Right from the start, Jeff Thomasson was sure of his vision. It didn't matter that the profession he envisioned barely existed at the time. He probably never imagined he was creating what arguably would become America's largest, most successful independent advisory firm, one that now has 500 family and 100 institutional clients with more than $13 billion in assets under advisement. After all, he started the Indianapolis-based Oxford Financial Group in 1981 at the grand old age of 22.

It was the worst of times, characterized by crippling inflation, 20% interest rates, intermittent gas lines and an unemployment rate well on its way to double digits (it reached 10.8% in late 1982). The fragmented independent advisory business at that time was a tiny cottage industry populated with career changers.

Thomasson had just completed his MBA at Indiana University, where he was named outstanding student. Even that hadn't come easy. The average student in Indiana's MBA program was in his or her early 30s, and Thomasson had to make several trips to the admissions office in Bloomington to convince them to admit him. He had graduated from Ball State at age 20 after three years of study.

Oxford was launched the same month Thomasson got married. He had asked for his wife's hand from his future father-in-law, a homebuilder who hadn't built a house for a year, and the older man offered him words of worry and concern. He worried Thomasson didn't have a job, much less a business. Nor experience or clients. Nor did he know any affluent people. The idea looked like a pipedream. It seemed like a lousy time to start any business, much less one in wealth management. His future mother-in-law had doubts, too, but she knew the two were in love and gave it her blessing.

Indeed, Thomasson hadn't rubbed shoulders with many wealthy folks growing up in the Hoosier state. But he had learned about hard work. His father was disabled and his mother was a bank teller.

Given his age, Thomasson could also afford to fail, though that was never an option for him. "We had a negative net worth [with student loans,] so our goal was to get back to even," he recalls.

The nascent entrepreneur had first given serious thought to his own firm during his second year as an MBA student. In the fall of 1980, he worked with a professor developing a business plan. "Back in 1981, you were either a trust officer, a money manager, a life insurance agent or a stockbroker. I really wanted to do something different," he says. "I knew I wanted to go into finance and I knew I wanted to make a difference."

So he went out and did something few RIAs today would deign to do. "A friend said all you have to do is cold call nonstop for two or three years and you'll never have to do it again, so I did," he explains. "Thank goodness it was before voice mail."
Although he looked closer to 16 than 22, the young advisor had been an ace finance student, specializing in investments and taxation, and he exuded enthusiasm and confidence. "I didn't know what I didn't know," he jokes. "I was incredibly confident about what I did know."

The Early Years
Oxford was established as a fee and commission firm. That first year, Thomasson earned about $60,000, split almost equally between two revenue sources. By 1984, the firm was thriving, with six employees generating about $600,000.

From the outset, Oxford cultivated relationships with allied professionals, particularly CPAs. Some became good friends.
In 1984, several people suggested that Oxford convert to a fee-only business. Thomasson and his colleagues liked the suggestion so they dropped their securities licenses that year. Even after the change, they pulled in another $600,000 in 1985, a "huge victory," he says. Still, it took another decade before folks in the greater Indianapolis region, particularly competitors, believed the firm was truly fee-only.

Not only did the move eliminate conflicts of interest and differentiate the firm; it also sprinkled some marketing sizzle on it. Allied professionals started taking Thomasson to client meetings and urging people to hire the firm. "I almost got a discount because I wasn't in the product distribution business," he says. To this day, allied professionals remain the "lifeblood" of the firm's growth strategy and it tries to reciprocate when appropriate.

In the mid-1980s, it seemed as if Oxford was adding a new client almost every week. Many of the early clients were physicians; others were business owners and people who had inherited money. The firm also started advising some retirement plans.

But even though the top line was surging, Oxford was already experiencing growing pains. When Jeff Stroman, a former Robert W. Baird branch manager, joined Oxford in 1987, the firm still had fewer than ten employees and it had been a successful fee-only concern for a few years. But it faced many operational challenges, and it was frequently forced to invent the wheel. "Before Schwab revolutionized how mutual funds could be bought and sold, all trading was done direct with each fund company one trade at a time," Stroman remembers.

When it came to performance reporting, there were no "off the shelf" vendor systems. "We had to create our own proprietary system," Stroman says.

Ditto for data aggregation software, which didn't exist. All the client portfolio information was entered manually from hard copy custodial statements.

