For many older advisors, the task of finding an exit strategy can be so daunting that they simply put it off or don’t do it. But your successor could be the person sitting across the table—your client.
That’s how Joel Shaps came to run Los Altos, Calif.-based Bedrock Capital Management, a $319 million firm that was recently acquired by United Capital Financial Advisers. The firm has been renamed United Capital of the Silicon Valley, and Shaps, Eric Lewis, and Tony Blagrove have joined as managing directors.
Shaps bought Bedrock in 2001 when it had about $40 million in assets. But he started out as a client of the firm.
“I was playing golf with the guy who was managing one of my portfolios and I asked him what his exit strategy was from Bedrock, and he said, ‘I really don’t have one. I’d love for somebody to come in and take it over,’” Shaps said. “And that’s what I love to do. I love to grow companies.”
Before taking over the practice, Shaps worked in the retail sector and then started his own auditing firm, where he would go into high-tech companies in Silicon Valley and found where they overpaid their suppliers. He later sold it to a big public company in Atlanta, and he ended up running divisions for them across the country.
“I was at a point in my life when I was looking for the next thing to do,” he said. “I had sold a company and worked for the big firm that acquired mine for several years, and that had run its course.”
Shaps had the funds to buy Bedrock. He also already had a feel for the client experience.
“I knew what he did,” Shaps said. “But when I did my due diligence in buying Bedrock, I talked to many of the other clients and it was clear there were huge opportunities to expand the service offering. He was really just an investment manager who had one very specific investment model.”
Shaps expanded the firm’s offering to include tax planning, estate planning, retirement planning, employee benefits analysis and risk and insurance analysis. And because of the additional services, the average client account grew from $250,000 in 2001 to about $2.5 million today.
While Shaps looked at wirehouses and other aggregators, he said he was attracted to United Capital's financial life management model.
“That was very much our approach,” he said. “When we had meetings with clients, it was talking about their situation and their goals and are they on track to achieve what they’re trying to do.”