
have nuances to it. So at the same
time, you pick up and and leave, you're
immediately working on entirely new systems that you've
never seen before and the Schwab custodian is
different than the... Goldman or U ups custodian.
It is just an incredible load of stress
for that year.
If you keep your head down and pray
constantly
and have a great partner like Billy and
a great staff, like we do, and everybody's
together. This can be very successful, but it
was certainly
challenging. It is a more challenging moving from
Wall Street to R.
It's just challenging moving
because you've got 50 families that have relied
on you and you have deep relationships And
in 1 moment,
after the fact, you've gotta come tell them
I've moved.
Wow. That can really cause some sweat out.
Mindy, and I'll add just a little bit
to that happy to report after
getting through the transition close to a hundred
percent of our clients followed us, which was
fantastic. And a huge blessing.
Going through that and that process,
beacon point did a really good job of
trying to get a team on board
coordinating with schwab and trying our our best
to come up with a framework and a
plan to handle the transition.
There were quite a few
unforeseen
things that popped up. Like, oh my gosh.
We didn't think about this or this didn't
connect.
But it was all hands on. We figured
it out. What I'd say is, but there's
another breakaway team that joins beacon point. We
got pretty good playbook on how to do
it now that we've already gone through the
process. So, you know, to some degree, we're
are a little bit of the guinea pig
and we work through all that and you're
gonna have any of these moves, you're gonna
have these problems, but we had a lot
of really good support and we work through
them
and a very efficient and timely manner.
And I would say you asked what went
wrong.
I wouldn't say that there was a whole
lot that went wrong, but I would tell
you biggest challenge
was that when we reached out to clients
and told them the story about how we
are moving and why,
we were just surprised at how many clients
said yes,
right away. We thought it was gonna be
a more gradual process
and with the number of clients that said
yes, right away. We had a a bottleneck
issue. And so high class problem to have,
yes, but that was probably
1 of the more stressful challenges is trying
to address the volume
of clients that wanted to come over in
a in a very short period of time.
First of all, I love the honesty.
Transitions are hard. And you are right. They
are hard, whether you're moving from 1 big
firm... Another or you're moving out of the
traditional space to go independent. And no matter
how much support you have and no matter
how many people surround you and scaffold you
At the end of the day, it's all
hands on deck and it's heart. And I
it's emotionally hard. It's challenging.
And you guys are... Still within that 12
month period.
A couple of questions came up as you
were talking. 1,
I wanna make it clear. So you were
beacon points first team recruited from a wire.
I imagine that learning curve that you're... Talking
about was very true
because what we find is that it's even
the language barrier.
People in the R space don't always speak
the same language as people in the wire
world. So are there any specific examples you
can share with us about what was particularly
hard or what was particularly different for you
moving from 1 world to the other?
Sure. I would say Mindy, 1 thing.
That is
different and yet
changing every day in the R
space that you might consider is different than
Wall Street. 1 of the things that is
so attractive about the Wall Street firms is
they're so vertically integrated
the custodian model,
the investment adviser model and the asset management
model to a very large extent are all
the same firm.
They're just on different floors in the office
building.
So if you have a problem at Goldman
with a custody issue, well, you just call
down to the seventh floor and say, hey,
Jim, And custody, our clients got a problem.
And that's a very fluid
very
connected environment.
When you move to the R i's, a
space and you're using an independent custodian
an independent advisory firm and an independent
investment management
boutique that you may have hired,
Well, they all have their own compliance departments.
They all have their own operations departments.
So it is certainly a nuance. To connect
all those
conversations
for a client
issue, client need, if you will. It's not
an impossibility
it's just maybe a couple of more phone
calls and you've got to build out your
spreadsheet of who to call and and who
those people are.
Where when you're in the big Wall Street
firms, you call downstairs and then whether it's
sally, or Gym or Kevin, we all work
for the same firm, and I need you
to help me with a problem here.
That certainly is a learning experience when you
go from Wall Street to R.
That being said,
10:15
years ago, that may have been
a much greater problem or hurdle or just
stress to deal with. Now,
knowing that schwab and Fidelity, the the 2
biggest really in the R space are so
well connected with our R a's. I think
that
differential is diminishing relative to Wall Street, but
that's certainly a reality that you don't have
to be a rocket scientist to see the
difference in how those 2... The the different
firms work.