A CPA from a regional brokerage firm, Stroman was brought in to build out Oxford's investment platform. The firm's investment offerings in the late 1980s were limited largely to a small group of no-load mutual fund companies and money managers. Stroman believes the firm had about $25 million under advisement at that time. But Oxford needed to expand its head count to deal with the client growth and the additional workload.

By the time the fee-only RIA business surfaced on the financial services industry's radar screens in the early 1990s, Oxford was going gangbusters. Lots of small business owners who had sold all or part of their businesses were searching for an advisor who was not selling products. So were executives from public companies. Many businesses in the Indianapolis area that were sold at prices ranging from $10 million to $100 million played right into Oxford's hands, so it moved to expand into family office types of services. Very successful small business owners tend to run in the same circles, and soon Oxford had a new referral stream. "They were incredibly attractive clients with sophisticated planning needs that had not been addressed previously because their net worth was largely tied up in the business," Stroman says.

As its client network was growing increasingly affluent, Oxford expanded its portfolio of services and investments and started to compete in the family office world. In the mid-1990s, it started offering clients alternative investments, particularly hedge funds. Oxford was an "early adopter of hedge funds and, by and large, clients have been well-served" as a result, says chief investment officer Mark Green.

By 1997, the firm had persuaded many clients to establish trusts at several banks. It quickly grew tired of banks trying to cram proprietary products into these trusts. In typical fashion, Oxford simply established its own trust company and told clients it would charge no additional fiduciary fees. That unit now has more than $3 billion in assets.

'Vision, Smarts'
The late 1990s was a magical time for the U.S. economy. With the exception of the technology business, few other industries were participating in the boom to the degree that the independent financial advisory business was. Around the nation, many RIA firms were experiencing the same growth trajectory that had propelled Oxford virtually since its inception.

Advisors who had struggled to pay their bills after going fee-only in the early 1990s, back when it seemed like a risky business decision, began to reap the benefits. Not surprisingly, more than a few were feeling quite satisfied with their accomplishments.

Not Thomasson. "I'm a great one for manufacturing a crisis," he admits.

Why? Thomasson has always viewed his firm through a highly critical lens that is foreign to most RIA firms. The firm's relentless process of self-criticism and a total rejection of complacency can be traced to him.

Despite its remarkable ascent, Oxford has experienced bumps along the way. Thomasson freely concedes that most of his negative experiences "have come when I thought I was too smart," he explains. "That's happened to me repeatedly. My first response is to get mad at somebody else. It's taken me a while to figure it out."

There's another reason he likes to manufacture crises. "If we don't have a crisis, I'm going to create one because we execute so well under pressure," he observes.

At the turn of the millennium, Oxford advised more than $3 billion in assets. It had 120 employees, strong growth rates and healthy profit margins. So it seemed an unlikely firm to turn to outside consulting.

In 1999, Mark Hurley, then starting Undiscovered Managers in Dallas, grabbed a lot of headlines, as well as widespread derision, with a white paper predicting that the advisory business would start consolidating, spurring the creation of large firms in most major metropolitan markets. Oxford was already there.

After spending some time with the firm, Hurley reached a simple conclusion. "It's the best-run business in the industry. Period," he declares.

Why? Hurley cites a "combination of vision, smarts" and the constant drive for perfection. "Go to any advisor conference and most of these guys are all walking around talking about themselves," he explains, adding that Oxford advisors are quiet, observant and searching for ideas. "They will not waste time with idiots." It's the only firm Hurley has seen that has designed its own cost accounting system to measure everyone's productivity and profitability.

Before Hurley's report appeared, Thomasson had already realized Oxford needed professional management if it was going to be able to scale the business. This meant hiring a chief operating officer, a chief investment officer, a chief compliance officer and a director of human resources.

As one might imagine, these were not small payroll numbers. "They don't do client work. Some would call them overhead," Thomasson says. But, he adds, "They are absolutely important to helping us scale the business."

Today, Oxford has tripled its year 2000 revenues and boasts more than $13 billion in assets under advisement with the same head count-120 employees-that it had ten years ago. Had the firm not made the transition to professional management, all this would have been impossible.

Culture Crisis
Overhauling a firm's structure is challenging in any environment. Oxford restructured in 2001 and 2002, years that presented new types of problems for advisory firms. Many advisories struggled early in the new millennium after the tech bubble burst, and Oxford wasn't spared.

Things were tense. "Ten years ago, we weren't behaving that friendly to each other," Thomasson recalls. "We had to create a culture crisis and get real issues out on the table."

