The co-founder and CEO of Beacon Pointe Advisors got a “B” grade on her firm’s business plan, keeps an updated list of mistakes made by financial industry players, runs marathons, blogs, coaches her children’s soccer teams, and offers solace to Guatemalan orphans.
On the scheduled date of her interview with this magazine, she was operating on four hours sleep because she was at Staples Center the night before attending the Sacramento Kings versus Los Angeles Clippers NBA game.
“I do like sports,” says the former UC Irvine collegiate volleyball player. At 5-foot 5-inches she is more Misty May than Kerri Walsh (though she played indoor, not sand, volleyball), guarding the back line against opponents’ spikes and volleys. The Clippers won the game, by the way, and the Beacon Pointe co-founder proved during the interview that she had no shortage of energy despite her evening of sleep deprivation.
Shannon Eusey will also confess to being competitive, though she quickly adds the modifier “self” competitive. Then she offers a concession on that modification: “Obviously, when I played volleyball, I was competitive against the team across the net. In our business, it is not that I am looking to compete with my competitor down the street; it’s more like: Are we doing the best thing we can be doing here for our clients?”
Those are some notions she might want to contemplate while doing her daily six- to 10-mile jogs, a regimen that was good enough to run in the Berlin, Boston and New York marathons, all of which she completed. She will run the London Marathon in April.
Who knows what Eusey is running to? It might be the classes she co-lectures on wealth management at University of California, Irvine, or one of the sessions organized by the Women’s Advisory Institute, a Beacon Pointe program geared toward educating young women about the private wealth business and helping advance their careers.
Who knows what she might be running from? Perhaps it is her relentlessly chatty mind — her most valuable asset, yet something that needs to be given its daily dose of serenity. “I get the most peace and satisfaction when I am out on a run,” she says. “It is the one exercise I have found that really allows me to clear my mind, and I do my absolute best thinking when I am on a run.”
By “best thinking” she means the sprouting of new ideas. Tucked in the back pocket of her jogging sweats is a smartphone that she uses to swiftly record those ideas in the form of text messages that she sends to herself.
“I come up with whacky ideas all the time,” she says. “If I wasn’t doing this, I would be a serial entrepreneur.”
Some of those ideas appear to have bled into the teaching she does for the Women’s Advisory Institute, such as the time she invited a mixologist as a guest speaker to talk about how a finely crafted cocktail requires a very careful mixture of ingredients, likening that to the proper mix of portfolio allocations; or the time the guest lecturer was a professional organizer, to discuss how keeping things properly organized was akin to a client organizing their financial future. Another session drew analogies between heart health and the health of one’s investment portfolio.
She also imparts financial lessons through the firm’s weekly Get The Sense blog, which is similarly written in a breezy, relatable way. Those blog posts, authored on a rotating basis by a half-dozen members of Beacon Pointe, were recently compiled into a book titled Your Dollars, Our Sense, which bills itself as “a fun and simple guide to money matters.”
“We really think it should get in the hands of everybody who gets their first paycheck,” Eusey says of the book, available on Amazon.
These efforts to boost financial literacy are Eusey’s greatest professional passion. As she teaches, she learns, and one of the most surprising lessons learned is many young people do not even realize private wealth advisory services is an industry.
Her achievements and savoir faire caught the attention of the people at CNBC, who added Eusey to their CNBC Digital Financial Advisor Council, a group of 20 financial professionals the business network turns to for advice and insights for its programming and coverage, as well as the contribution of guest columns and the occasional on-air appearance.
Not bad for a person given a lackluster “B” on the business plan she penned for an entrepreneurship class that was part of her MBA studies at University of California, Los Angeles. The plan called for the creation of an investment advisory firm that offered a “holistic, unconflicted approach” to its financial advice and investing. She still keeps a copy of the marked-up business plan under her desk. Some $9 billion in assets under management later, one would certainly argue that Eusey has been vindicated.
FATHER HOLDS COURT
As a child, Shannon Eusey was one of six children sitting around the dinner table listening to dad talk with relish about what he did for a living, and he made it apparent that he enjoyed his profession. Garth Flint founded Canterbury Consulting in the late 1980s, a firm that advised institutional investors on their investment programs. Eusey characterizes Flint as a kind and charismatic man who was around a lot, even coaching his children’s sports teams. His influence is apparent, considering Eusey, the second in the six-child lineup, is one of four siblings who followed dad’s footsteps into the financial services profession.
