Private Ocean Navigates Choppy Financial Market

January 13, 2012

No economic seas are too stormy for wealth management firm Private Ocean LLC.

The San Rafael company combines a big firm’s research-based approach with a small firm’s personal touch to navigate Wall Street market trends. Its 27-person team works with economists and finance scholars to ground its investment strategies in rigorous academic research.

This approach has paid off, allowing the company to add six new employees and expand its office space in San Rafael. Richard Stone of Salient Wealth Management and Greg Friedman of Friedman & Associates    merged their two firms in 2009 to create Private Ocean.

“When Richard approached me, we talked philosophy and discussed our various firms’ strengths. Our goals lined up perfectly,” said Friedman, who became Private Ocean’s president.

Stone is an industry veteran who co-authored the first financial planning code of ethics in 1974 and founded Salient in 1983. Friedman founded his firm in 1991 and in 2002 created Junxure, a separate software business that helps firms manage their customer relationships. Junxure now has over 12,000 people using the platform worldwide.

Private Ocean has used Junxure to manage approximately 450 client portfolios, each one invested in approximately 300 companies to encourage global diversity. The firm, which has $750 million in assets under management, sets account minimums for new clients at $2 million. Private Ocean tailors clients’ investment portfolios, investing in corporations and industries that align with their clients’ individual values — creating so-called socially responsible portfolios.

“Each portfolio is altered to fit the clients’ idea of what is socially responsible to them, as social responsibility is, perhaps, in the eye of the beholder,” said Stone.

Stone received the 2011 Schwab IMPACT lifetime achievement award, which creates a nice bookend with with Friedman’s IMPACT best-in-tech award from 2007.

But Private Ocean’s clients require more than a stocked trophy case. Mill Valley resident Paul Venables, co-founder of the advertising firm Venables Bell & Partners    , values the firm’s human approach.

“What was extremely impressive was that Private Ocean had the conversation with us about what matters to us, what makes us happy. It was about our lives. What do we like to do, accomplish and enjoy,” Venables said. “They did a deep dive into our values.”

Nancy Angelos, a Mill Valley resident who has been a client with Salient Wealth Management and then Private Ocean for more than 20 years, said she doesn’t “ever worry about our money. We’ve been on a lot of roller coaster rides and Richard has always been the voice of reason. He’s really thinking about the future of the company. He’s bringing on young associates so he can train them on how to run his business.”

The company hopes to increase assets to $1.5 billion by 2014 and then expand with new hires and more space.

To reach that goal, the firm plans to continue to invest based on scholarly research, not the ebbs and flows of Wall Street.

Snapshot: Private Ocean LLC
HQ: San Rafael.
What it does: Research-based wealth management.
Co-founders: Richard Stone and Greg Friedman.
2011 projected revenue: $5.68 million.
2010 revenue: $5.13 million.
2009 revenue: $4.04 million.
Three-year-growth: 40 percent.
Founded: 2009.
Employees: 27.
Future plans: To expand assets under management.
Key challenge: Merging not only two well-established firms, but also the distinct cultures of both firms.