Publications

- September 1, 2018: Vol. 5, Number 8

Playing ball: When his Major League dreams did not pan out, Rick Buoncore of MAI Capital Management went on a hitting streak in the financial services field

by Mike Consol

After seven years in the accounting business at Peat Marwick Mitchell & Co. and seven years on Wall Street at Shearson Lehman Bros., Rick Buoncore received a fortuitous phone call from Vince Farrell, a partner at a boutique investment firm, who asked a very direct question: “What do you want to do next?”

An equally direct reply to that question might not have been at Buoncore’s disposal at the moment, but the caller was prepared with a suggestion. His investment firm — Spears, Benzak, Salomon & Farrell — needed someone to serve as CFO, as well as manage its private equity activities and be its media analyst.

It was quite the job description, yet Buoncore noted his years as a CPA equipped him for the CFO’s post, and his experience at Shearson Lehman included managing the private equity unit, as well as doing many investment banking deals in the cable television and cellular communications industries.

“He created the perfect job for me,” Buoncore says. “It was a great opportunity for me because I got to do all those things at a very young age. I really think, to this day, that was a turning point for me.”

Indeed. He ultimately became COO of the firm, which in 1995 sold itself to KeyCorp, the major regional bank based in Ohio. Buoncore’s career was off and running in earnest and would eventually lead him to the top of MAI Capital Management, a $5 billion registered investment adviser with acquisition plans to grow the firm to $30 billion in assets under management within the decade. Having been responsible for overseeing more than $70 billion in assets under management while at Victory Capital Management, a division of KeyCorp, Buoncore does not find the $30 billion target intimidating or insurmountable.

WAITING TO SOLICIT AND COMPETE

In February 2007, Rick Buoncore bought McCormack Advisors International; he had 50 people under his leadership, about $900 million in assets under management and big ambitions about where he could take the firm. A couple of impediments to reaching his goals, however: Buoncore was constrained by years of noncompete and non-solicit agreements. When they finally expired, Buoncore reassembled the management team — particularly his COO, CFO and director of operations — he had carefully put into place at Victory. By this time, MAI had grown to about $2.2 billion in assets under management.

“I wanted a dedicated management team that could run a business and allow me the flexibility to do what I think I do well, which is deal with clients, look at investments, be the face of the firm and bring in business,” he explains.

In addition, the firm has invested more than $10 million over the past five years in the kind of technology and infrastructure Buoncore believes is needed for MAI to become a world-class RIA.

“Now we have tremendous capacity,” he says.

Since making those moves, MAI has grown to five offices, more than 100 staffers and $5 billion in assets under management. Its clients’ investable assets range from $1 million to $400 million, and 30 percent of its clients are high-profile professional athletes.

“We are a unique shop in that way,” explains Buoncore, referring to the extraordinarily high percentage of professional athlete clients. “I won’t name them because I am not allowed to, but they are names that you would all recognize.”

70 CONVERSATIONS AND COUNTING

The key to the firm’s future growth was locked in place in July 2017 when MAI became affiliated with Wealth Partners Capital Group, an organization led by John Copeland, Rich Gill and Sean Bresnan, part of a nine-person team that has spent the better part of a decade acquiring other firms. In aggregate, the principals at Wealth Partners Capital Group have, over their careers, acquired more than 40 firms controlling more than $80 billion in client assets. With those expert resources in place, Buoncore is planning an acquisition spree that aims to bolster MAI’s assets under management to $25 billion to $30 billion in the next five to seven years.

“There are 15,000 RIAs throughout the country, and we want to find those that we think make sense, and we will make our infrastructure available to them,” he says. “We have closed our first acquisition, and we have probably four or five more lined up.”

That appears to be the tip of the iceberg, as Buoncore and his team have since talked to more than 70 firms about becoming part of MAI.

“We are getting quite a good reception,” says Buoncore, who identified the three kinds of acquisitions common in the RIA business:

  • The succession acquisition, when the partners at a wealth advisory firm are nearing the end of their careers and are looking for a home for their clients, as well as to turn the equity they have built up over the years into cash.
  • The second type of acquisition is to capture talent, where the acquiring firm is seeking to bring aboard highly talented people with great capabilities whose potential has been limited by their firm’s lack of scale and resources. “With scale comes a lot of benefits,” says Buoncore. “You get better pricing, technology and infrastructure. We can make the case that says, ‘If you come aboard with us, your clients will be in a better position and, ultimately, you will be in a better position because you will be part of that growth path that we are on, and you will be well rewarded for that.’”
  • The third type of acquisition captures new geographies, expanding the MAI footprint to new markets.

PLAY BALL!

Buoncore’s life did not exactly go according to plan. He was supposed to be a Major League Baseball player, probably a Bronx Bomber, having grown up in New York City. The closest he got was being coached by James “Gil” McDougald, a New York Yankee infielder from 1951 to 1960 and the 1951 American League Rookie of the Year. McDougald later managed the Fordham University baseball team. When officials from Fordham approached Buoncore about playing ball for the Fordham Rams, the opportunity to be coached by an ex-Major Leaguer — and a former Yankee at that — was too exciting to pass up. Besides, the school offered him a four-year baseball scholarship. Buoncore’s contention that he did “relatively well” as a collegiate baseball player is a major understatement for a guy who averaged .363 at the plate his senior year and was an even stronger performer in the field — once even making an exceptionally rare unassisted triple play. That was good enough to get him inducted into the Fordham Athletics Hall of Fame in 1994.

