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Add Beacon Pointe Wealth Advisors to the growing list of registered investment advisors who want to become a national firm (the subject of Registered Rep.'s March cover story).
The Newport Beach, Calif.-based firm, which has approximately $4 billion in assets under management, made its first move towards expanding beyond California on Tuesday when it signed on Bruce Meyer, former managing director of Copperwynd Financial in Scottsdale, Az., Registered Rep. has learned.
The “enterprise building partnership” with Meyer, who became a managing director at Beacon Pointe, launches the firms’ strategy “to build our footprint around the country,” said Beacon Pointe president Matt Cooper in an exclusive interview.
“We want to grow the biggest, most robust national partnership of advisors that we possibly can,” Cooper said. “We think bigger companies growing faster will have more value, and we want to take advantages of the economies of scale that multiple locations will give us.”
Unlike a number of other firms with similar aspirations, Beacon Pointe does not have outside investors and is not offering advisors who join the firm cash up front. The advisors will become partners, and the percentage of their ownership will be determined by the proportional share of net income they contribute to the firm, according to Cooper.
Nor does Beacon Pointe have plans for an initial public offering (a la LPL Financial, Nasdaq: LPLA), Cooper said. “We’re not under pressure to have a liquidity event in three to five years,” he explained. “We’re appealing to the advisor who wants to stay in the business for the long term, and is energized by the thought of building a larger company.”
Beacon Pointe will buy out partners who stay with the firm for ten years, or reach age 65, if they choose that option, Cooper added. Beacon Pointe also hopes its affiliation with TD Ameritrades’ Advisor Direct (NYSE: AMTD) referral program will appeal to potential partners.
Advisors’ Dilemma: Grow Organically or Find Partners
After growing his business to $125 million in assets under management, Meyer, a dually registered broker/dealer and RIA, said he was faced with a choice: “I either had to build a whole new level of infrastructure or find people I was compatible with.”
Meyer said he clicked with Beacon Pointe because the firms’ active asset management style was similar to his and he shared Beacon Pointe’s vision of a national firm that could leverage economies of scale. “I’ll be able to work with boutique money managers at a discount and utilize my time in a much more efficient manner,” he said.
Beacon Pointe is joining a wide range of wealth management firms striving to establish a national presence. They include the high-profile aggregators or so-called “roll-up” firms like Focus Financial Partners and United Capital Financial Partners; traditional RIAs like Mariner Wealth Advisors and Edelman Financial Services; multi-family offices such as GenSpring Family Offices and Silver Bridge; holistic wealth mangers like Aspiriant and HighTower, a hybrid broker-dealer/RIA model for high net worth clients.
“The allure of growing in other locations around the country is very powerful, but at the same time difficult,” said industry consultant Tim Welsh, president of Nexus Strategy in Larkspur, Calif. “Spreading fixed costs over a large account base can certainly be a good thing and going for it is great. But you have to ask if firms are doing it with their eyes wide open or have they just run out of ideas? If a firm like Beacon Pointe can get to $4 billion in one of the best markets in the country, are they taking their eye off the ball by adding $100 million offices around the country?”
Cooper said Beacon Pointe is not in a rush, but determined to expand, and is targeting the Northeast and the San Francisco Bay Area for its next moves.