Stories From Advisors Serving High-Net-Worth Clients

EDDIE BROWN: Well, Shannon, thank you so much for being here with us today. Shannon, I'd love to hear a little bit about your story and the career and experience you've had, and what's led you to your role today.

SHANNON KENNEDY: Sure. Thanks for asking, Eddie. I've been in the business for 35 years, all in the ultra-high net worth space. I, actually, wanted to go into medicine helping people. But I was a nanny in New York City, went to Wall Street, and it was like the angels in heaven went, 'Woo, go into finance.' And so I worked at a Chicago-based large trust company for many years, working with mostly single family offices, billionaire families. And then moved to Southern California, to Newport Beach, and more in the high-net worth-space, so more of a community type bank. And then moved to BMO Family Office a couple of years ago, which is super exciting for me because it has two different platforms, both the RIA, but I'm a boutique in a very large enterprise-wide institution. So great experience, lots of wisdom.

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EDDIE BROWN: Well, Eric, thank you for taking the time to be with us this afternoon. You know, when I think about the relationship that we've developed, maybe tell us a little bit about that experience and where it is today.

ERIC BECKER: Sure. My partner, Avy Stein, and I, were lifelong entrepreneurs and private equity executives, and it was really in our retirement, in looking at the way that our families had been taken care of by some traditional wirehouses that we decided to do a search and see if we could find a firm that was more like a family office to serve our families. And after a year of research, we just didn't find anything that matched what it was that we were looking for. We both felt that life could be so much better for families like ours if we had the right type of platform and relationships. So we did some research. We ended up putting together a plan. We agreed that our two families would be the first two clients. And very early on, I remember being introduced to Bernie and having a call. I remember where I was in my kitchen, walking back and forth, pacing, having a conversation, which led to us meeting in Phoenix, and we laid out what it was that we wanted to do from the earliest days of the launch of the business with our friends at Schwab, which was terrific. 

And since then, it's been an incredible journey. The first year, just from our two families, and, frankly, people that knew of us, we were able to finish the first year with three billion in assets. The second year, it doubled to six. The third year, during the pandemic, when no one knew what would happen, it doubled again to 12. And we finished last year at about 23. So as my dad used to say, people vote with their feet, and we've been able to really build something special, but with that unique DNA that it was started by clients, for clients, and with very broad-based employee ownership. It's 65% owned by the employees and 35% owned by the clients.

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EDDIE BROWN: We've had quite a history together. And I know a little bit about your journey and what's led you to your firm. But maybe we can start with you, Steve, and tell us about your career experience and what led you to being the founder of Pathstone.

STEVE BRAVERMAN: I came up as a client. I was running my family's single family office and was very much engaged with, at the time, not even realizing that it was, by design, a family office. We just thought about the day-to-day needs of what our family was engaged in and where we were going. And, for us, it was simply do the next best thing. I came to find, through our own experiences, an organization that reached out to us, said, 'Hey, you're a interesting family. We'd like to learn a little bit more about you.' And that was really my first entree into the industry and into the experience. From there, you know, grew into becoming a client, became an employee, found great people to partner with over the time. And together, we have moved through the industry and find ourselves today managing Pathstone together.

EDDIE: It's great to hear the story and being a client and bringing that to a firm, and is incredible because that passes on the values that you have with the firm. Matt, maybe take us through your journey.

MATT FLEISSIG: Yeah. Yeah, I was lucky enough to meet Steve in 2006. Both of our families had a lake house in the same location. And, you know, through a casual conversation, Steve said, 'I'm trying to start this single family office for multiple families, and you want to come in Monday and talk?' And I was like, 'Wow, okay.' I did some quick research on Steve's family and Steve's background, and went in there, and it was Steve and one other person. And from the start, it was the three of us that started this little adventure of being that single family office for multiple families to build what we are today.

EDDIE: What a great origin story. You've done a tremendous job in the time that you've been building the firm.

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EDDIE BROWN: Coming from outside of the wealth management industry, your perspective was very different than many that have spent decades in financial services. Are there few that you would highlight that we could share with others?

ERIC BECKER: I would. I would give three examples of things that you probably would only learn from the client side that have been impactful in how we've thought about the business. The first would be when I was 28 years old and had already had some entrepreneurial success, one of the large wirehouses reached out to me and came down to visit me in Baltimore, had already exited two businesses and was working on a third, and we had this wonderful lunch. And at the end of lunch they said, ‘It's too bad that you don't meet our minimum…

EDDIE: Wow.

ERIC: …and we look forward to when you do, and we'll be here for you.' And I remember that feeling of rejection and feeling small. And that was tough to hear, because when you need help, you really want someone to be there for you.

The second thing I would mention that was influential was my dad. My dad was this wonderful first generation entrepreneur, in the Christmas business, one of the coolest businesses that a family could be in. But my dad never had access to the types of resources and talent that we have and that you have available. And so as I saw him later in life, his later years really weren't what he had hoped for. He really didn't have access to great planning and great advice, and I think that it affected the quality of his life. And so for Santa to not have had the benefit of that is something not lost on me and that we want to make sure that we provide for the families.