Sources recall that, to clear the air at an offsite meeting, Thomasson asked each of the firm's top dozen or so executives to name two things about everyone else in the room that really bothered them.

"Perhaps we did [that]," Thomasson says, adding that at the firm's annual offsite meetings, "we've done some interesting things" over the years.

In reality, the cultural crisis was inevitable when the firm turned from a small entrepreneurial company to one with a board of directors and a sophisticated governance structure. "People had to change," Stroman says, and there had to be a willingness and spirit to trust each other and let go of certain responsibilities.

Another move Thomasson made was to expand the firm's ownership. There were four partners a decade ago and there are 14 today. "When you work with Oxford, you work with an owner," he says.

Ready To Grow
When Mark Green joined Oxford as chief investment officer in 2006, the firm had emerged from its growing pains. Green's strengths lay in big picture issues like asset allocation, not security selection.

Having worked in banks and family offices, Green was familiar with their shortcomings. "Usually, the growth in the family tree outstrips the growth in families' assets," he observes.

Oxford appealed to Green for several reasons. Its giant asset base ensured that it wouldn't be locked out of opportunities in the hedge fund and private equity spaces. Moreover, Oxford was gaining market share in the underserved Midwest, away from the saturated markets on the coasts.

Green describes the firm's investment philosophy as "the disciplined balance between the art and science of investment management." That means the firm takes advantage of the "twin miracles" of compounding and rebalancing with a view toward both strategic and tactical asset allocation.

Over the years, Oxford's research departments have shared research ideas and held quarterly conference calls with the team at Convergent Wealth Advisors, a Washington, D.C.-based RIA with $14 billion in assets. Both firms have major manager overlap and a desire to guard against "group think."

"Lots of people in this business think that they have the secret sauce," says Steve Lockshin, chairman and CEO of Convergent, noting that the two firms' approaches to investments are very similar. "They don't. Jeff [Thomasson] knows that."
Oxford's investment forum is responsible for education, communications and client delivery. This is where Green and his staff can explain their decisions to and get feedback from Oxford advisors who are dealing with clients on the front lines. "During the depths of the [2008] financial crisis, feedback was critical," Green says.

Communicating with clients is an ongoing process. Because most of the firm's clients have more than $10 million in assets, they are more sophisticated than average. Green and his staff actively try to teach clients to think more like institutions.
Thomasson is stunned when he hears tales of 70-year-old clients at other firms whose advisor has 80% of their portfolios invested in equities (unless it occurs at the client's request). "Our clients do have diversified portfolios, but they do not have 80% of their assets in equities," he says. "We are much more inclined to dial it back to something closer to 35% past the age of 60 and even less when [they reach] their 70s and 80s."

The Look of an MFO
Rick Davis joined Oxford as a managing director in the summer of 2007, just before all the fun was about to begin. His timing was propitious in several ways.

Davis' background had much in common with those of many Oxford clients who owned private businesses. Before joining the firm, he had served as president of his own family's third-generation residential real estate company.

His legal credentials also proved to be an asset to a large RIA looking more and more like a multifamily office. After graduating from the University of Michigan, Davis spent years as a corporate attorney at the New York-based legal giant Sullivan & Cromwell. In a family business where his relatives possessed real estate expertise, Davis specialized in all the other activities, including the insurance, finance, accounting and legal work. "I almost ran a single-family office," he says.
He now devotes much of his time at Oxford to working with private business owners on issues like family succession planning, diversification, estate tax liabilities and asset protection planning. He confirms what Green says about how clients change their perspective once they become Oxford clients.

"The thing I hear almost daily with my clients is that when they joined Oxford, they quickly begin to think like an institution," he says. "They adopt a different mindset."

That doesn't mean the conversations are easy ones. One nettlesome subject the firm must often broach with clients is the idea of pulling some liquidity out of a private business or reducing a highly concentrated equity position to diversify. "We look at a client's net worth from 35,000 feet," Davis says.

Some clients don't. Since many have succeeded by building their own businesses, they have a bigger comfort zone in those business areas they know intimately rather than in the volatile global financial markets.

Major decisions to diversify aren't easy ones. In the end, it's the client's money. Sometimes a recommendation is made and put on the back burner. Oxford advisors like Davis won't badger a client, but they will raise the issue at subsequent meetings.
As the financial crisis turned tumultuous in 2008, Davis found himself on a steepening learning curve in what was suddenly a difficult profession. He's no stranger to financial crises; he recalls working at Sullivan & Cromwell in the fall of 1987. "This period [2008-2009] was distinguishable from others in that you began to wonder if the whole system was going to collapse," he says.