I appreciate that honesty. It occurs to me.
So you moved in August of last year.
You're at the 10 or 11 almost approaching
the 11 month mark. So I imagine there's
still pretty much a learning curve. Do you
feel like you're on the others side of
it or getting to the other side of
it where it feels more like smooth sailing?
Yeah. Mindy, I think we're there. The first
thing is getting clients over getting them set
up organized to where they can see their
accounts in a very similar organized fashion,
learning the systems, reporting systems, getting through tax
even and then spending the time to learn
new systems and create
operational procedures for the team
that take 5 hour tasks down to 20
minutes.
And we've spent a lot of time doing
that at U b
trying to get our process for the team
on how we do things.
There are a lot of repeat motions that
you do for all your clients across the
client base. And so how do you get
operationally efficient to where you can do it
in less time with 0 mistakes,
And so we've been spending the last 3
months doing that. And, I would say we
are now... When it's been this way for
a while, but we're fully functional.
Operationally efficient moving forward,
actively
engaging with clients and trying to meet new
families. Yeah. And you moved a hundred percent
of the assets, which is
answers the question. Mindy, if if you would,
had 1 more thing to add on there
with Billy.
1 of the things that's probably been refreshing
for us. In this move is...
And maybe this is just indicative of billy
and I... We don't pretend to be the
sharpest knives in the drawer. The the way
we built our career
is by calling on very
sophisticated wealthy families that asked us very hard
questions
over a career,
and billy and I, 99
percent of the time had to say, wow.
I don't know the answer to that question,
but I'm gonna go find out. If you
do that 50000
times over a career,
all of a sudden, you've got some mental
files built up of 50000
ants, Answers to 50000
really good questions,
and you develop what we would call tribal
knowledge or experience a battery of experience that
really helps you in the business.
I think when we made this transition, Billy,
and I had to jump back to those
days, which are frequent
where we had to say, I I don't
know the answer to that question, but I'm
gonna go figure it out.
And we've rein
ourselves in a way in that learning experience
that frankly
is how we built our entire business, going
to find the answers to questions that we
don't know is the quickest way to develop
expertise and experience our view. Yeah.
1 more question about the transition and it's
important 1. 1 of you just said that
you needed to be impeccable about following the
legal rule. So that you don't blow up
your career. And it's notable that you left
a firm, namely U ups that is a
non protocol firm,
you have a large book of business in
terms of assets under management, you have a
relatively
small number of clients in the scheme of
things. That makes it easier to move a
book with 50 families than 200.
But how challenging was the non protocol status?
How did it complicate things or did it?
Look, It complicated it in the sense that
you couldn't just go and
engage with clients like the way you you
did,
we followed our lawyers advice to the t
and took their advice on how to the
transition over to U b in a way
that was legal and ethical and the way
the industry is set up, and we followed
that advice. When we did that, I will
tell you there are a lot of things
that if we weren't bound by those rules,
we would probably like to have done a
lot of things a whole lot differently.
And you feel like you are walking into
a situation where you are
at a disadvantage because you are following the
advice of your lawyers.
But when you eventually ended up talking to
your clients and with the history and the
experience you have with them.
I don't think you needed
the other things that maybe you wish you
could have done. You follow the rules, listen
to your lawyers. And rely on the relationships
with your clients, and and that's what we
had to do. And proof was in the
pudding because you moved a hundred percent of
your families. So there you go. Yeah. And
Mindy, I'd add also billy and I as
we've probably mentioned through the course of this
call. I think you can feel that tenor
of our attitude towards Wall Street. Listen, We
owe a tremendous debt of gratitude and
appreciation to Morgan Stanley Goldman and U ups
because we were trained by the best.
And we built a good business there and
we worked very hard to make our bosses
happy. And I think you do best read
in the newspaper about teams leaving Wall Street
firms and doing,
hate to use the word, but just stupid
things. Yeah. They pinned them there. Yeah. And
they end up on the front page of
the newspaper, Billy and I had to look
at each other in the eye every day
and say don't do anything that you don't
wanna read about on the front page and
the newspaper
Yeah. I actually like that attitude. I agree
with that. Even those that leave big firms
because they are fresh traded. Mean, there's a
lot of pain points that are motivating them
to leave.
