RIA Leaders 2021: The billionaires’ RIA flies beneath the radar

Early in his career, financial advisor Michael G. Mohr of Comprehensive Financial Management got bored with being a traditional CPA.

He decided to make ultrahigh net worth clients his specialty and narrow the Silicon Valley-based practice’s base to no more than three, Mohr recalled last year at the Hawaii Community Foundation’s Professional Advisor in Philanthropy Award ceremony. Mohr told the group that the practice has only two clients these days: eBay founder Pierre Omidyar and Yahoo co-founder Jerry Yang. He didn’t mention another billionaire connection. Besides them, Mohr has set up charitable and estate planning trusts for Marc Andreessen of Andreessen Horowitz.

“We just really have two clients and we’ve had them for over 20 years,” Mohr said at the foundation’s event last November. “We’re not looking to grow the practice. The practice grows because they’re very successful business people and we hopefully continue to help them be successful.”

As the No. 7 firm in Financial Planning’s RIA Leaders rankings of the largest fee-only RIAs, Los Gatos, California-based Comprehensive Financial has reached $22.76 billion in discretionary assets under management across 39 accounts and 33 employees, according to its SEC Form ADV. As an example of the expansion of family offices springing up worldwide for UHNW clients, Mohr’s firm displays the role philanthropy plays in a relationship spanning decades with families that gained wealth at a young age.

The “incontrovertible” growth of family offices in recent years stems from the rising number of ultrawealthy people worldwide and the inability of most practices to serve them due to the sheer amount of required resources and expertise, according to Jamie McLaughlin of J.H. McLaughlin, a wealth management consulting firm that advises RIAs about HNW and UHNW clients.

“It’s a beautiful thing if you can do it,” McLaughlin said of Comprehensive Financial. “The assumption is that they’re doing something distinctive on the non-investment side and they’re doing something distinctive on the investment side.”

RIA LEADERS 2021: Also in this year’s annual feature, find a slideshow with the views of some of the industry’s largest firms and toughest critics, a piece exploring the problem with industry rankings and a printable PDF of the top 150 firms based on FP’s criteria.

Giant family offices for tech giants
The tech entrepreneurs who built today’s digital world have turned to family offices for the management of their billions. Bayshore Global Management, the family office of Google co-founder Sergey Brin, followed other billionaires last year in launching a location in Singapore. Cascade Investment, made infamous earlier this year by the allegations of former employees against money manager Michael Larson, has served Melinda and Bill Gates for nearly three decades. Former Goldman Sachs broker Divesh Makan and the three other partners of Iconiq Capital have amassed a staff of nearly 300 and $60.54 billion in AUM with Mark Zuckerberg and Facebook executives as the company’s main client base, its Form ADV shows.

Comprehensive Financial is “not as flashy” as Iconiq, but the firm shares a similarity with it in that it allocates to alternative vehicles from third-party fund managers, according to an analysis of its public filings, tax and trust documents and databases by Michael Maduell, president of research firm SWFI.

“Iconiq wants to build its brand; they want to build a franchise,” Maduell said. “This company wants to fly under the radar.”

Noting that it’s typical to have more than 20 employees working with one client, We Family Offices founder Maria Elena “Mel” Lagomasino views the business model as akin to running a separate company for each household’s wealth. Her Miami-based firm is No. 25 on the RIA Leaders rankings with more than $10.2 billion in assets under management. For about 50 of the 88 families working with the firm, it acts as their entire family office. For the remainder, it works on a supplemental basis or for single assignments, according to Lagomasino. She compares the families’ philanthropy and ESG focus to nonprofits.

“We have families who come to us and say, ‘This is really important to me, and I want my investment to mirror my values,’” Lagomasino said. “This whole issue about making the world a better place is bringing together the for-profit investments and the foundation investments.”

Brunch connections
Comprehensive Financial’s relationship with its big name clients clearly revolves around philanthropy, based on its small footprint in assorted news stories over the years about Pamela and Pierre Omidyar and Jerry Yang and his wife Akiko Yamazaki. The three billionaires linked to the firm are each among the 2,000 wealthiest people, with Pierre Omidyar at No. 83 on the Forbes magazine list at a net worth of $24.5 billion. Comprehensive has no website, though.

Mohr declined an interview request. Representatives for Yang at his venture fund, Ame Cloud Ventures, didn’t respond to inquiries. Representatives for the Omidyar Network, where Comprehensive Financial Managing Director Jeff Alvord is on the board, didn’t either. Representatives for Andreessen Horowitz declined an inquiry on Andreesen’s behalf.

