Money goes to money — as the brand-new merger of a big, high-profile family office with a large wealth management firm proves.
Total assets under advisement: $2.65 billion.
The principals have been friends for more than 20 years but have never conducted business with one another — now they’re in business with one another.
The family office is William E. Simon & Sons (WESS), founded by the late William E. Simon, former Treasury secretary under Presidents Richard Nixon and Gerald Ford. The advisory firm is Massey Quick & Co., specializing in investment advice for high-net-worth families, endowments and foundations.
ThinkAdvisor recently interviewed Massey Quick Simon & Co. managing partners Stewart Massey, Leslie Quick and Peter Simon for a glimpse at why they opted to merge and how the new firm will work.
Prior to the merger, effective April 1, AUM of advisory firm Massey Quick was $1.93 billion, according to financial technology website Credio.
Scions Peter Simon and his brother Bill Simon, WESS co-chairs, bring to the party an extensive network of well-heeled business and philanthropic friends and contacts from the for-profit and nonprofit worlds. For WESS, the merger means that it can now make available to the public services previously provided only in managing its private family office assets.
Further benefits to Massey Quick: the RIA can leverage the Simons’ expertise in areas such as capital markets, real estate, private equity and venture capital.
Leslie Quick, 64, began his career in 1975 with discount broker Quick and Reilly, becoming a key member of the management team that developed the firm’s branch network, started and grew a major clearing firm and built one of the first internet trading platforms.
Stewart Massey, 60, led Morgan Stanley’s private client business in Asia and Australia, and was later head of institutional sales, marketing and product development for the firm’s prime brokerage business.
Peter Simon, 63, was with Kidder Peabody from 1977 to 1988. After rising to managing director of convertible securities, he and older brother Bill joined their father in managing the family assets.
Bill Simon, 65, ran for California governor in 2002, losing to incumbent Gray Davis. Previously, he was assistant U.S. attorney under U.S. Attorney Rudolph Giuliani.
To pop another boldface name into the mix, WESS also manages the assets of a certain three-time Academy Award winner. She is the ex-sister-in-law of a divorced Simon sibling but has remained close with the Simon family for more than 25 years. The New York Times and other publications identify her as actress Meryl Streep.
Massey Quick Simon will serve high-net-worth and ultra-high net worth clients, family offices, endowments and foundations, as has Massey Quick since its 2004 inception. The merged firm is headquartered in Morristown, New Jersey, where both MQ and WESS have been based. They plan to occupy joint office space in the not-too-distant future.
William E. Simon, who died in 2002, was an advocate of the free market system. He started out trading big bond portfolios at Salomon Bros in the 1960s. After government service, he co-founded Wesray Capital Corp., a private equity firm pioneering in leveraged buyouts. Later, he invested heavily in real estate and founded a merchant bank with sons Bill and Peter.
ThinkAdvisor recently interviewed Peter Simon, Leslie Quick and Stewart Massey by phone to learn how legacy planning on a mega-high level has largely guided a decision to merge two big RIAs. Here are excerpts from our conversation:
THINKADVISOR: Why did you decide to join forces?
PETER SIMON: One of my real motivations for doing this merger is to make sure there’s a firm behind me that has the leadership and strength of forethought that can serve the needs of our eight families that we take care of — [including] my five sisters and one client that was related by marriage; the marriage ended. I’m almost 64; my brother bill is 65. We plan on working, but now I know I have a responsible structure that will succeed me.
The Simons’ experience in capital markets, real estate, private equity and venture capital is “a tremendous asset” to Massey Quick, you say in a statement. Please elaborate.
LESLIE QUICK: It brings more firepower in considering investments and in making sure we’re looking at all the aspects of a manager we’re considering investing with. It brings another level of expertise to us as an investment team.
The core of the Simon family’s wealth comes from the work and investments of William E. Simon. What was the secret to his success, Mr. Simon?
SIMON: First, he was a very hard worker. Second, he was willing to make decisions with about 50% of the information. He had a wonderful acumen for how things were going directionally. Third, it was [always] a matter of trusting the people that he was dealing with.
How else does the merger benefit Massey Quick?
QUICK: Our ability to serve the needs of ultra-high net worth and high-net-worth clients is enhanced. We’re investing $150 million of our own money, and the Simons are investing their own money side by side with clients.
