Matt Cooper: Driving Growth With M&A and Private Equity

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Hi everyone, I'm business coach Steve Sandusky for Barron's Advisor, The Way Forward Podcast. Today we're going to dive deep into the details of the M&A business as well as organic growth with Matt Cooper. Matt is a founding partner and president of Beacon Point Advisors. Matt gives us a rare behind-the-scenes look at their approach to M&A including how they identify potential partners, how they navigate the integration process, and how they maintain cultural alignment across a rapidly expanding organization. We also explore BeaconPointe's organic growth strategies that they employ at both the corporate and local levels to drive new business. Additionally, we discuss how taking on a private equity investor has affected BeaconPointe's operations and growth trajectory. With that, please enjoy my conversation with Matt Cooper. One of the key changes for you since we last spoke was you have private equity ownership at this point. So walk me through the thought process of deciding that you wanted to bring some private equity in, and then what was the impact of that?

We started doing M&A, or we entered into our inorganic growth stage, roughly 2011. And when we did that, we actually did it in a separate RIA within Beacon Pointe. So we've always had Beacon Pointe Advisors, and we set up something called Beacon Pointe Wealth Advisors as that M&A vehicle. To the marketplace, it looked exactly the same. It was merely an ownership structure, primarily because the original partners at Beacon Pointe, my other partners that we started the company with weren't keen on diluting our original business. I'm not sure everybody really thought what we were doing was going to be successful at the time, but we did 8 or 9 transactions in that acquisition vehicle. It got larger than our original business, and we had what we thought was perfect alignment between the two RIAs, underlying RIAs. Started to get a little bit cattywampus or out of alignment, if you will, primarily because we were looking to make investments in the business and which P&L should pick to pick up that expense and how are the cash flows going to flow and all of this kind of stuff. So we had a meeting. In addition to that, we had 3 somewhat older principals and, and a couple of the partner offices that wanted to take their equity off the table because they were entering their 70s and wanted to slow down a bit. We knew we were going to have to buy them out. We knew we had the underlying structural issues. Everybody was really growing quite nicely and we were excited about that. So we got everybody together here in Dallas, actually. And we had our original investment bankers, Ardea Partners, run a kind of a forum or kind of an open discussion about what it means to merge the two underlying RIAs together and the potential positives and negatives, if there were any, and the accretive effects of doing so. And we came out of that meeting unanimous that we would merge the two underlying RIAs together and also bring in outside capital. Primarily for two reasons. One, to buy out those partners that needed to be bought out, but also our M&A activity had started to slow as we entered 2019 because we were doing all of our original deals with cashless equity swaps into that acquisition vehicle, and we were becoming uncompetitive because we needed to start using cash in deals. And so we needed to restructure our balance sheet and to start doing deals in a more traditional sense with more flexibility around cash and equity and everything else. So we sold 30%. We merged the two together and sold 30% of the business to Avery Partners out of Boston in March of 2020. Fantastic partners, no complaints. We actually, from March of 2020 through the end of '21, did 19 buy-side M&A transactions. And the business was growing incredibly organically, net of market. So 13.3% 5-year CAGR through that period of time while Avery was on board. We decided that with the growth of the business, where capital markets were in 2021, that we would look at recapping and refinancing the company. And so we went through another process and we chose Goldman Sachs as our investment banker after interviewing several, and that process led us to select KKR as our now private equity sponsor and partner. They bought slightly less than half the business, took Avery out. Avery marked an incredible return for their fund, and we've had KKR as partners for the last 2 years. So that's a little history on how we got to where we are today.

Yeah, quite the story for sure. So during that 2020 to 2021 period, when you had Avery Partners on there, you said you did 19 deals. That's incredible during such a short period of time. So was there pent-up demand just waiting for you to get the capital to start doing some cash deals, or how did that happen so quickly?

Yeah, we were— we had relationships in the marketplace. I had told Avery and the other potential sponsors in that process with our data in 2019 that led to the investment in '20, I said, look, we have existing relationships, and it's not about Matt and the M&A team per se. It's about BeaconPointe overall, both the platform leadership and the existing partners across the country. And when we put capital behind great people and great relationships and we can structure the deal right for a potential new partner, they're going to want to be a part of this and things are going to happen rapidly. So it was like a spring, just boing, and here we go. We're off and running. Now I say 19. Honestly, Steve, we probably could have done 50. Buy-side transactions in that period. It was so active in that period of time. But we don't want to be a, a spray and play aggregating platform. We want to be extremely thoughtful. And to put that in perspective, I've heard some of my peers who run great businesses, no complaints, they're friends of mine, but I've heard in the marketplace people bragging about having 25, 30 LOIs floating around out there. That's shocking for us. If we have 1 or 2, floating around. We wouldn't even have them floating around. They'd be rifle shot to where they need to be. But 1 or 2 is a big deal for us. So we're looking for people who are accretive beyond the economics when they enter the room with the rest of the Beacon Point Partners.

