Jeff Thomasson: The Visionary Entrepreneur

Editor’s note: This is the first in a series of interviews with thought leaders on the future of the wealth management industry.

“Visionary Entrepreneur” aptly describes Jeff Thomasson. Right after graduate school in 1981, he launched Oxford Financial Group Ltd. at 21 years old. Today, it is one of the country’s most successful firms with more than 130 employees advising on $24 billion of assets, of which $14 billion is under management. Thomasson avoids the spotlight and rarely publicly discusses strategy. For this issue, however, he agreed to share his thoughts on the future of wealth management.


Hurley: What do you see for the future of this industry?

Thomasson: Winners and losers: Brokers and banks will continue to gather assets but ultimately will be losers in the ultra-high-net-worth space.

Initially, our industry began as a bunch of barbershops with owners who hung out shingles as financial planners and are now trying to become wealth managers or multifamily offices. Going forward, you will only be a winner if you can scale to at least $100 billion or even $200 billion over the next decade, while differentiating yourself.

Hurley: For firms that target the $10 million to $50 million client?
Thomasson: Exactly. Or above $50 million.

Hurley: Will firms that target $1 million to $2 million clients and have $20 billion to $40 billion of assets also be winners?

Thomasson: If they’re lucky. It is unclear whether they will be able to sufficiently scale in technology and people.

There are going to be three buckets of winners: high-net-worth-firms, ultra-high-net-worth firms and robos. All will have to figure out how to scale. Robos will be massive by capturing those folks who can’t afford to pay for the first or second bucket. The second bucket’s challenge will be to differentiate themselves from the robos.

Hurley: Even Oxford will need an astounding number of additional clients to get to these levels.

Thomasson: It is staggering.

Hurley: How are you going to be able to do it?

Thomasson: Acquisitions of talented people. Never in the history of America has an industry scaled without acquisitions. Like other industries, you just can’t do it mathematically without acquisitions.

Hurley: That still means a lot of deals.

Thomasson: They will be strategic and, believe it or not, a majority of them (the people) are going to come to us.

Acquisitions are a people-gathering exercise, attracting folks that have a similar culture to yours. By working hard in the geographic markets that you want to target, teams of folks—at a bank, a brokerage, a group of advisors with a 60-year-old senior partner and no currency—will come to you.

It’s not going to happen from a target list. For example, if I was to assemble a Midwest target list, it would probably have only four and a half names because I lack the optics to see inside a bank or brokerage and find the advisor who has $3 million of revenue at an organization that they’re tired of representing and who I could bring over to Oxford.

Hurley: You’re describing lift-outs?

Thomasson: They are non-cash acquisitions with someone interested in being a part of our culture and platform.

Hurley: So you are targeting employees of businesses, as opposed to acquiring other firms?

Thomasson: Yes. With so few Midwest targets, that type of acquisition strategy will not allow us to scale and continue to be a winner.

Hurley: Why limit yourself to the Midwest? How can anybody achieve scale by limiting themselves to a geographic region?

Thomasson: Geographical limitations allow you to grow without sacrificing being home at night, seeing the kids’ soccer game, going to the lake on the weekend. Management can easily get to our multiple offices and advisors can come into Indianapolis or travel to other markets without connecting flights or perhaps even drive.

We also can focus solely on the Midwest because of the demographics [of prospective clients] in this region. We’ll get plenty of other clients in other markets by accident, as we have in the past, to get us to our current 43 states.