The Nation’s Largest Female-Owned RIA Started as a Business School Class Project
Since founding Beacon Pointe Advisors in 2002, CEO and partner Shannon Eusey has grown it into the country’s largest female-owned and led Registered Investment Advisory firm, with over $10 billion in assets, 14 offices nationwide and nearly 160 employees. A graduate of the University of California, Irvine where she played Division I Volleyball, and UCLA, where she received her MBA, Eusey stresses the importance of making financial planning holistic and accessible. She spoke to Worth about how she’s expanding her firm from its Newport Beach, Calif., base, getting corporate culture right and what she wishes she had known in business school.
Q: Beacon Pointe jumped 16 spots in Barron’s 2019 top 50 RIAs ranking and is now in 20th place. What helped you make so much progress?
A: It’s a combination of things. We’ve continued a nationwide expansion. Today we’ve got 14 offices across the country and are planning for additional expansion. We’re doing due diligence with two potential offices in other states that we’re not in yet.
We have a proprietary approach called All Wealth. It’s a unique way to help our clients manage their total assets. Investments are certainly important, but it’s all the other things that families and next generation of families feel are more important. So it’s understanding the total wealth picture and understanding what the families want to achieve with their assets. Are they providing the philanthropic means they want to provide? Are they creating a family mission around their assets? It’s all the pieces that go into the financial picture, including investments but some of the “softer” stuff as well.
As a firm, we’re really about education. We have a Women’s Advisory Institute. We wrote a book a couple of years ago geared to next generation investors. We teach financial literacy at the local university and in high schools. All of those things come together because of our entrepreneurial culture.
You recently partnered with Heller Wealth Advisors, based in Summit, N.J., and Manhattan. What prompted that merger and how does it fit within your overall growth strategy?
We’re acquiring the firm, but they still have ownership and are merging into the organization. The way our business works is we bring these teams in as partners in the organization. It’s extremely important for us that we’re hitting the culture absolutely right.
It’s geographically being in the right spot, and also making sure philosophically they see things as we do. We put clients above everything else, and then take care of our employees and then the community in which we live.
The tristate area is a market we want to be in but culture—having a dynamic and diverse group—trumps all. That’s not easy. We kiss a lot of frogs before we find the right fit within the organization.
What do you wish you’d known when you were studying for your MBA?
When you get your MBA you think—at least I thought—the most important thing is all the technical knowledge, but your culture and the people you hire and partner with trump all of that. You can have the smartest team, but if you don’t have the right culture, it won’t work.
There needs to be more of that in school, the basic knowledge of getting dirty in a business, versus just all the studies and books. What has made us successful is the people. Not only is everybody working incredibly hard, they’re also friends.
How do you foster that culture, in tangible ways?
We have a Monday morning huddle every week with our 60 plus local employees, talking about what’s going on in the business, celebrating professional but also personal successes, marriages, kids, whatever that looks like. My philosophy has always been, family comes first, period.
I really think it comes down to caring for everyone as a human being, and it’s not dissimilar to what we do for clients. Understanding who they are as a person is extremely important. And we’re really entrepreneurial. We’re always asking, “What can we do better?”
How has the field changed since you founded Beacon Pointe in 2002?
I wrote the business plan in grad school in 2001. We had a unique platform when we launched. We’ve grown up with the evolution of the RIA. There weren’t 19,000 RIAs out there, like there are now.
I do think we will see continued consolidation, because it’s harder to run a large size firm, not just from managing the clients’ assets, but also taking care of compliance, marketing, hiring and you want to make sure you’re doing right for your clients.
When we started, it was with an institutional focus. We built a firm and investment platform that was extremely robust and it’s still critically important, but in 2008 we refocused on financial planning, helping the clients plan their lives through their investments. It was an important strategic shift. You’re seeing it in the asset management space. Individuals prefer wealth managers because they want their wealth seen in a holistic way.
Are there are any common mistakes that even sophisticated investors make?
It’s not necessarily a mistake but maybe human nature: Hindsight bias is the biggest thing we see with investors. Believing they can predict the future based on the past. You see it even with the most sophisticated investors. The market is driven by human emotion, which is not necessarily rational. I love what Warren Buffett says: “You have to be greedy when others are fearful.” It goes absolutely against human nature.
On a less sophisticated level, we’ll see clients in their 50s or 60s who have failed to plan. Not because they didn’t have assets, but because life gets busy and it’s hard to sit down and plan. Or they’ve planned but done it without help, and often times it doesn’t work because they don’t have all the pieces. When do they take social security, what are healthcare-related expenses going to be, are you planning for inflation? There are a lot of ways people leave money on the table.
Beacon Pointe recently tweeted, “Growing kids, aging parents, your 40s can be an overwhelming time as you try to juggle family life and finances.” What are your top recommendations for investors in their 40s and 50s?
The issue in your 40s is you’ve got family obligations, work and travel. Often, people forget to review their life insurance and their estate planning. It happens all the time: People invest in their 401(k) plan in their 30s and they forget to rebalance it based on where they are in their 40s and reevaluate what their assets look like.
You also get “lifestyle creep.” You’re starting to spend more money—it could be kids and a house or vacations and a second home—and so you have to make sure your savings are still intact.
A big question I get is how to pay for your child’s college education if you haven’t saved for your retirement. We say save for retirement first and then take a college loan. You’ll never be able to retire if you do it backwards.
Making financial planning more inclusive is part of your mission. How do you make it accessible?
We’re really about providing clear and targeted advice. Even with a sophisticated investor, you still want to be clear and targeted. We try to educate where needed, and part of our philosophy is making sure we’re educating all the time, targeting advice to our clients’ ages and where they are in their family structure.
