James D. Osborne, 34
President  /  Bason Asset Management  /  Lakewood, Colo.

A few years ago James Osborne was working as a planner at a broker-dealer/RIA, when he got an e-mail from a prospect, who’d been impressed by the firm. But the client wondered if he were doing his math wrong after adding up the fees he’d be paying. For his $3 million to $3.5 million portfolio, he would be handing over $28,000 to $30,000 in fees. The math wasn’t wrong.

A light bulb went off. “For $40,000 a year, what are we offering? A couple of meetings a year? As much phone contact as he wants?” The overhead per relationship was about $2,500 a year, including staff salaries. Osborne wondered if the 1% AUM fee structure for high-net-worth clients was in trouble. He had also become disillusioned chasing active fund managers’ performance when ETFs are a cheaper option.

He couldn’t shake the idea he’d have to form his own business. But he wasn’t a born entrepreneur. He had been a religious studies major in college, and fell into the financial industry as a paper pusher to snag an income and pursued an MBA while working at a small brokerage.

He founded his new firm, Bason, in Lakewood in 2012. Right after he quit, his wife said she was pregnant with their second child. He had no clients and had to build from scratch. What’s worse was that the marketing for his new firm with industry conferences and social media didn’t pay off at first. There were 18 lean months, when they had to stockpile cash.

But his idea would prove to be a winner, especially among high-net-worth individuals for whom he could make the simple pitch: “You’re being overcharged.” A mention of Osborne in a Wall Street Journal column cemented him in a few minds, and business picked up in 2013-2014.
Now he’s got some $155 million in assets with an average client size of over $2 million. Someone with a $4 million portfolio is looking at paying him $4,800 a year, rather than $30,000 somewhere else, he says. Now, he’s getting to where he has to turn clients away.

Peter Lazaroff, 32
Director of Investment Research  /  Plancorp LLC  /  St. Louis, Mo.

Peter Lazaroff, a 10-year veteran of the financial advice industry, remembers getting his first share of Nike stock for his 11th birthday from his grandmother in 1994. He watched with fascination in the Wall Street Journal as the share price rose and the stock split. “I was fascinated by the idea that I would get these dividend checks without having done any work.”

Still, he didn’t know what financial planning was when he graduated from college in 2007. “It was in the CFA process … that I realized it was really hard to just get rich from buying a handful of companies. There is a better approach.”

At his old firm, he quickly moved from analysis to portfolio management and then showed a talent for new business, too. He started bringing in big fish when he was still in his mid-20s. He also started writing a newsletter (currently available at PeterLazaroff.com).

“We had account minimums [at the old firm] of $1 million,” he says. “It’s hard to have people come on board with you when you’re 25. So I started writing [the newsletter] to demonstrate knowledge. That opened up a whole different world for me, and I think that’s really when my career success took off.”

The idea of a planning process was well understood at his first firm, but as his clients’ lives got more complicated he realized tax planning and estate planning were sometimes more valuable than investment management. So two years ago he jumped ship and joined Plancorp. “This was a financial planning firm first. They didn’t even manage money for the first decade or so of being in business. When I came over here with my clients, suddenly they got comprehensive financial planning that I couldn’t provide by myself. I honestly believe one person can’t possibly be an expert in all fields.”

“I frequently tell people I can change their lives if I get to them in their 20s and 30s,” he says. “Just because you have the benefit of compounding. Not just investment returns but all the decisions you make at an early age.”

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