I'm interested in how the dynamics change once you go from being entrepreneurs, your owners, you've got some partners since the, the start of the business, but you guys are in charge and now you, in the first deal, I think you said you sold about 30% of the business. Now you've got someone that you have to answer to. So how was that transition from being a small, tight-knit ownership team, founding team, to now we've got other people that we have to answer to on a regular basis? How did you make that transition?

What's interesting is at any point we always had somebody to answer to. Our clients first and foremost, our team, the other partners that we brought in. But you're right. So now we have private equity involved and to Avery's credit and really to KKR's credit, because when you hear there's only one private equity firm larger than KKR, and that's Blackstone. KKR lets us run the business. Now they have board control at the end of the day. The other thing that's of note is even a minority non-control private equity partner still has control because they have to have protections as a minority investor, as fiduciaries for their investors and their funds. So regardless, when you take outside capital, there are going to be controls put on the business. Now we've executed just like we've always executed. And we have had zero interference from either one of our private equity partners other than they bring some really good thinking to the table around different strategies around pricing or digital marketing or deal structure on M&A, all kinds of stuff. So they've been nothing but helpful. Be sure we're accountable at the end of the day. Now, I will say this. When we first brought in private equity capital, it made decision-making easier. It's still easier. And the reason why it's easier is Shannon, myself, other people at Beacon Pointe, we had a huge chunk of our net worth tied up in the business. We still do, but we're diversified now. We've been able to de-risk a little bit and we've got KKR backing our balance sheet. So it, it's a different environment. We're able to relax a little bit and make, I hope, smart decisions. I wouldn't, I don't consider myself the sharpest guy on the planet, but I know the people around me are, so I think it's helping us make smarter decisions.

At the end of the day, the PE owners want to get a pretty significant return on their investment. So do you have some examples of the expectations that these owners have placed on you? For example, were they expecting that your growth rates were going to accelerate dramatically? How do they hold you accountable to that? How does that work?

So all private equity firms, generally speaking, work on a 3x multiple of invested capital, MOIC, M-O-I-C. And so you'll see they talk about a 3 to 7 year hold period for private equity firms. That's the target they're trying to hit. And the larger firms may actually work on a 2.25 to 2.5 MOIC kind of model. How we get there, there's a model built that determines how you get there. And every firm I think is going to be a little bit different, but probably in our space, not too dissimilar. Organic growth is the most important part of the model because organic growth, the ability to, to attract and retain clients, is the most important measure of the health of the firm. So that's where their primary focus is— net flows. All the businesses are valued on a multiple of run rate EBITDA today, and so that's a metric that's highly important as well. And so everything else around these two measurements are important, but they're contributing to the two main things, which are organic growth, net flows, and run rate EBITDA at the end of the day.

I think you touched on this a little bit, saying decision-making is easier today since you've taken some chips off the table, you've de-risked. Do you feel less pressure as well, or do you feel more pressure to deliver these types of returns?

So Beacon Point's an interesting animal. The way that we got where we are is we're just— Shannon's run, I got, I don't even know how many marathons. We're very competitive and driven people because it's stress, but it's stress that we enjoy. We love doing this. And so I think we're driven in a way. Now we don't impose that value structure or that kind of stress or mandates on our local partners. We, it's collaborative, peer-to-peer. Here we are in Milwaukee, our Milwaukee office. What do you, how'd it go last year? What do you guys think you can do this year? What, what's it gonna take to get there? And we collaborate on the upcoming, the budget for the upcoming year and the staffing plan and everything else. But I don't feel it like stress. I feel it like it's a long-term game for long-term players. And if you really enjoy it, then you get in and you got to show up every day. So let's be as good as we could possibly be and play at 110% and then go to bed at night feeling good.