They absolutely need to and should be grateful
to those very farms because that's who train
them. That's who enabled them to build the
business that they did. And I have this
belief that people wind up right where they're
supposed to when they're supposed. And I think
they're probably the same can be said of
you. Let me ask you a couple of
other questions. So,
okay, you're almost at the 1 year point.
You're over the hump of transition, and you've
moved all of your clients and now you're
in growth mode to get what are some
of the things that you hope to be
able to do for clients
in the future that you haven't done before?
Or what are some of the the things
that you think about in terms of growing
the business.
Mindy, 1 thing that doesn't quite exist, but
I think it's... Moving that direction over time,
and this would be really Shannon could shed
more light on this. But I think 1
of the things that would be nice
to tuck
into
the R
space and really the space at large would
be, if if something like the accounting functions
were brought in house,
seems like that could be an interesting opportunity
to do more for clients. And obviously, the
accounting function is such an important component
and it is 1 of those where you're
working with a variety of different accounts on
various families. I I think That's 1 thing
I'm curious to see how the R space
develops over the next few years in terms
of maybe a trust. Company, maybe an accounting
function, etcetera, that would be in house to
the firms.
So as you think about growing your personal
business,
What is or what has been your best
source for attracting new clients?
Mindy, you're asking us to deliver the special
sauce there's not a whole lot to it,
but as the coal caller, I'll give you
the inside story. It's not very hard to
pick
a town in Texas and find out
who who are the movers and shaker in
a particular town. Just go to the internet
and look at ranches and look at the
museum and etcetera, etcetera. I don't have to
give more way to advisors. They already know
how to do that. And then writing a
really nice letter in making a cold call
still works.
Almost every time. You would not be surprised
probably to know with your experience in the
industry Mindy that wanna in entrepreneur
finds a letter on his desk, requesting an
opportunity to visit because that entrepreneurs has been
successful. That's really not an offensive letter. Now
you may not get in the door, but
it... It's a con con
outreach, and I spend a lot of time
writing letters making cold calls now,
25 years ago, Billy and I didn't really
know any client to say, hey, do you
happen to know this family
Now 25 years later, we have the opportunity
to make a some internal client calls if
you will. And and find somebody in the
network that might give us some opportunity to
have a referral. But I will tell you
that it's the way we were born Billy
makes cold calls. I make cold calls. We
definitely are active.
And honestly, it's an incredibly
exciting part of the entrepreneurial business that you
sent a letter you got in the door
and 18 months later, that person becomes a
client. For my personality, that is something that
just gets you up every day and is
really an exciting part of the growth side
of the business
along with
adding value to existing clients and accomplishing tasks
for them in the course of their family
history. Yeah.
And how that as you think further into
the future? What do you guys hope to
be remembered for? What kind of legacy do
you hope to leave? Is this going to
be a family business tell me what it
looks like. Really good question.
I don't have a great answer for you.
And I'll tell you the reason is that
day just seems like a far away. I
know we're in our fifties, so we're not
spring chickens, but we love what we do.
I'm not sure what retirement looks like 60
years old and sitting on a beach doesn't
sound like a whole lot of fun to
me. I love what I do.
But I do rest
knowing,
that when that day comes that I'm no
longer able to work here and do this
job, we've got a lot of clients that
have become true friends. But again, as Russell
said, you never forget that you work at
the pleasure of king.
And there are next generations that you would
hope to be able to work with, and
I feel
very good knowing
that if they decide to stay with our
team at Beacon point or at our firm
that they will be in good hands because
they at a firm that's a fiduciary through.
And so when that day comes,
I'm gonna be able to retire
well
knowing that my clients are going to be
well served. But what I'm gonna be remembered
for I... You know, it's a really good
question. I don't have a great answer. So
hopefully that's okay. Yeah. Chris, it's okay. In
my love what you said about feeling good,
I will be able to retire a rest
easy knowing that my clients and my next...
Generation team members will be in the right
hands.
