Derek Holman and Brian E. Parker had a leg up on their peers when they founded EP Wealth Advisors, an RIA in Torrance, Calif., in 1999. The two, ages 43 and 42, respectively, have been friends since middle school and each served as best man at the other’s wedding. It’s a good basis for a business relationship, they say.
“We’re both competitive. We both push each other as well. Sometimes, a solo practitioner may not have that other person to bounce ideas off of,” Holman says. Says Parker: “We go back so long, we basically treat each other like brothers.”
Today they’ve pushed EP to $2.3 billion in assets, with an average household account of $1 million. And, there’s more growth planned; EP has completed two acquisitions totaling $260 million in AUM over the past year and a half and has set a $5 billion AUM target for 2020.
One thing they agreed on years ago was a mutual desire to leave the sales world behind when they formed EP. Holman was a broker at Paine Webber, and Parker worked at John Hancock. They found the RIA’s fiduciary requirements appealing—“the kind of advice we wanted our parents to get,” Holman says—and a model that they believed would likely be embraced by more firms in the years to come.
Over time, they focused on wealth management and financial planning as specialties, serving individuals and small business owners. EP recently added its fourth financial planner, a CPA, to its total staff of 53. Holman says EP’s planners are becoming more involved in client relations.
As the RIA field becomes more competitive with the widening fiduciary requirements put in place by the Department of Labor starting next year, EP senses a greater need to differentiate itself. Having an accountant on board is one way of doing that: Among other things, it allows EP to help its small business clients with the common problem of distinguishing between personal and business expenses.
Another differentiator is an emphasis on simplification for clients. Holman says EP now limits statements prepared for meetings with investors to just a handful of pages, with an emphasis not on performance but on showing whether they’re meeting financial goals.
“Financial statements just don’t do that right now,” he says. “Financial statements will show you the percent gain this month, that month. But ultimately, what is it for? What are you trying to achieve with that?”
Parker says EP’s $5 billion AUM target for 2020 isn’t tied to some larger strategic mission for the firm. “The goal is to expand our offering within what we consider our geographic footprint, and build a good business.” Meanwhile, he and Holman are delegating more management responsibilities, such as interviewing job applicants, to others in the firm. It’s essential for growth, Parker says.
“If we made the company wait for us to be involved in every last decision, it would certainly slow the company down,” Parker says. “The more you really put your faith in your employees, the happier they’re going to be. Everyone benefits from a growing company.”