When father sent daughter off to college, she headed to UC Irvine, where she majored in social sciences because the college catalog did not offer a finance degree. It did offer an investment management minor, though, and she signed on and took the economics classes it offered. The exclamation point came when she took an internship at Smith Barney while still earning her bachelor’s degree.
“I called my father and said, ‘Look, I think I want to be in the investment management space,’” she recalls.
A second internship landed her at Roxbury Capital Management, where she drove 55 miles each way to and from work.
“They didn’t have a job for me when the internship was over, but I told them, ‘I’m not leaving, I want to stay here, I want to work here.’”
Eusey made good on that audacious declaration, and Roxbury decided to capitulate and give the brassy college co-ed the job she was demanding. Eusey showed up early in the mornings and stayed late into the evenings, commuting daily 100-plus miles round-trip. She learned “a ton” about the business and held the title of senior managing director when she and a colleague eventually left Roxbury in 2002 to make the entrepreneurial leap of forming Beacon Pointe, using that “B”-grade business plan centered on providing clients with objective advice. The name was selected with the assistance of a marketing firm.
“We weren’t capitalized with anything but our own money,” Eusey says. “I was young, and my dad, bless his heart, took a huge risk at age 60.”
Now 76, Flint, a former Navy radar intercept officer who flew backseat in the F-4 Phantom fighter jets off the decks of the USS Coral Sea and the USS Constellation aircraft carriers, is still the hardest-working person in the office, according to his admiring daughter.
“We didn’t have any clients, we didn’t have any assets, we had eight employees, we had a credit line,” she says. “I sold my house because I believed it would work.”
Her belief was well founded, as the firm she built from scratch has since ballooned to $9 billion in assets under management and 125 employees, with women accounting for more than 60 percent of the leadership team, though not by intent or design. The resulting culture is one she called “casual sophistication” during an interview with BizWomen.com. Stylistically, the firm focuses on fostering an entrepreneurial atmosphere, family values and friendship. Employees are encouraged to leave work to attend family events, while ensuring all work duties are fulfilled.
ROCKING THE CRADLE
During the startup phase of Beacon Pointe Advisors, Eusey was already busy, having given birth to her second child, a son, only two months before the March 14 launch of the firm.
That she is married to a man who has spent the past 18 years as a househusband to the couple’s four children, would lead many men to surmise that Shannon Eusey has some mystical power over the man in her life. She claims no such agency, instead simply saying, “thank god” that her husband was amenable to assuming the role for a wife whose workload seems interminable.
All this still begs the question of why Eusey was so attracted to the private wealth advisory field.
“I love serving others,” she remarks. “It is very gratifying to help people achieve their vision of what happily-ever-after looks like. Is it having children? Having grandchildren? Is their dream to pay for their grandkids’ education? Is it to make sure they are taking their entire family on vacation every year? It is that future we plan for today with their investments and their portfolio construction.”
She is getting plenty of help with that. Today there are 26 partners — eight in the Newport Beach, Calif., headquarters and the rest in 11 affiliated offices in cities such as Boston, Dallas, Philadelphia, San Jose, and Scottsdale, Ariz., among others. Beacon Pointe basically owns half the business generated by its affiliated offices, while the other half is owned by the local partners in each office. In return, affiliated partners operate their offices on the Beacon Pointe platform and use its products and services. That includes the firm’s technology resources, which Eusey is committed to keeping advanced.
“I want to make sure we are on the forefront of technology and are delivering the high-technology experience for our clients, while still keeping our interaction personal,” she says. “A lot of things are done online compared with 10 or 15 years ago, such as the robo-advisory platform and a lot of portfolio mechanics.”
Besides serving clients, it will serve the firm’s ambition of doubling the number of partner offices in the next two to five years.
“There is a lot of opportunity out there to do that,” she remarks. “We are sitting on advisory boards at places like TD Ameritrade and Schwab, we are active in the industry, and have built a pretty good name for ourselves. We have a good reputation, and people are looking to do business with good people.”
