SpringReef Partners, a consulting firm specializing in evaluating wealth mangers for wealthy and ultra-wealthy clients, has been acquired by Aronson, an accounting and consulting firm based in Rockville, Md.
Doug Black, the former UBS wealth management executive who founded SpringReef in 2010, said the demand for his services was so great that he could no longer continue as a solo practioner. He will continue to oversee the firms business in his new role as director.
Black has carved out a lucrative niche charging clients with at least $5 million dollars in investable assets $700 an hour to find the right financial advisor. Fees typically range from around $5,000 for an evaluation, $10,000 to $20,000 per assignment for searches, and ongoing retainers determined on a case by case basis.
Theres no doubt theres a value and need for the service, and that people are willing to pay for it, Black said.
People who come to us are either confused or unhappy or both, he said. They walk in with a stack of brochures from wealth managers, broker-dealers and private banks and trusts. Every firm has told them they are the perfect solution. Their biggest concern is they dont know who to trust and what questions to ask.
SpringReef runs background checks on firms and their regulatory history, Black said, and also reviews such factors as their experience with managing high levels of wealth, their investment process and performance, use of proprietary products and transparency.
We have to get underneath the sales veneer and find the gap between the gap and the pitch, he continued. The narrower the gap, the better chance a firm has of getting the business.
HOW TO GET THE BUSINESS
Blacks advice to wealth managers?
Transparency is a big differentiator, he says. What really separates people is how straightforward they are in terms of what they can do well and what they cant.
Advisors should also play to their strengths, Black counselled. Once youve targeted a certain type of client with a certain level of wealth, you should stay true to that. I think about 10% of advisors are talented enough to handle clients with over $25 million in assets. The problem is that 100% of advisors think theyre in that 10%.
Firms SpringReef recommends usually have at least $1 billion in AUM, Black said.
In addition to evaluating firms who best bit his clients needs, Black also negotiates fees for clients based on their assets, value and complexity.
The biggest surprise in the three years since Black started the company has been clients who have put him on retainer to continue to monitor their financial advisors performance. I thought after we found the right firm for them it would be one and done, he said. But many of the biggest clients have asked me to stay on to review and evaluate the firms performance and how they are being treated.
Black said he been approached by investors and financial service firms interested in buying SpringReef but went with Aronson because of their complete devotion to client-centric consultancy. A bedrock principle of the business has been maintaining the client as the sole revenue source, he declared, despite not being most advantageous from an economic point of view.
Armed with cash from Aronson, the 58-year old Black said he will hire more people, and find the person who is the next me. He will also begin to split his time between his offices in Short Hills, N.J. and Aronsons headquarters outside Washington, D.C. in Rockville.