For example, there’s important paperwork when a child turns 18 and goes to college, and lots of parents don’t know about it. It’s really important for families to fill out a healthcare power of attorney, allowing your child to name you as agent to make healthcare decisions on their behalf if they are unable to do so themselves. This document often also contains the language under the Health Insurance Portability and Accountability Act of 1996 (HIPPA) authorizing you to speak with medical providers, but if it does not, we also recommend your child complete a HIPPA authorization form. While our clients usually ask their estate attorney to create these forms for their children, both the healthcare power of attorney and HIPPA authorization are commonly available from state bar association or medical association websites.
A power of attorney for financial matters, available through an estate attorney, is another key document we recommend to provide you with the power as your child’s financial agent to work with financial institutions, pay taxes, pay bills or conduct other necessary financial matters on their behalf should your child either temporarily or permanently lose capacity. There’s also the FERPA form (Family Educational Rights and Privacy Act) which allows you to, if needed, access their information at college.
How do you work with young people?
We try to educate the younger investor—we’ve even worked with Girl Scouts, giving a badge in basic budgeting and credit advice. We also teach high school students financial literacy.
Every year we have 10 to 15 college interns. We take them through a 10-week course on understanding the basics of finance. I’m continually shocked that basic finance isn’t taught in schools. It should be taught in grade school.
We help our interns set up their IRA and make the first contribution to their retirement account. It’s like muscle memory. If you start teaching yourself to save every year, you’ll do it every year.
Tell me about your involvement in ScratchWorks.
It’s a fintech accelerator and run like a mini Shark Tank. It’s at the Barron’s conference every year and the other folks on the panel are like-minded industry leaders, so not only are we getting access and first look at emerging fintech ideas, we also have collaboration as a group to see if this is something we want to invest in. One idea pitched there, AdvicePay, is something we’ve used in our firm.
How else have you integrated technology into your services?
Everything is technology-related and most of our offices are paperless. We have a dashboard and a virtual vault where clients can access all of their documents. We have a portal for clients, including planning questionnaires so we get a sense of what both spouses think about financial planning. Being able to integrate everything about our clients’ financial picture is extremely important.
It’s vastly different from when I started. Still, I had a client in her 70s the other day who walked into the office with a suitcase of all of her financial documents. We uploaded them and now she and her kids have the peace of mind that everything’s in one place.
What is the Women’s Advisory Institute? Why did you found it and what are your goals?
When we launched it, we got real pushback from the industry. But that’s completely changed.
We launched it in 2011. We noticed that often women weren’t coming to the investment table, and we wanted spouses and daughters to be involved. Fifty percent of our leadership is female, so I think we’re more attuned to it. What we found is when women got in a room together, they asked more questions. We’ve done things like a workshop on how asset allocation works. We had a group come in and teach that, and we also had a mixologist. We pair it with something that’s kind of fun. We did heart health and financial health; organizing your life and your financial life. It’s making it easy and relatable. It’s not dumbing it down. It’s shifting the priority. Often times it hasn’t been a priority for women. When we launched it, we got real pushback from the industry. But that’s completely changed.
How do you attract female financial advisors?
It’s very hard in our industry. The percentage of women financial advisors hasn’t changed in 30 years. If you don’t have women in your organization, you can’t attract other women to join.
You have a robust internship program. How do you identify, train and retain talent?
The internship program wasn’t intended to find our next candidates to hire. However, a number of our employees were former interns. The intent of the internship program was to provide a community and industry service—there are so many people who don’t know that wealth management is a career.
Most of our employees have come through a referral through somebody internally. How do we retain them? Treat them well. Do right by your team. The fact that we have an entrepreneurial, collaborative culture is essential. Without that, you get eaten alive. We’re very deliberate about who we hire, even if it takes longer. Our candidates go through rounds of interviews with the people they’ll be working with directly, not necessarily the partners.
Diversity is such a corporate buzz word. How do you actually enact policies that foster diversity in a significant and meaningful way?
We don’t have policies per se as it relates to diversity. We hire the best people for the job and as a result of that, we have diversity. We’ve been blessed in that regard and it is a byproduct of how and who we hire. Fifty percent of our leadership is female. Our team runs the age spectrum and we have a number of different cultures represented as well. You attract like-minded people.
What is your approach to philanthropy, and has it changed in the course of your career?
For me personally, and as a family, we’ve become more focused in our approach. Where do my kids and husband and I want to be in terms of philanthropy? It’s not dissimilar from how we work with clients. It’s something we’ve taken to our clients and to heart in our home as well.
When you have a mission and say, “This is what we want to focus on” it allows you the freedom to decline other requests that aren’t in line with your mission. My recommendation to families is to save part of your donations for the smaller asks, and the bigger donations should have a clear mission and focus.
As it relates to our business, we started it working with foundations and their endowments. We still do that, and we love to do it. It allows us to give back to our community. As a firm, we do a paid day of service almost every quarter.
In addition to your very demanding career, you are a marathon runner and have four children. How do you balance the competing demands on your attention?
I just happily completed all the world majors and am running Boston in April of next year. I think this comes with age and a little more wisdom: I’m focused and disciplined about making sure I have the time that I want with my family and I’m disciplined about when I run. My best ideas come when I’m running. The ability to be in clear head space makes me more focused when I’m in the office and working. There are days when it doesn’t work, when I’m in the office until 11 pm at night. Last night, I asked my husband to swing by the office with my son after his volleyball practice so I could say goodnight. My husband’s a stay at home dad. I’m pretty sure this wouldn’t work if he weren’t. He’s been home with the kids for 20 years. I also love what I do and that makes a big difference.