His position of choice was catcher, because the catcher controls the game because he controls the pitcher. But that changed one day when McDougald told Buoncore he wanted him to field some ground balls.

“He hit me three, I swear to God, three ground balls — one to my left, one to my right and one right at me — then he threw the bat in the air and said to another coach, ‘I found my shortstop!’” Buoncore recalls. “So I played four years at short.”

His senior year, the team had a 30-15 record and went to the NCAA regionals. After graduation, he was offered a minor league contract to continue playing baseball, but it paid only $500 per month. Instead of pursuing his big league dreams, Buoncore put his accounting degree to work by joining the Big 8 accounting firm Peat Marwick Mitchell (today called KPMG and one of the Big 4 accounting firms). He got his degree in accounting because he considered it a valuable skill set.

“If you can understand a balance sheet, financial statement, income statement and cash flow statement, there is a lot that you can learn from that,” he says. “It gives you perspective.”

He became a senior manager at Peat Marwick and had logged seven years at the firm when he got a call asking if he was interested in working on Wall Street. The inquisitor was Shearson Lehman Bros. (which ultimately became Lehman Bros.), and Buoncore moved into the investment banking business, doing cable and cellular deals, both growth industries, to be sure. He points out the advancement and declining cost of technology has enabled us to buy an iPhone for $650, technology that would have cost $1.4 million in 1991.

“It shows how much technology costs have come down and how much more you are getting for every dollar you spend,” he observes.

THIS LAKE WAS NO MISTAKE

Cleveland came into play after Buoncore was asked to be CEO of Victory Capital Management, a subsidiary of Cleveland-based KeyCorp. He calls the move to Victory a “great opportunity” for a young, aspiring executive, especially when KeyCorp handed over to its entire asset management business to Buoncore and his team.

“It was a very big step because we were in New York, they were in Cleveland, and I commuted every week for three years,” he says. “Finally, in 1999, it just became obvious to me that to move there was the right thing.”

Fortunately, Buoncore proved adaptable when he gave up the Big Apple for Cleveland, derisively referred to by critics as the Mistake by the Lake (a reference to Lake Erie, one of the country’s Great Lakes). You will not hear Buoncore using pejorative terms of any kind about Cleveland, a city he cannot say enough good things about.

“Cleveland is a wonderful city,” he says. “It has great people and all of the amenities of New York without the traffic and congestion and expense. When I left New York in 1995, the rent in my building was $85 a square foot. Our rent here in Cleveland, for an equally nice place, is $15 a square foot.”

The decision to relocate to Cleveland was a major turning point, he says, the “luckiest and best thing” he has done professionally and personally. Life in Cleveland is much less taxing and far more enjoyable, he says. An example he offers is the blockbuster musical Hamilton is coming to Cleveland this year and, though three years later than Broadway, you can actually buy tickets. In addition, Buoncore and other local dignitaries will be having dinner with Hamilton’s cast members, something close to impossible to pull off in Manhattan.

One thing Cleveland has not been able to do is dislodge his commitment to the New York Yankees. “The Yankees are my heritage,” he explains. Yes, Buoncore is a Cleveland Indians fan, and even a good friend of Paul Dolan, principal owner of the Indians. But when the schedule calls for a head-to-head showdown between the two teams, Buoncore is pure Bronx Bomber pinstripes.

It also does not hurt that Buoncore’s time in Cleveland has been filled with success, as he was eventually elevated to CEO of Victory Capital Management at age 43.

“I was always passionate about what I was doing, but I knew Victory Capital wasn’t my final calling,” he says. “When I started my own company in 2005, BC Investment Partners, it was probably the hardest thing I’ve ever done.”

Buoncore’s success in Cleveland has since extended well beyond Victory Capital Management, all the way to his current post as the head of MAI Capital Management. The antecedent organizations to MAI were many, dating back to 1973 (see timeline).

As prodigious as MAI currently stands, with about $5 billion in assets under management, Buoncore and his team have much bigger things in mind, as detailed above.

M&A THE OTHER WAY

While he has found his calling in professional life at MAI Capital Management, Buoncore is aware the firm’s success and resource development not only make it an attractive partner or parent organization to smaller firms, it also potentially puts a target on the firm’s back for larger organizations with expansion plans in mind.

Would he entertain such a suitor?

“I have always said you have to listen to everything, just from a perspective of knowing what is going on in the marketplace,” he says. “But I see our opportunities as so great that I can’t imagine someone could offer us anything that would be appealing enough for us not to fulfill our plans.”

Mike Consol (m.consol@irei.com) is editor of Real Assets Adviser. Follow him on Twitter @mikeconsol to read his latest postings.

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