“We are the world’s best high-net-worth wealth advisory firm.”
That’s the elevator speech of Eric Kramer, founder and principal of Crestone Capital Advisors LLC in Boulder, Colo. That confidence isn’t just marketing spin. Crestone’s average client has around $50 million in net worth and new clients must have a minimum of $25 million to invest.
Crestone Capital Advisors was founded in 1991 as The Eric J. Kramer Company. After a lot of “refined experimentation,” and some help from the telecom and tech booms in the ’90s, the firm has grown to $1 billion in assets under management, and advises 40 clients. Kramer attributes part of his firm’s growth to an influx of “sophisticated, wealthy families” in Boulder.
“That really turbocharged our growth and really helped us cement the value proposition,” he says. “You know, at a level, the industry was really was pretty incipient at that point in time. You didn’t know if people would pay for these services or not. It was a philosophical choice and a value proposition that had to be proven as a viable business.”
The business has proved to be viable, and today, Crestone makes its mark as a high-service firm for the super-rich. “I think the thing that is unique about us that is hard to really put your finger on is our unique culture in terms of our high-service approach,” Kramer says.
“Our clients make money. We are focused on that effort, yet at the same time, at a service level, from our clients’ perspective, it feels like the Ritz Carlton all the time.”
This commitment to service differentiates Crestone from the competition. As recent economic woes have made abundantly clear, the markets don’t always play nice. “We know there will be a day when big investment results aren’t great,” Kramer acknowledges. “We won’t look brilliant and we know that relationships stick with people who provide great service and treat clients with appropriate respect.”
In fact, when Lehman Brothers closed in September 2008, kicking off an unprecedented recession, Crestone immediately jumped into action. “We knew enough about our clientele and our business to know our people were going to need to talk,” Kramer declares. Kramer and his partner Michael Sherman hosted a Friday afternoon conference call with all their clients, promising two things: “Number one, we were going to stay on the line until every person had been heard about anything they wanted to talk about. If we were on the line until midnight, that’s fine. Number two we were going to do it every Friday at 2:00 until the all clear sign so nobody would be losing sleep over the weekend.”
The repercussions of the recession were “exhausting,” Kramer admits, but by taking on the stress themselves, they were able to relieve stress for their clients. Those Friday conference calls continued every Friday for five or six months, Kramer recalls; now, they are a monthly event.
While Kramer and his team reacted to the recession with extra support for their clients, a proactive approach to due diligence prevented any unnecessary fallout. Crestone approaches due diligence with the presumption that they will say “no”, Kramer says.
“We are very comfortable missing good opportunities because something just didn’t feel good enough,” Kramer claims.
“We look at so many opportunities between in-person meetings, phone meetings; we dig at least a thousand shallow holes a year on managers and we might put money with fifteen new managers a year,” he says.
Crestone has enough capital to hire private investigators and research managers to help dig those “shallow holes,” and Teams of interns help scrub files. Kramer recalls notes on Bernie Madoff in 2004.
“Our file notes said, you know, it looks like he’s doing something at best unethical, maybe illegal. It just smelled wrong.” That gut feeling, Kramer says, comes from informed business judgment and an understanding of the strategies being used. “It’s the business judgment that you only get by turning over a lot of rocks,” he says.
“We are managing money like a NASCAR driver,” Kramer explains Crestone’s outlook on positioning client assets. “We’ve got the foot halfway on the brake and half on the gas.”