I was having a conversation just yesterday with one of my clients, a financial advisor. And he mentioned that he was having a conversation with another hugely successful financial advisor. And this other advisor, like you, like Shannon, like a lot of people that listen to this podcast, you've got more money than you need. You don't have to work another day in your life, but you still do. You still work really hard. So he asked this other guy who's super successful, he says, why do you keep at it when you could have retired a long time ago? And the other advisor's response was, As long as I'm in the game, I'm going to play. And I thought that was a really interesting way to frame it. And it sounds like the same thing for you and Shannon and the team there, that as long as you're in the game, it's, man, I want to hit a home run. I want to hit a grand slam in the bottom of the 9th inning of the 7th game of the World Series kind of thing. So beyond that, like, where does that motivation come from for someone like you to just keep crushing it long after you really need to?

Yeah, it's an interesting question. One of the questions that we got from every private equity firm we spoke with was, hey, you guys are going out and you're bringing in these RIAs that are growing at modest single-digit rates net of market, and now the firm overall has this double-digit organic growth rate net of market. How are you doing that? And our answer consistently across every conversation was it's Just simple. Find great people who really want to do great things, who honestly believe the next 5 to 10 years for them are bigger and better than the previous 5 to 10 years. Get the non-money-making stuff, or the stuff they're not passionate about, out of their way. Allow them to focus where they're passionate. And put those people in a room with other people who are just like that. And a common trait amongst all these people is they're self-starting, self-confident, creative entrepreneurs, but they have enough self-awareness and humility to work incredibly collaboratively with all those people who are just like I just explained. That's it. And I think there are people in this world that are givers and there are people in this world that are takers. And so we're looking for people who are net givers, who just really shine when they're part of something greater, but we don't want to interrupt their entrepreneurial passion and excitement for the business and creativity. When people say, I want to have more influence over the decision-making process at Beacon Pointe, I say, it's an open forum, create value. However that is, do it as an entrepreneur and you'll create leverage in the conversation every single time.

So I have a belief that people rise to their level of desire. And oftentimes people tap out at some point when they do have, quote, enough money. And enough is different for everybody. Do you find though that when you are talking to these advisors that are thinking about selling their firm to you, do you find that they may have, quote, reached their level of desire, but when you guys acquire them, that they get re-energized because of everything else that's going on around? Because now they're in the room with all these other people like you and Shannon and everyone else, do they get re-energized? And if so, how do you identify those people in advance that will get re-energized by being part of the bigger group at BeaconPointe versus they've already reached their level of desire and they just want to get a check and they just want to sail off into the sunset?

Yep. That's very tricky. Some will self-identify during the initial conversations. Hey, look, I'm gone in 2 years and these guys are taking over. And so we better make sure we're very comfortable with the next generation if that's the case. More often than not, that's what we see. How do we identify those people? We have a process that we go through. So 90-something percent of the buy-side deals that we've done, we've self-sourced, meaning we're not going through a process with a sell-side investment banker. And the key thing there is there's no filter between us and the seller, and we work very transparently. So we, we get to know them really well. And they don't just meet with me and a decision is made. They meet with me, my team. There's 4 or 5 of the leadership team at the platform level, Shannon, Kevin, Kami, Ali, that they meet with prior to us approving we're gonna do this deal. But we also require that they meet with several of our partners that were in their seat prior and are running local offices for us around and merged with us and are our partners now that can see it exactly from where they sit currently. All of that together gets us to a point where we feel comfortable and we've got all the metrics and we can see their organic growth going back. And we talk about that when they were successful, when they weren't successful, all of it, what the expectations will be. You're gonna be in a room with 70 other partners that are your peers. Are you gonna be comfortable if you're not participating in— you don't have to lead, you don't have to be the lead grower, but if you're not participating, are you gonna feel comfortable? Are you going to tune out? So we get a lot of eyeballs and a lot of brains on the, on the process.

So you mentioned the importance of organic growth, and I think you said that's probably the number one factor that you're looking for. What are some other factors that you are looking at as an acquirer in terms of where your ROI is coming from on an M&A deal beyond just the organic growth after the deal?