And the last thing that I would mention is not knowing, quite frankly, as an entrepreneur, the difference between a fiduciary and someone in a different model, suitability or other types of concepts. I didn't know that. I actually had the presumption that my advisors were fiduciary. And it wasn't until this journey that I learned how important it is to have access to independent fiduciary advice. And that's certainly something I would tell anyone who is thinking about who should serve their family, is to find someone who is independent, capable, and a fiduciary, a true fiduciary. So those experiences, when we formed Cresset, we tried to address those so that family members have a lifetime of planning.

EDDIE: What we've done within Schwab is how do we accelerate and fuel that, and I hear the fuel that you needed. This is all very personal to you and I know that the values that you employ in your own family have helped inform the values that Cresset has.

ERIC: And so, of course, there's the very all-important financial and planning and investment side, but then they're the things that we do to help families to be more highly functioning. And so whether that is in having a family mission, thinking about family governance, how they work together around service and philanthropy to others, having programs for next gen and even for children. And it's that combination of making sure that the financial objectives and the investment objectives are met for the future, as well as making sure that the family stays together and hopefully is as highly functioning so that they can lead a better life. And our thesis is, is that if a family can succeed together, that they will have a greater impact in their community, and sort of one family at a time that then, hopefully, has a very big impact over many years.

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EDDIE BROWN: But I'm interested more in kind of the unique requests, or unique experience, that has been most memorable. I'm sure there's been plenty, but maybe one top of mind.

SHANNON KENNEDY: Yeah, so one story that I can think of is I am always representing BMO Family Office and our firm. So I was at a health camp in California, and met another woman who had just sold a fifth-generation business, she and her husband. And you get talking, and I told her what we do, and trying to help families and generational wealth. And she said, 'I need to work with you guys.' 

So after a series of meetings with our team, and with your team, she became a client, and then asked if we would do something for her and her three daughters. They had set up a foundation, and she was trying to figure out how to educate them, number one, on prenups, number two, on the foundation, and then number three, on leadership, just leadership for women. So rather than do something completely bespoke and custom for her, we decided to open it up and be a little bit more broad, and brought in some other women, clients who had just sold a business, my daughter attended, we had a client who had authored a book that was focused on women and leadership, and just had this incredibly special experience, which now, of course, all of these 20 or so women want to repeat every quarter going forward. 

But that's my most memorable of just meeting someone by… just by happenstance, serendipity, and now they're a client, not only a client, but a very good friend

EDDIE: That's such a great story, and to take that client request, and make it something more meaningful and impactful. You know, we speak a lot about next gen education, but women and wealth is such an important part of what we need to focus on as financial service leaders.

SHANNON: So we have another program coming up in September, where we're getting about 25 women together, and we're going to hike, and do some mindful eating, and do some education around, you know, what it means to be a good, prepared inheritor, and what does it mean to be an owner, not just, you know, a steward of wealth, but an owner of wealth, and how to move that forward. So trying to mix those two things in specific to women.

Connecting owners of wealth has been fun, challenging, because the confidentiality behind it. But connecting through some of my peers has been incredibly important, and even through what you all put together for the leaders in the industry. And bringing together multi-family offices and single family offices is a bit unique, and so you've got some special sauce there, I think, where, you know, we can all interact together and learn from each other, because it doesn't matter how much money someone has, they still want to know what someone else is doing, or how they're doing it at no matter the level. So that's been very special, and I appreciate that.

MATT FLEISSIG: I mean, at the very basic, we are still a single family office for multiple families. From the start of the firm, our philosophy has been if our people are happy, our clients are happy, and the business will do well as a product of that. And I think it's very important that even whatever success we've had, whatever growth we've seen, is really because of those first two things, and it's for serving clients. You know, people say, when you look at our growth rate and new clients joining, 'How did you do it?' Well, we just delivered incredible service to our clients. I know it sounds old-fashioned that there's not a…

EDDIE BROWN: Sure. Sure.

MATT: …there's not a secret trick that's out there. But the secret trick is delivering incredible service to your families and growing the business. And I think that's been from the start.

STEVE BRAVERMAN: Yeah, we make what we consider to be a multi-generational promise to our clients. You know, when I said back to this concept of a family who hires us is effectively entrusting us with their legacy. So, you know, the way in which we think about building the firm, the way in which we set our north star, as you say, is really centered on this idea of getting it right continuously, and being the right partner for our clients each and every day.

EDDIE: Yeah, and it's become more complex. It's a tremendous responsibility when you think about the impact that you and your teams can have for multiple generations and how that shapes the course for the family's success. You know, and with increasing complexity in families, and the needs and expectations increasing, it's obvious they're asking more of you.

