How would you feel if a prospective client stood up in the middle of a conversation, slammed his fist down on the table, and let you know in no uncertain terms that your meeting was a total waste of time? Arthur Cooper, CFP and president of Cooper McManus in Irvine, Calif., can tell you that it doesn't feel good.
After almost 20 years in the financial services industry, that "angry client" experience still gives him pause. It was 1991, and he had had four years of testing his sea legs both as an intern at Dean Witter and as a recruiter for A.L. Williams. Then an employee of IDS Financial Services, Cooper was expected to promote the company's agenda--to follow the plan. The year-long training program included memorizing a script, the sole objective of which was to sell the program and get the check.
"As I watched this gentleman walk to the elevator, I was in total shock," Cooper, now 40, remembers. "Eventually, I started thinking, 'Okay, this is a message; I need to do something else.' My first thought was to pack up and leave the industry entirely, but I needed to stay another three days to get my paycheck, so decided to tough it out. I survived that experience and determined to make things better. Eventually, I became a training manager and achieved 'silver team status' by meeting certain production levels and charging financial planning fees. In those days, this demonstrated that you were practicing financial planning versus selling products."
After earning the CFP mark in 1994, Cooper became a district manager, training financial advisors in the Orange County area and, during the next three years, was personally responsible for some 10 to 15 people. In 1997 Cooper became a "gold team financial advisor," the company's highest level of distinction at that time, and stepped down from management to focus on building his own practice. Also in 1997, Cooper moved to Lincoln Financial Advisors. Given his leadership status at IDS, several other advisors decided to transition with him. Cooper served as Lincoln's regional director of financial planning, increasing the group's planning fees from $1,000 to a whopping $100,000 in the first year alone.
Determined to become even more independent, Cooper found Securities America Inc., the mid-sized, broker/dealer based in Omaha. In 1999, he incorporated as Cooper Financial Group and set out to build a fee-based financial planning and investment advisory firm. Initially working out of his house, he eventually moved into an executive suite, but found working completely by himself to be a lonely experience. In 2000, Cooper and Dan Spotts, one of the advisors he'd trained at IDS, moved into an office to share expenses and cross refer (Spotts had returned to the mortgage brokerage side of the financial services industry). Cooper also received state approval and became a registered investment advisory firm that same year.
"That was when the practice really started to grow," Cooper says. "I started operating more like a business owner than a rep for a financial services company. That's an important distinction, one that keeps a lot of financial advisors from progressing to the next level of success. Am I a representative of a financial services company? Or am I a business owner who affiliates with a financial services company to help provide better service to my clients? Once I made that mental and emotional transition, things really took off. I started to interact with other business owners and my clients in a whole new way. I was able to relate much better and developed a lot more credibility."
Later that year, Cooper had an opportunity to purchase a practice from the widow of a Securities America representative who had passed away. "I ended up meeting with the family, ultimately competing against two other Securities America-affiliated advisors and getting the nod." Cooper purchased the practice for $30,000 and within 12 months had generated revenues of over $150,000. Ultimately, the advisor's widow became a client, and is still a client today, as are many of the clients from that acquisition.
Over time Cooper recruited additional reps, mostly through referrals. Today his firm has 21 reps in two states. In 2001 Cooper approached David McManus, CFP, an advisor he had trained at IDS, and proposed a merger. McManus had followed Cooper to Lincoln and was still there. He had completed the financial planning program at San Diego State University. Now equal partners, they are doing business as Cooper McManus, an Irvine-based financial advisory and wealth management firm.
At the outset, the two had a combined $50 million under advisement, $18 million of it under fee-based management. Then 9/11 shook up the world. Interestingly, revenues for Cooper McManus grew 30 percent to 40 percent annually for the next few years. "Many of our friendly competitors were going out of business or experiencing tough times," Cooper says. "We attributed our success to staying true to the core financial planning business and our money management philosophy. We did diversified asset allocation, model portfolio-type investing and stayed invested through that whole time. Where clients' other assets or their friends were losing 40 percent to 50 percent, our clients were only experiencing declines of 5 percent to 10 percent during that time. As a result, we developed a lot of credibility with our clients and continued to grow. In 2003 we became SEC-registered, with close to $30 million under management. In addition we brought over a producer group that did about $750,000 in production. These were people I knew from IDS, who had moved on to other places, but were ready to exert more independence. Interestingly, they were looking at going direct to LPL or coming to Securities America under me."
Normally, a producer group that size would have gone direct, rather than come under an OSJ, Cooper said. "One of the reasons they came to me is that I have a reputation of being a good guy, somebody who can help you stay out of trouble as well as get things done." For Cooper, becoming an SEC-registered firm and taking on the producer group in 2003 amounted to kind of a coup.
Today the firm manages about $160 million in advisory accounts--about half that amount falling under the Cooper McManus banner. They also recently purchased a 10,000-square-foot building within the prestigious Irvine Spectrum business complex. "We formed an LLC and three of us--Dan Spotts of Loan Advisors, David McManus and myself--own equal shares," Cooper explains.
Cooper's enterprise continues to grow, with clients coming mainly from referrals. With the new building's available space, Cooper wants to hire a number of staff planners to serve the 300 financial planning clients he and McManus call their own (the tally is closer to 850 clients if you count every McManus/Cooper account). The producers' group also continues to hit new goals and enhance the business mix. For example, one of the firm's areas of specialization is creating tax efficiencies with real estate.
Cooper believes clients are attracted to the firm--and stay--because they know it presents solid solutions, whether it's creating tax efficiencies or just its general style of managing money. "The way we manage money is not exciting, but it works," he says. "So it's not because my portfolios are better than anybody else's; I think it's because I have strong technical knowledge and can convey that in simple, easy-to-understand terms."
Cooper has a client services director whose primary responsibility is to ensure that the existing client base is taken care of. His best clients are small business owners with fewer than 10 employees and $500,000 to $1 million or more in annual revenues. They are people in their early 50s or older, with at least $2 million of net worth.
"I want to help [my clients] capitalize on all their assets," Cooper says, "--the financial as well as the non-financial...the things that people want to transition to their children, more so than a big lump sum inheritance. Instead of having the children inherit a bunch of money, we encourage our clients to look at how the Rothschild family passed on their assets. They didn't just gift the assets to their heirs, they created a central location where the heirs can come and withdraw from the Rothschild bank, so to speak, with the understanding that they not only pay it back, but that they share their experiences with others. It becomes part financial bank, part intellectual knowledge bank."
Marie Swift is president of Impact Communications, Inc. Connect with her via www.impactcommunications.org.