So it's important that we can integrate quickly so they're up and running quickly and we don't have a drag in terms of systems and integrations and everything else. So we've spent a lot of time on making sure that we can on day one, we're off and running from an operational standpoint in terms of systems and technology and also from a, a growth standpoint and delivering value to existing clients, COIs, new prospects in the marketplace for driving the organic growth. The other thing is we're really focused on making sure that we're getting involved with and merging with fully developed, if I can say fully, but predominantly developed businesses that are staffed properly going forward, as opposed to you see a lot of these small shops, $200-300 million, 1 or 2 principals, a couple of support people, and they're running at 70% margins and they want to monetize that whole 70% margin as free cash flow, EBITDA on the business. Which is not really what's going to happen. We're going to have to staff up and everything else. So we, we want to avoid situations where we're overpaying for businesses that aren't really businesses. They're just a book. And so we're, we're really careful around that.

Now, what about the delta on the deal, so to speak, where if you're buying a firm at, let's call it 8x EBITDA and you guys are valued at 15, I'm just picking numbers out of the air here. Is that an important thing that you look at as well?

Sure. We want to maintain the accretive spread. And it's interesting, we did a, a little exercise the other day and created a one-pager, frankly, that just shows if you had $1 million of EBITDA in that 8x business and you then moved it over to Beacon Pointe, you just merged your firm into Beacon Pointe. First, every dollar that hits the bottom line of that 8x business is an $8 dollar. Every dollar that hits the bottom line of a 15x business is a $15 dollar. Same dollar. It's just worth more over here. Also, and actually the numbers are more like 10 and 24 times in terms of valuation spread or 20 plus. But when you merge into the larger firm, assuming it's a place where you're happy and productive and you really are fired up about it, you're diversified across several offices nationwide. And so your risk reward, it's a more valuable dollar on the bottom line. And it's a diversified, better risk profile dollar on the bottom line as well. In addition, you've got, in our case, KKR backing the balance sheet of Beacon Pointe. So you're in a much better position. The question then becomes really, are you able to optimize your experience as an entrepreneur in the new format? It's really, there are two big E's, the emotional part of the deal and the economic part of the deal. The economics, as I just described, are like a no-brainer. So it's, it's really about what you want emotionally and where you're willing to sacrifice for the greater gain. Having control over things short-term, day-to-day may seem like where you want to be, but you actually lose control over the long-term outcomes by trying to control things in the near term.

You mentioned the word margins here a few moments ago. If you look back at the profit margins of BeaconPointe, let's say prior to 2011 when you started your inorganic growth strategy, and you look at your profit margins today as a much, much larger company, but also one that does a lot of M&A stuff, are your margins higher today? Are they about the same? Are they lower than they were before you started this strategy?

They are actually higher today than they were when we did our first private equity deal. In 2020, almost 10 points higher. And that's a function of greater scale, a centralized operations team, for instance, out of Arizona, where we're able to— we don't have to hire so many operations people around the country because the local offices can rely on that central team. It's also a function of stepping back, understanding what our value proposition is for— to clients, and making sure that we're priced properly across the segments of the business. Depending on the client and the services delivered that we're doing it correctly. And then we have firms coming in that were smaller firms, maybe charging on average a higher fee rate. And we've had some that were at the extreme 1.6% come down to our more normalized 1% on the first million or whatever it is as they got larger. And we've still expanded the margins considerably year over year. And one of the things about BeaconPoint at the outset we had dedicated management. So Shannon's role has never been to serve clients. She's always run operations and run the overall business from day one. And so we've always had a, a structure that was a business structure, not a practice structure. From 2002 until 2011, when we started doing M&A and inorganic growth, we were investing big time in the business to create the platform. So we sacrificed early to create what we've created today, as opposed to some who maximize profits early and can't ever get to scale because they're taking all the money home and their lifestyle rises to meet that situation.

You mentioned here a moment ago that one of the returns that you get is by getting a firm integrated quicker and onto your platform quicker. So I'd love to hear a little bit more about the integration process in terms of you've just signed the deal, Money's been transferred. This is now your firm. So tell me what the first, let's call it 90 days, looks like when you have a new firm.

