In 2011, the firm started its financial planning component under the eye of Commie Stevens, an estate planning attorney hired in 2008. “She built our entire department and platform,” Cooper says. “So we have two estate planning attorneys and three CFPs who are dedicated just to supporting our
client-facing advisors, many of which are also CFPs. So the private client side of our business over the last seven and a half years has evolved to be 100% planning first and then the planning is run by what we believe is a superior investment platform.”

Serial Acquirer
Eusey says that an important part of the culture is to let people run with new ideas. And it was Cooper’s idea in 2011 that Beacon Pointe needed to launch a new strategy, Beacon Pointe Wealth Advisors, when he realized there was money in the streets—in the form of mom and pop RIAs with no exit strategies.
“I was on the TD Ameritrade advisor panel and they invited Rudy Adolf from Focus Financial and Mark Hurley [of the Fiduciary Network] to come in and talk to the panel,” Cooper says. “A fantastically entertaining meeting. … The message I took from that meeting is that there are thousands of small wealth managers, RIAs out there that will never create any real value in their enterprise value of their business because the owners are the business, and when they’re gone, there is no more business.”

Many firms peak at the $150 million to $200 million level, Cooper realized. “Why was their growth decelerating and just stagnating?”

“The light came on in my head,” Cooper says, “And I said, we can provide a solution to the marketplace because we’ve got a lot of stuff here at Beacon Pointe that smaller firms can scale off of.” Though asset appreciation over the past six years has given many smaller RIAs confidence, the market is fickle and asset values could plummet. They also know they are facing compliance problems and robo-advisors, and know they’ll have to reinvest in their businesses. Many small advisors don’t want to take the money they’ll need out of their own pockets, Cooper figured.

The firm’s strategy is buy RIAs by paying them in shares of Beacon Pointe. They become paycheck earning employees of Beacon Pointe, but also K-1 business owners in charge of their own P&L statements. Some have criticized deals that are paid for in shares, asking where the liquidity is, but Cooper says that his offering is tailor-made for advisors who want to retire in three to seven years—people who might be staring into the teeth of a bear market and plummeting asset values just when they want to cash out.

“It will be accretive to them when they join us, their equity value goes up because Beacon Pointe trades at a higher multiple than XYZ manager down the road,” Cooper says. “And then we’ll put them in a position to grow much faster, use all the resources of Beacon Pointe, free them up to focus on what’s most important. Then when they want to retire, we have to have a nationally recognized third-party firm value the overall enterprise. Whatever they own, whatever percentage they own, we have to buy them out at fair market value with no discount. So it’s solving all of those issues. Growth, creating enterprise value, succession planning … empowering the next generation and recycling the equity to the next generation of that local firm.”

He adds that the firm puts a floor under the buyout, equal to the advisor’s entry evaluation.

“So if you’re somebody who’s 60 years old and your valuation has doubled since 2008, and you’re starting to feel like we’re maybe at the top of the market and you’re trying to figure out your succession plan, but you want to work for a few more years, why wouldn’t you merge into Beacon Pointe and put a floor under your valuation just in case we have another 2008 scenario? You don’t have to wait for an entire market cycle to get back to where you are, which puts you well into your 70s.”