Landgraf, a graduate of the University of Arkansas who received his degree in Accounting and Data Processing, started his career at Pennzoil before accepting a job at Enron, where he created a trading system for hedging oil drilling operational risks. Then he joined with a family member to build a money management business focused on sector rotation. At 48, he hopes to double assets under management over five years.
Landgraf says low returns on stocks in "The Lost Decade" have put pressure on margins. "You can charge a 2% annual fee when you can gain 20% annually, but not in a period of meager returns," he says.
Landgraf says lackluster returns on stocks in recent years forced him to branch into managing portfolios of bonds as well as stocks, which turned out to help his firm's growth. "It helped us retain assets, even though fees on managing fixed income obviously cannot be as high as those for managing equities," says Landgraf.
Landgraf says his trend-following approach shielded his clients from the worst effects of the bear market of 2008-2009, which is now helping him get more referrals. "While a lot of advisors suddenly got broken arms and were unable to pick up the phone and call clients, we increased our communication effort using e-mails, newsletters, and online meetings," says Landgraf. "It's helped."
Last fall, Landgraf hired Quantuvis Consulting of Redlands, Calif., to assist with strategic marketing issues. "We now have a formalized marketing plan which spells out activities month by month," he says. With the knowledge gained in working with Quantuvis as an underpinning, Landgraf is now implementing ideas to grow his practice.
Norm Boone, founder and CEO of Mosaic Financial Partners with offices in San Francisco and Lafayette, Calif., says one of the factors that will aid his firm's growth in 2011 is a reformulation of his firm's compensation package for employees. "We basically cut advisors' compensation in half and made it up by tying their compensation more closely to the revenue generated by their clients," says Boone, a Harvard MBA.
Boone started Mosaic 20 years ago. After a couple of years, Boone says, he hired an assistant to work part time. She worked full time right from the start, however, Boone recalls, and he doubled his business almost immediately. Within two years, Boone hired a financial planner and operations staffer and doubled his business again. Mosaic now employs 17, which includes five advisors who are responsible for business development as well as client relationships; four planners who are responsible for most of the client contact as well as designing financial plans: two investment specialists, one of whom handles research while the other is responsible for performance reporting and operational issues; a dedicated business development executive; a family business and succession planning expert; and three and a half clerical staffers.
The Mosaic Family Business Center is a key growth area for the firm, Boone says. This is a separate business for Mosaic and it's run by an individual who has worked in multigenerational family businesses and is familiar with succession planning issues. "We're providing consulting on succession planning issues in conjunction with attorneys and accountants," says Boone, who says he expects this niche could bring in at least $20 million of additional assets to be managed by his firm.
Boone says his firm has also developed a relationship with a local expert in advisory firm M&A. "I believe that there are a good number of individuals that are managing between $25 million and $75 million and who are drowning in administrative work and not having fun," says Boone. "We want to find those people in the Bay Area and make them part of our team here so they can get back to doing what they like best."
Dr. David Yeske, of Yeske Buie in San Francisco, a former chairman of the Financial Planning Association, is thinking big.