Yeah, it actually starts at the signing of the LOI. And so every new merger, partner merger situation has a dedicated integration lead. Okay. So it's either Liz, Megan, or Zach from our team. That's the lead on that underneath Carissa, who's our COO, who has several different situations reporting to her, but integration is a key one. They'll begin working with the local team on understanding all of our systems and everything else at the signing of the LOI. So by the time we get to a signed binding purchase agreement, we're now talking about integrating all systems, CRM, reporting systems, etc. Deal closes, they're running, let's say they're on a different reporting platform than we're currently using. They'll run that platform parallel for the first quarter while we're making sure that everything's working correctly for those first 90 days. But the team has already been schooled up on how our reporting process works, and so they're up and running. Salesforce is one of the primary things we use. Salesforce is an enterprise CRM. It's critical that they understand Salesforce before day one. And then Salesforce is up and running ASAP the minute the deal closes because our entire business runs through that CRM and everything that gets sent to central operations and back goes through Salesforce. And every lead that's generated through digital means or from a custodian referral program or anything like that is sent out to the local office through Salesforce. So if we get Salesforce up and running immediately and they understand our other parts of the tech stack, primarily that reporting platform on our UMA platform over the first 90 days, then they're off and running at a very fast clip. They've already met all the key players in the key areas of the business prior to the closing, so they know where to go with any questions. And we do have an online, something called L Hub, Learning Hub, which is everything that we do at BeaconPoint. If you think about like a Wikipedia for BeaconPoint and around processes and you name it, it's in there. An immense library of video tutorials on any aspect of the business as well. So there are things to fall back on where if they forget something from initial training, it's right there at their fingertips.

You mentioned that you acquired 19 offices back in like 2021. So that's 19 different ways of doing business. And it's been said working with advisors is like herding cats, that everyone likes to do it their own way. So you're an integrator, so you're requiring that they're going to use your CRM and probably going to use your portfolios. How do you ensure, or do you require, that they follow your same investment philosophy, that they have the same standards of service that you want to deliver? I suspect you're getting all of that out in the courting phase, and so if someone isn't interested in doing that, then you're not even going to acquire them. But is that ever an issue where they're a little slow to adopt the way that you like to do business?

Yeah, I think change is hard. There are always things, even as long as we've been doing this and as many deals that we can always improve. We don't have all the answers and we want to hear like where we can get better in any deal and any integration. There are other things that, that people just get hung up on, not the principals who have agreed to the deal. It's typically the underlying operating team. Because it's just change and change is change. And we need to make sure that we have great dialogue between our integration team and the, and their in-house or local, I should say, operating team. Our investment platform is broad and deep. And so I put it in these terms, if the client wants a pink suit, we've got a pink suit. So there are 49 models, but we take the existing models of our new partner. We put those on our UMA platform.. And so they can be centrally traded. So they're not changing client portfolios on day one, and they may not change them at all if they're pretty much in line with, with what's going on. And there's a 3 to 5 year period for that process to take place because again, we don't want to disrupt clients, we don't want to create tax problems for clients, all of that. So the— at the client level, we're not disruptive. So I think that makes it easier for them to get on board. We're looking for people who are primarily focused on the client and the planning process and developing the relationship and supporting it with the investments. You have to do the investments great, but so if their paradigm, their, the way they think about the relationship with the client is in the right spot, it tends to work a lot easier.

Everyone talks about the importance of cultural fit, so When you are acquiring these firms, again, we've got— everyone has different ideas. They have different perspectives, different viewpoints, different belief systems. How do you ensure that the corporate culture, that the values that you espouse at BeaconPointe get permeated into all of these offices around the country?

So here's the way we look at that. The culture of BeaconPointe will not stay the same, but Hopefully we evolve it for the better with each new person that joins the firm. We don't go backwards. And that's why the first 3 screens I always say are no jerks allowed. Good news is we work in a people business, so most people are great. So it's, it's fun in that regard, but we, we want to make sure that we're evolving the culture. We don't want to impose anything on a local partner. So it's really important that we understand them and what their current culture is and that we understand that it's a great fit. And that their culture is additive to the overall BeaconPointe culture. Now, how do we bind it all together? So it is one Beacon is what we like to say. Twice a year, all the people running the local offices are together in what we call the BeaconPointe Leader Summits. We also have an operations summit and a financial planning symposium where people from around the country that are involved in operations all come together once a year. In person, as well as the financial planning. We have monthly and quarterly meetings with those groups ongoing via Zoom. We also have something internally called Compass, which is like Facebook and LinkedIn for BeaconPointe. We communicate a lot of business information through Compass to everybody in the local offices, but also a lot of personal stuff. So weddings, birthdays, charitable stuff that each office is doing. So it's fun. We try to tell a common story. And the way that we, the way that we're able to do it is we have something called AllWealth. It's trademarked and we kept it very simple. There's 3 pillars to AllWealth: access to institutional quality investments, life and legacy planning, and impact initiatives, which includes like our women's advisory initiative and institute. We do some stuff for veterans. We have a badge for Girl Scouts, stuff like that. Whatever our local offices want to do to impact their communities and how we can support our clients and impact other communities, that's the impact initiatives. Those are 3 pillars that each office can tell with their own voice, their own accent, their own personality, yet they're still telling a common story across the firm. So we do a lot of things like that. And then the, the managing directors around the country, it's like a giant study group. They're on the phone constantly communicating with each other. Operations people in each offices are talking to each other. So it's, we want a transparent, open, communicative culture. That's how we do it.