1 of the things we talk with advisors
about all the time in our work with
that. Is to ask yourself early and often,
if you feel like if you retired from
the firm where you are today, would you
feel good about that? In other words, do
you feel that your firm would allow you
to leave the legacy that you want to.
And what you're saying is that even in
these early innings after 10 months of
transition, which was hard, you have the sense
that your clients and your next generation in
your business is in the right hands.
I think that's right.
Yeah. I love it. Okay. Good. So Anything
that keeps you up at night, anything that
worries you either about the industry overall or
your personal business?
I wouldn't say anything
Billy and I don't show up to the
office and we'd sit about 3 feet from
each other on an open trading floor. So
if something's going on and his mind, I
can see it on his face.
Mindy, I I don't think there's anything really
keeping us up at night per s.
I do think that when you move from
25 years ago making a trade
to 25 years later,
operating as a family office, a, a financial
concierge,
the responsibility
you feel
for your client families
is
exponentially greater
because you're involved in so many
decisions
regarding different generations of the families
that are not always easy.
I think those things were Billy could look
at me and say, or are you thinking
about so and so in this transition situation
or whatever might be happening?
With a client family, and how do we
help in that situation? We have some clients
that are dealing with some health issues and
went down to the hospital and took them
out to dinner just a few nights ago.
Those kinds of things when you become so
close to the family
and they go from being a transaction to
being just an entire career,
those kind of things are are what we
probably
if anything was gonna keep us up at
night, it would be those kind of of
bank for sure. Yeah. Well, that's me right
there is the definition of being a fiduciary.
So I think you hit it on the
head.
1 closing question for you both. What advice
would you want to share? If an adviser
that is a colleague of yours an next
colleague of yours that was a Or Morgan
Stanley or Goldman or elsewhere in the traditional
brokerage field.
What would you say to them? If they
said to you I'm thinking about my career.
I'm at this crossroads, I'm not sure what
the next 10 years are gonna look like,
What advice would you give me? It's a
really good question. All I can do is
talk from experience?
I can't imagine doing this business alone.
You have highs and you need good days
and you need somebody that you can celebrate
with, and you're gonna have plenty of low
days and you need somebody to help you
through those difficult times. And so
the structure and the team that I've had,
the partnership with Russell has been invaluable. He
or she
did not have a partner
My encouragement would be not to go run
and marry the first person that becomes available,
but keep your antenna up and try to
form a partnership. 1 plus 1 equals 3.
Over the years, we've had a couple of
extra partners in our team, but, Russell and
I have been the core from the beginning
and the core to now. I don't know
what the magic number is. But it's greater
than 1.
You love it. I would say this. We
have some
amazingly dear friends for decades that will likely
always
remain in the Wall Street space.
And boy, you can have an amazing career
and do amazing work for clients and move
off into the sunset in in that particular
realm, look back with great pride and
appreciation for your career.
But if you are 1 of those people
that looks and say,
wow, I might wanna be a part of
a boutique,
that is on the cutting edge of the
industry, and I might wanna have some influence
in the direction. They're going, and I think
my clients would actually in joy being and
more of a boutique experience
than in the big firms,
totally
opportunistic. It is a
road where
you might be surprised how many clients would
say to you.
I've been waiting for you to come and
tell me this. If you have that entrepreneurial
drive,
and and I'm not making a case that's
better to have it or not to have
it. Some people don't just personality trades.
Billy and I were driven and are driven
bet by that entrepreneurial drive to build and
continue improve and doing that in a boutique
environment
is exactly what it was born to provide
you.
I think doing that in Wall Street is
more challenging.
These are mature big industry players. I I
think the boutique environment is where you really
can exercise that muscle. And so if that's
you,
man, there is an exciting world that is
only growing and only calling to you. And
as you said, Mindy, you'll know when it's
right, but it's been a great, exciting and
wonderful adventure for us so far.
Well, thank you both. Your story is wonderful,
and I can sense your excitement,
your commitment to each other, which is really
notable.
And your commitment to your clients. I'd say
your clients are lucky to have you as
their financial stewards. So
it has been a real pleasure. Both of
you. I'm grateful for your time and your
transparency,
and I look forward to continuing the dialogue.
Thank you, Mindy so much. We very much
enjoyed it. Thank you, Mindy.
Curious about where why and how advisors like
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