Comprehensive Financial’s relationship with the Omidyars came through Yang, according to a Forbes article from 2000. At a brunch Yang hosted at his home in Silicon Valley in 1998, about 40 young couples gathered to eat wild mushrooms and sushi while discussing “money — giving it away, not making it,” the article says. A few weeks after Pierre Omidyar met Mohr at the brunch, they spent hours talking at the firm’s office, where the advisor suggested Omidyar identify what issues he was most passionate about and act on them.

The days before the first dot-com bubble burst were “a funny time,” James Ledbetter, author of the FIN newsletter about fintech and a former editor of the tech news pioneer website The Industry Standard, recalled in an email.

“While of course those ‘90s founders launched their companies in order to make money, many of them had no realistic sense of how much money their companies would end up making,” Ledbetter says. “Many of them were quite young — Jerry Yang was 27 years old when Yahoo went public. Most of them were programmers or engineers, not financial guys, and they had no experience of managing the amount of money that was sloshing around. It was kind of dreamlike for a lot of them.”

By 2012, the Omidyars had committed more than $1 billion towards hundreds of different causes, USA Today reported at the time. Gates, Virgin Group founder Richard Branson and former President Bill Clinton spoke glowingly of the work in the article, which included a rare quote from Mohr.

“Think of it as a portfolio approach to doing social good,” Mohr told the publication.

Moving to Hawaii
The family’s philanthropy extends to a global reach with upwards of 600 employees in various organizations. A small but significant portion are in Hawaii, where Pam Omidyar is from and where Mohr moved in 2010 “to better serve the Omidyar family,” Micah Kāne, CEO of the Hawaii Community Foundation, said at the virtual event last November for philanthropic advisors. Mohr is on the boards of the Ulupono Initiative, the Hawaii Data Collaborative and the Honolulu Civil Beat.

“While Mike may shy away from this, he’s played a really instrumental role in helping to reshape how philanthropy is trying to impact some of Hawaii’s most systemic problems,” Kane told the group. “You can see his fingerprints in many places and in organizations that are having tremendous impact.”

In his own remarks at the event, Mohr said that he “frankly got a little bored” as a traditional CPA in the ‘90s and called the decision to change to UHNW services the biggest professional risk he’s ever taken. He also praised his longtime clients as “very innovative folks,” sharing how they have approached philanthropy on the islands in the past 20 years.

“One of the things that we’ve helped do is to shift the global philanthropic field through accomplishing societal improvement through for-profit entities, as well as nonprofit entities,” Mohr said. “It doesn’t feel that different today, but, boy, when we started, we were not very popular. Now we use what we call hybrid structures of LLCs and foundations to do philanthropy. I think we also helped pioneer using systems analysis to uncover root causes and key dynamics that are holding the status quo in place, which is important, because you could imagine that, with the kind of resources the Omidyars have, all they do is wave a wand and make change happen. And we found that was absolutely not true.”

With clients like the Omidyars and Jerry Yang who have accumulated a massive amount of wealth early in their lives, family offices can add value by providing the “solid ground from which confident, transformative investment decisions can be made,” Sara Naison-Tarajano, the global head of Goldman Sachs Private Wealth Management Capital Markets and Goldman’s Apex family office business, said in an email.

“Oftentimes, we see entrepreneurs are so passionately focused on building their business that they don’t always take the time to protect and grow their personal wealth,” Naison-Tarajano said in an email. “It’s crucial that they establish an expert team early on to handle their wealth while they remain focused on driving their business forward. We have found that family offices offering in-house expertise in building and running multimillion-dollar businesses are very well suited to serve clients who are entrepreneurs.”

She noted that Goldman offered private wealth clients the ability to invest in more than two dozen exclusive direct deals in 2020. The access to such alternative investments and collateralized loans, as well as the tax advantages of philanthropy, is helping family offices reel in UHNW clients that might otherwise use traditional wealth management practices, said consultant Tim Welsh of Nexus Strategy.

“You just need a really sophisticated level of support,” Welsh said. “It starts with the compensation question of how do you liquidate all these equity units.”

Advice from grandfathers
At the base of Comprehensive’s philosophy, Mohr told the Hawaii audience, is the idea of client service for them, not the advisor. Kāne noted that Mohr had spent roughly four decades in the business and asked what advice he would have for fellow advisors who have been in the industry for about 10 to 15 years. Mohr counseled the advisors to remember that, “at a maximum, I should just get paid a percentage of value” he creates for clients. A grandfather of three himself, he said to the group that his grandfather often told him to “make sure the excess of generosity is always on your side,” he said, acknowledging the phrase sounded simplistic.

“It has certainly worked for us in our firm with the clients that we have,” Mohr said. “We still have that ethos, and we weed out people who we find are actually too ambitious. There’s a level of ambition that is healthy. And then there’s a level of ambition that’s self-serving. So, it’s never been about the money for us. It never will be.”