Yeah, I love how you describe that. And even though oftentimes we say cultural fit, as you describe it, what we're really talking about is cultural complement because you mentioned that the culture continues to evolve. So each new firm that you bring in is going to add some new dimension. And while you don't want them to cut off who they are, you want them to still be able to be who they are, but also within this one common story that you described. The other area I want to touch on here, and you mentioned this just a little bit, and that is organic growth. You guys are growing. I'd love to hear some more about what you are doing outside of custodial referral programs, because I know for some of the bigger firms like yours, the custodial referral programs are certainly a huge source of organic growth. But let's take that out because not everybody gets access to that. What are other things that you're doing in the organic growth area and also From your seat here in the industry, what's your take on the overall organic growth in the industry? Are we seeing growth? Is it flatlining? What do you see in there?

What we're seeing is most RIAs that we evaluate, and we always look at the last 3 to 5 years of organic growth net of market, aren't growing greater than 5%. And one of the issues I have with the sell-side processes that are being run by the quote unquote investment bankers that are representing the smaller RIAs being sold is they're asking for premium pricing on something that doesn't really deserve it, frankly. So I hope that changes and that more firms can pick it up from an organic growth standpoint. But it still is all about the relationships and the reputations and the energy of the advisors at the local level in their communities that drives the most amount of organic business. That for us, that still remains true. So it's referrals from— now when somebody first joins us, we get a lift because we've taken all the distracting responsibilities out of their way and allowed them to focus on their best relationships. And they're going in and they're talking about expanded resources, both on the planning and investment side, and they're able to spend more time with the client and be present or with the COI. And so they get more referrals that way. We support that with a very robust digital social media approach and SEO and everything else. And so we do a lot in terms of Instagram, LinkedIn, Facebook, and Pinterest. And Pinterest is because I, last stat I saw was 96% women. It, it ties back to our efforts on the Women's Advisory Institute initiative. Very great. We do a lot of work on the digital side. The lead, everything is then driven back through the website. We know we've geo-mapped everything. We know exactly where the lead belongs. We push it back out to our local office. That's been very successful. The other thing that we do, we do a lot of still, we do a lot of bricks and mortar events supported by the platform leadership that gets out there in the community with our partners locally who have that reputation and the energy to do it and the excitement to do it. So we're bringing resources to the people in person. And then we have more recently started cadence style mass email things where we use an AI-enabled program to sort a certain type of lead, call it female CEOs in this type of industry. We've got 17,000 prospects nationwide. We start an email drip program that has a tree that they click through and it goes to the next level, blah, blah, blah. If they don't, it goes back to the beginning and we generate an interest score. And if that person gets above a certain score, then we kick that one, one-page profile sheet out to the local office where it belongs. And they'll contact the potential prospects. So we do things like that to help support at the local level. But the key thing is growth is a mentality, a mindset, and an energy level. And we need to free people up so they can, they can be creative and get more engaged. And then we need to make sure we're there to support.

I was looking at a study here recently by Russ Allen Prince and I think it was Jerry Prince, and this was published in Financial Advisor Magazine. And they asked advisors who had sold or merged their firms to another larger firm what their satisfaction level was. And 51% of those advisors who merged said they were satisfied, and 49% said they were dissatisfied. What kind of feedback have you had from your advisors that have merged with you that may have been dissatisfied? Because I can't imagine you've got 100% hit rate here, but what are some of the things that where you say we can actually get a little bit better at this, I think?