By fall 2008, clients who thought they knew better were nearing panic mode. More than a few wanted to go to 100% cash. "Clients were asking questions about bank accounts and custodians," Davis says. Even though they had established some relatively defensive positions, he spent time and energy "counseling clients against their own worst instincts."

Understandably, clients who have built wealth elsewhere want to conserve and protect what they have. After emerging from the crisis, clients have survived, but "they remain cautious and they put a higher premium on liquid investments than they did before," Davis says. "Illiquid investments have less appeal."

A Remarkable Relationship
Lockshin of Convergent Wealth Advisors met Thomasson at a Young President Organization meeting five years ago. When the two discovered they were not only in the same business, but also operating firms of a parallel scale with few peers, it was the beginning of a remarkable relationship.

Their business models differed significantly-Convergent has offices all over the nation while Oxford is in the Midwest and Dallas-but their approach to the client, with a heavy stress on asset allocation, estate planning and other esoteric issues affecting ultra-affluent individuals, was strikingly similar. Soon they were getting together every eight to ten months and running two-day, complete open book meetings. If dramatic disparities surfaced, their CFOs were called in to figure out why.
Lockshin says there are three attributes about Oxford that stand out. "Jeff is incredibly disciplined, and that benefits the company, employees and clients," he notes.

Service delivery is another component of Oxford's value proposition. "From a marketing standpoint, he puts together events for his clients that are only rivaled by places like JP Morgan and Goldman Sachs," Lockshin explains.

But the third attribute may be the most significant. "He has a tremendous commitment to remaining a 100% employee-owned company," Lockshin says. "That matters to clients."

Succession planning is a touchy subject throughout the profession. Only a handful of firms-like Oxford and Convergent (which is about 66% owned by City National Bank of Los Angeles)-might be accorded nine-figure valuations. A few months ago, Charles Schwab & Co. paid $150 million for Boston-based Windward Investment Management, which manages about $3.9 billion through a proprietary quantitative investment system. These valuations may not be comparable because Windward, Oxford and Convergent have different business models-Schwab wants to leverage Windward's investment platform and market it to other advisors and retail investors-but all are in a different league than most successful RIA firms.

Several years ago, Thomasson established a Delaware dynasty trust that lives on in perpetuity to ensure Oxford could remain private and independent indefinitely. Kara Talbott, a managing director at the firm, says the trust was established as a governance and succession structure, not a family wealth accumulation and transfer strategy. However, Oxford has recommended these same trust structures to clients for all the aforementioned reasons.

"I have stood in front of my partners and cried out of humility and joy," Thomasson says. "To see that kind of commitment from 120 people is humbling. They work seven days a week, they call clients every night, they work on Sundays.
"I can tell partners this is for keeps," he declares adamantly. "We're not going to sell this place. We don't have a B team. I'm making a commitment that this place will go on beyond my lifetime."

With the dynasty trust, he says, "My voting shares are protected indefinitely to allow for the private ownership of the firm so that the owners make the decisions and enjoy the quality decisions of same." Neither of his children is involved in the firm.
Clearly, total commitment is required at Oxford, but that doesn't mean other aspects of life are given short shrift. Hurley says the best piece of advice he ever received from an advisor after working with them for more than ten years came from Thomasson.

It has everything to do with family and nothing to do with finance. Thomasson advised Hurley, a father of five, to have one-on-one lunches with each of his children, when possible, every week, at a restaurant of the child's choosing. It may not be completely practical for Hurley to do on a weekly basis, since his youngest is 1 year old.

"I never would have thought of it," he says. "But it has totally changed my relationship with my oldest daughter [who is 6 years old] and increased her self-esteem."

Every advisory firm finds it difficult to pass the torch to the next generation. But it's a somewhat different issue at Oxford, which has 14 partners of varying ages and lots of talent right below the partner level. "Shareholders here are not looking to sell the entire firm for a large payday," Stroman says. "It's critically important that we transition out of the first generation. I'm not going to be around here when I'm 70, and three or four partners are in my age group."

At some point, their shares will need to be redeemed. Of equal importance is ensuring that client relationships remain sticky and become institutionalized.

As for Thomasson's retirement plans, his answer via e-mail isn't surprising. "Retirement is not likely," he says. "Perhaps working less, but this seems like a long time away."