STEVE: We had a wonderful family of ours that we had been serving for a number of years prior to their liquidity event back in 2008, and they were able to sell their business to a large, well-known, multinational conglomerate for what was a quarter-billion dollars in cash in August of 2008. Markets were at about 6,000 on the Dow. So, you know, effectively having 250 million in cash was a good place to be those days. But, interestingly, the entrepreneur that had spent years getting himself into that position, shared with me at that very moment, basically said, 'Steve, I've never felt so poor.' And I said to him, 'Well, tell me a little bit more about that. You've just now taken in $250 million by way of the sale of your business. Why is it that you feel poor?' And he said, 'Steve, today is the first day I stop making money. From this point forward, I have to live on what I've done.'

Now, of course, you know, the beauty part of it is that this gentleman has gone on to multiple iterations of entrepreneurial success since then. But, nonetheless, in that moment, he needed to know from us as his family office that we had his back, that we understood his balance sheet, that we understood his goals, his fears, his aspirations, and that he needed to hear from us in that moment 'I've got you.' And I think for me, that always sits as a special moment, an opportunity to really say, 'Look, we are informed. We've known you for years. We were working with you well before your liquidity event. And we know how you live, what you want to do, how you want to impact society, how you want to develop your family, and we're ready to be, you know, a confident partner for you.' So that's always been an impactful story for me.

EDDIE: You know, it's all about the client perspective, and something that we built with Chuck Schwab and his vision was always seeing things through clients' eyes.

STEVE: Absolutely.

EDDIE: And safety and security is incredibly important, but the ability for you to kind of span that scope of doing so much more than just manage the money is tremendous.

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EDDIE BROWN: What energizes the two of you each and every day to continue to do more?

STEVE BRAVERMAN: Every day is different. Every client is different. When we think about the evolution of the firm, in many ways, you know, you think about the buying decision that a family makes when they become a client, which is, 'Here's all my money forever. I've got a legacy I care about, its continuity. I want to experience, I want to be able to be engaged with people that care and understand, and in many ways bring a cultural proactivity.' So what energizes us every day is knowing that, you know, for the hundreds of families that we serve, they're counting on us to look up and around the corner to think and engage for them in a way that drives opportunity and manages risk.

EDDIE: Matt, how about you? You wake up in the morning and you're energized and ready to go to the office.

MATT FLEISSIG: Well, first of all… first of all, this isn't a job, I have to say. I really believe if you look at our whole team, we run to work, we're having fun. And the idea is let's create something that does not exist. And I think that's the reality of the industry right now as well. And we're really in the infancy of where the independent advisor and the RIA business is going.

EDDIE: So true.

MATT: And I think it's incredibly exciting is, is how do we create a brand, how do we create a firm, or a national boutique that serves the ultra-high net worth? And if you go out there, Pathstone, we have found, is well-known in the industry. I think we've done a good job getting up to 35 billion. Average client size is roughly… about 85% of our business the average client size is a little north of 120 million. And that's the area that we've been focused on from the start, continue to be. And how do we become that national boutique for that client segment?

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EDDIE BROWN: You know, Shannon, what energizes you every day to come into work and have the role and responsibility that you have?

SHANNON KENNEDY: Well, you know, what energizes me is two things, clients and employees. So, you know, we're an employee-led, advice-led firm. So starting with employees, I believe happy employees mean happy clients, mean more advocacy for growth, for the future of our firm. But I also love learning about our clients, most of them are business owners, and how they created generational wealth. And then how to go from owning a business to owning financial assets, and figuring out what to do with the legacy, what to do with their children, how to be a good philanthropist. I think, for me, the best compliment I can get from a client is 'I feel like I'm your only one, but I know you have plenty.' Which is how we feel with Schwab oftentimes because you have such dedicated servicers and people that we get to work with. So you're part of our family, as well.

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EDDIE BROWN: What is it that brings you that energy to keep building and doing more?

ERIC BECKER: We love working with families and being a trusted counselor to be able to provide advice, to do mentorship of the younger people on our teams, and even the next generation for our families. In business, when you're young, you don't always have the luxury of time and capital and to be able to aspire to the best vision possible. Sometimes you have to make compromises, particularly when we're much younger. And so at this stage in life, to be able to do things like create a 100-year plan, how many chances in life do you get to put together a 100-year plan? I've never had that chance before. So to be able to think really long term, and to be able to create that culture of ownership in the firm, and to add amazing services, as we have, it's such a broad based offering, and to be clients ourselves. It's really been a special opportunity and responsibility.

ERIC: It's powerful, but it can also be daunting.

EDDIE: And so it is a very special responsibility that we take very seriously, and we've seen the benefits of it. And whether it's reviewing a business plan for a teenager in one of our client families, and giving them some coaching, or talking to a young person that's intimidated by their upcoming college journey, whatever it might be, we really enjoy being of service across the board, and with the goal being that when something is on one of our clients' or family's mind, we want to be the first call. We want to be that first text message. We want them to reach out to us and give us the opportunity to take that on and to try and help them, no matter what it might be.

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