Yeah, a couple of things going on there. One is the incentives for the aggregator may be off. And so there's a management incentive plan typically at any private equity-backed aggregator and the management, if they're not the founding management, they're now, they're just professional management that comes in, their incentive may be to grow the economic side of things in order to participate more in the equity of that management incentive plan. And that could distort things where you're just grabbing people for the economics. Again, spray and play, get them in. It's accretive from an economic standpoint. It's got to be good, right? Okay. So misalignment there. And you're— the other thing is, I don't know where I got this. I'm sure I got it from somebody else because I don't— I'm not that creative, but here it is. You can't make a duck an eagle. Right. And so if you get a bunch of ducks together, you can't expect them to suddenly become eagles overnight. People's personality makeup and stuff is, you got to make sure you're going after eagles first and foremost. So it's about the people, but for firms that are representing that they're going to do things to support eagles, they've got eagles and they don't support those eagles or those great producers, those high-quality advisors, shame on them. Misrepresenting the, the resources or the support level that they're going to get for those people. Our experience has been if we've got somebody who's a genuine grower, they've grown dramatically. I think about our first office to join us, Scottsdale, Arizona, $110 million. Bruce Meyer, Copper Wind Financial was the name of the firm. He actually separated from Copper Wind. He had another partner, amicable split. Bruce just wanted to do this thing with Beacon Point. That office today is close to $2, I think $2.6 billion or something like that. And so how did we support them? We supported them on organic growth, as I've explained before. We added custodial referral programs, but Bruce wasn't really adept at that. What we did was we brought over 4 advisors from another firm in 2014, and those 4 advisors ran with that part of it. We added some other advisors through small sub-acquisitions, and then we did a, a larger deal and merged them together, and Scott's deal was about $450 million in terms of large earnings. So they hit it on all 4 cylinders of the game and we supported them the whole way through. But that was because they, they got it and they, they were high energy and focused. And we, we've had that experience now in terms of not growing. Yeah. So we've, I can think of maybe 1 or 2 offices where we have really nice people, great advisors, but not a lot of juice around growing. In organic growth. And so we've had to augment that with some younger, more energetic people to get out there and do it, but not at the expense of their relationship with the people that we brought in as partners. We have to own the fact that we did the best diligence that we possibly could on those people to determine that they were an eagle, not a duck. And I don't think they're ducks. I think they're eagles in a different way. And we just need to get a different type of eagle alongside of them. To really make that particular office hum. But for the most part, we just need, if we make a mistake, we need to own it. We need to make sure we're transparent and honest with our potential partners.

As we think about organic growth, there's, let's call it two big buckets. So one bucket is what you are orchestrating at the corporate level. It's your digital marketing strategies. You get a lead and then you feed it to the local advisor. So it's corporate generated, let's call them warm leads. And then there's also at the local level, it's the work that each of those advisors are doing separate from anything that you might be doing at a corporate level. And I understand that some of the corporate stuff that you do is going to bleed out into the marketplace. So it might be a little hard to separate. But do you have any sense for, of the organic growth that you as a firm overall are achieving? What percent of that do you think is driven by the corporate-wide marketing strategies versus what is being generated in the trenches at the local advisor level with their boots-on-the-ground work that they're doing?

Yep. So true to probably 90% of the players in our industry, the vast majority of it is created at the ground level locally versus corporate. I can think of maybe a handful. Well, you get to Schwab and Fidelity with their brands that's driving it. Fisher probably has the most effective mass marketing thing. I think anybody else who tells you that they've got a really got it wired. I wouldn't put much weight on that right now. I think it's still at the local level with the local. The key is finding people who are energized by the social networking and all that kind of stuff that drives business. So that way you can just free them up and allow them to be very active in an area that they're passionate about and they get energy from and supplement that with our efforts. At the corporate level. So you call it 80/20, if I had to guess.

Do you see that shifting at all, maybe from 75/25 or 70/30 or 60/40? Or do you think it's pretty much going to stay this way just because of the human dynamic of the relationship between an advisor and a client?

I think it's going to shift. I think it's going to shift generationally. In other words, I think millennials, Gen Z, onward, I think it's going to shift as you get younger and those people start to get money. I think that they'll, it'll be driven by digital and AI and that kind of thing. I think that where the most of the money sits today in the boomers and Gen X, I think that's still a highly relationship-oriented kind of environment. Certainly at the ultra-high net worth level, you want to know who's handling your money when you've actually got some money to be handled. So I think for a while it's going to remain a very hand-to-hand combat kind of thing.

All right, Matt. So what's the best way for folks to connect with you if they want to learn more about what you're doing and what BeaconPointe is doing?

Sure.

You can email me directly at mcooper@beaconpointe.com, or you can call me 949-584-4184. I still have my Orange County area code.

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