That effort is cutting both ways. While independent financial advisory firms are finding and approaching Beacon Pointe about joining the platform, Eusey and her colleagues are actively searching for good partnership opportunities. First and foremost, Eusey is looking for a cultural fit, which involves good chemistry between both parties, as well as partners and advisers whose commitment to driving revenue is secondary to serving client interests.
What made Beacon Pointe a standout, at least at the time, was operating as an advisory firm not associated with any product, thereby leaving its advisers unconflicted about whether to populate portfolios with products that offered the highest fees and commissions, rather than those apropos to the client’s interests and objectives.
TIME ON MY SIDE
Eusey acknowledges Beacon Pointe’s success was, in part “luck” in that the market timing was right; the market was sound when the firm launched in 2002. When the global financial crisis struck, the firm fared better than many people expected because of its emphasis on asset protection.
“Our investment managers focus on protecting the downside,” she says.
The firm then experienced some of its fastest growth during 2009, as the economy was reemerging from its financial nadir. Extra cash the firm had salted away in anticipation of an eventual recession helped it weather the financial storm, though Eusey never fathomed the maelstrom that was the global financial crisis.
THEN AND NOW
Beacon Pointe Advisors began as an investment firm, primarily because of the foundational experience provided by the team’s many years working with institutional clients, large endowments and foundations among them. While the firm still invests on behalf of its clients, the level of financial planning offered today is vastly higher than during the firm’s early days.
“We are a full-service financial planning firm,” Eusey says. “When we work today with a client, we are really diving deep into all aspects of their financial lives, and they have access to a portal where they can see absolutely every part of their financial picture.”
Private clients are benefitting from a Beacon Pointe platform that has been held to institutional standards, says Eusey, which is one of the byproducts of her father’s professional experience.
“It is a different standard of investing,” she says, “which I think is extremely beneficial for the private client.”
The financial planning aspect of the firm’s operation involves a deep understanding of clients’ fiscal situations. She defines proper diversification as a portfolio that meets the client’s end goal.
“I look at it like this: Is the client appropriately diversified for what they are trying to achieve? You can have a municipal bond portfolio that absolutely achieves the client’s long-term goals,” she says. “You may not be able to get a lot of growth out of that portfolio over the long term, but that may not be what that client is looking to achieve. It is really specific to the client. Yes, we diversify portfolios; yes, we have various asset classes — private equity, alternatives, all that — but it is really so dependent on what the individual is looking to achieve with their investments.”
Indeed, real and alternative assets are stalwart components of Beacon Pointe client portfolios, and they are present to a greater or lesser extent based on the individual client’s or institution’s objectives and time horizons. Eusey acknowledges liquidity issues are fundamental considerations of real asset investing.
“That is part of our overall strategy,” she says. “Remember, coming from the institutional world, the expectation is to have that type of portfolio. We grew up on that model.”
With alternatives and real assets in the mix, the firm naturally has a “bias” toward active management of client portfolios, she points out.
GETTING IT WRONG TO BE RIGHT
One rather unorthodox management tool used by the Beacon Pointe leadership team is maintaining a running list of mistakes, which serves as a reminder of what can go wrong, and helps ensure Beacon Pointe does not fall into the same traps, or simply become complacent. Take the case of the many reputable and sizable firms that did business with Bernie Madoff, who for years ran the biggest and most egregious Ponzi scheme in U.S. history, costing investors about $65 billion.
Asked if she believes organizations learned more from their mistakes than their successes, Eusey replies without hesitation: “No question.”
As part of its defense against complacency and aggressive due diligence, product sponsors seeking to access the Beacon Pointe platform are greeted with a 10-page questionnaire, for starters, followed by face-to-face meetings with Beacon Pointe executives.
“We make every investment manager sit across the table from us and go through absolutely everything about their business, and then we are onsite visiting and asking questions,” Eusey says. “We had an investment manager tell us it took him two years to get on our investment platform, and he told us no other advisory firm asked as many questions.”
TOMORROW AND TODAY
The die has been mostly cast regarding Beacon Pointe’s future plans. But today, like most every day, Shannon Eusey will be running the streets of Newport Beach, training for the London Marathon, clearing her mind and sprouting new ideas. That means a text message to herself just might add another item to the agenda.
Mike Consol (m.consol@irei.com) is editor of Real Assets Adviser. Follow him on Twitter @mikeconsol to read his latest postings.