STEWART MASSEY: What we’re trying to solve for is what’s better for our clients and for our [staff]. [The merger] had to give us more depth and breadth to bring to our clients. Culturally, this is a perfect fit. It also provides better visibility of career paths for our people. It helps us in succession planning because it spreads equity ownership among more members. We’re formalizing a succession plan that will likely entail the ability of members of [the Massey Quick] team to purchase equity.
Certainly your own personal wealth plays a big part in your capability to serve clients in like circumstances.
QUICK: The Simon family has had lots of homes, boats, planes; and I’ve had some of that experience in my family. We’ve all had problems with children as well. So being able to sit and talk to a client, and [empathize] is very comforting to clients. You can really add a lot to people’s deliberations if you’ve gone through all those things too — good and bad.
The William E. Simon Foundation is sunsetting. In 2011, its assets under management came to more than $97 million. What’s the total now?
SIMON: About $56 million. We’re giving away close to 15% of our assets [per] year. It was Dad’s intent that the assets be distributed during the lifetime of the people that he knew — seven on the board are his children, and three are very close personal friends of his.
How do you decide who the recipients will be?
SIMON: When we get requests, the reactions of everyone on the board can vary. But one reaction that never varies is: “Would Dad do this?” We all look at each other and ask that. It seems to be a rule that we’re all very comfortable with. We’ll probably continue to make gifts for the next five years. After that, I’m not sure.
Does that rule apply when you make decisions that don’t involve the foundation?
SIMON: No. My father taught me a lot, and his instincts were excellent. I’ve used what he taught me. But every day is a new day. The world is different [now]. Every cycle is different.
How else does the merger benefit WESS?
SIMON: As a single family office, we acted as an RIA for our family, but we couldn’t take in another client because if it wasn’t someone that had $100 million or $200 million, the expense of adding that registration status to the business [was very high]. People would come to us and say, “We have $10 million. Can you help me?” I’d say, “I’ll look at your portfolio; the advice is free.” Now, not only can I bring those friends and acquaintances in, but we have a product for the client and can charge for it. We can literally use our address books to continue to build a very meaningful business for Massey Quick Simon.
I assume that the people you’re referring to are high-net-worth and ultra-high net worth friends, business associates and colleagues that you’ve met over the years in serving on investment committees, for example.
SIMON: Yes, that and with Dad’s longtime reputation in the financial world. So the network is quite large and substantial.The services that we strongly feel we do a good job in are not really on the investment side or advice-based. They’re financial, tax and legal services — and are somewhat mechanical. But, for instance, we file 220 tax returns, [some] required for [reaffirmation of] corporate validity a few times a year. High-net-worth clients are very concerned about liabilities that could affect the other parts of their life. That’s why you have all these entities to insulate yourself.
What will your brother Bill Simon’s role be? In the past, he ran the family foundation.
SIMON: Bill is going to be a part of [Massey Quick Simon]. He’s an investment professional, like me. He just does it out of our L.A. office. He and I went to work for my father in 1988 to help manage the family assets. We don’t make any investment decisions independently of each other. It’s a true partnership. We’re co-chairs and trustees of the foundation, which Jim Piereson [a senior fellow at the Manhattan Institute] now runs day to day. The [expanding] L.A. office will be used by Massey Quick Simon to look for opportunities not only for clients but money managers. Bill has an extensive network because he ran for [California] governor. He almost made it, but not quite.
How long have you all been discussing the possibility of merging?
QUICK: We’ve been talking about it and thinking about it, probably, for three years. But it really came together and got legs in the last three or four months. We all agree that the most important thing is culture: Could we see ourselves sitting together managing the firm, sitting in front of clients and telling the story?
Mr. Massey, as chief investment strategist, please discuss your outlook for the market and the economy in the second half.
MASSEY: We’re long-term investors. In the equity markets, we take a three-to-five-year point of view. We remain fairly constructive on equities, and we’re at or close to full allocation in most of our client positions, within the confines of investment policy statements. That’s because we believe the economy is getting better.
On what do you base that?
MASSEY: Corporate America is in fantastic shape: Balance sheets are strong, cash flow is strong, employment has improved tremendously. We’re starting to see wage growth. We’re relatively constructive on the direction of the global economy. We’re expecting the pace of growth to pick up. Europe is probably two to three years behind us in terms of their recovery.
It’s surprising that more family offices haven’t merged with wealth management firms.
MASSEY: They should. This may be a breakthrough type of transaction. We’ll see.
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