One of the newest players in the family offices space has been setting the pace in recent weeks, and this publication recently caught up with its CEO.

The past few weeks have been a whirlwind for the team at Cresset Capital Management. The firm has built out a family office business, recruited a number of teams and, most recently, launched a fund tapping into a new US investment program.

Cresset’s build-out of a family office operation, led by award-winning industry figure Michael Cole, and a team of colleagues from his old firm, Ascent, was one of the wealth industry stories of the summer. And Cole, whose thought leadership prowess was honored by Family Wealth Report earlier this year in New York, recently spoke to this publication about what he is trying to achieve. Cresset has more than 70 employees and recently its Cresset Wealth Advisors arm surpassed $3 billion in assets under management, a year after it was launched.

The founders of Cresset Capital Management - Avy Stein and Eric Becker - have a background in the private equity sector, and retired early from the industry. They wanted a family office-style structure to protect their wealth but could not find something suitable. So, as often happens, they wanted to build one of their own, Cole said. 

Cole, who is chief executive of the new Cresset Family Office, is delighted to be on board. 

“The future of serving clients is best done in an independent, objective way. It is not something I had seen a lot of before,” he said. (Editor: Of course, there are, as this publication knows from readers who have seen this article, some existing US wealth houses already make a point of not selling any financial services whatsoever.)

“I had found that having all the resources of a big bank wasn’t necessary for the client [any more],” he said. Technological changes increasingly put some of the resources that banks once monopolized at the fingertips of smaller firms. And smaller, more nimble organizations have the advice-led approach clients want, Cole continued.

Cole has worked at some of the biggest hitters in the field. Before Cresset he was president and founder of Ascent Private Capital Management and head of the predecessor to Abbot Downing. Cole, based in San Francisco, is also a recently-published author, writing More Than Money: A Guide to Sustaining Wealth and Preserving The Family. (In March this year Ascent Private Capital Management - of US Bank – was awarded by Family Wealth Report for being the Best Multi-Family Office ($5 billion to $15 billion AuM/AuA) and for Outstanding Contribution to Wealth Management Thought Leadership for Cole’s book.) A senior industry figure told this publication that Cole's credentials and those of the team he was building are impressive.

The launch of this business is part of a continued flurry of new entities in recent weeks and months. Arrivals in the sector include Dakota Wealth Management, Waypoint Investment Partners and Sanctuary Wealth Partners. To some degree, these launches offset a trend in the wealth industry of consolidation that has been a talking point for some time. Clients may like some of the benefits of economies of scale – and regulations make these more urgent – but clients also like the personal touch. This situation explains why wealth management is unlikely to ever be dominated by a handful of big players.

And despite the derailment of the Department of Labor Fiduciary Rule, there is a continued need for impartial, fee-driven advice, so Cole and some of his peers say.

There have been a number of hires and initiatives in recent weeks. A few days ago, Cresset Capital Management partnered with Diversified Real Estate Capital to launch a new fund that will invest in Qualified Opportunity Zones, areas targeted for economic stimulus by recent US reforms. QOZs to some extent are a form of "impact investing" - an investment space attracting considerable industry attention in recent years. (See an article about the issue here.)

Side of the table
With large banks hobbled by regulations, the kind of freedom they once had to help clients manage credit issues, for example, does not exist today, Cole said. “You need people with deep credit experience sitting on the client’s side of the table,” he remarked.

Clients are also less interested in paying fees to obtain what amounts to capturing market returns (“efficient Beta”) and more concerned about paying for where real expertise is needed, he said. “The real opportunity lies in where it takes more expertise: private equity, hedge funds, direct investing, etc,” he continued.

So what is success going to look like at Cresset? “Having families really appreciate the model that we are building and what we’re doing,” he replied. There is a real need to work not just with entrepreneurs, but what Cole calls “capreneurs” – persons who have cashed out of a business, taken significant capital, and need to have it intelligently invested, he said.

Since the news first broke of the Cresset Family Office venture, Cole quipped that he has been inundated with enquiries about it.

“People are looking for the right business model,” Cole added.

(Editor's note: The editorial team here realizes there's a debate going on about what constitutes truly independent advice around wealth. One test for a while has been that a firm or person isn't pitching any products or services at all, is remunerated in a way unconnected to sales or metrics such as share of AuM, and so forth. We'd be most interested if industry figures want to comment on this. They should email tom.burroughes@wealthbriefing.com.)