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At Deadline - SMA Firm GlobalBridge Targets Community Banks

GlobalBridge, a Minneapolis managed account provider, has hired a former U.S. Bancorp Piper Jaffray executive as president in an effort to expand distribution through community banks and small community trust companies. Ross Rogers, the former president of U.S. Bancorp Piper Jaffray's private advisory services business, is now president and principal of the firm.

"We think there is a tremendous opportunity with community banks and small trust companies. We are happy to private-label a product for banks," Rogers said.

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GlobalBridge, which offers managed accounts through independent brokerages, financial advisers, bankers and certified public accountants, has distribution partnerships with 40 banks, and Rogers said the firm is actively talking with a number of other banks around the nation.

Rogers said GlobalBridge likes to say it has a national reach, but its current banking relationships are in just eight states in the upper Midwest. "I see a lot of opportunities nationally," he said. "It is all a matter of getting the word out. There is a sense in the industry that a lot of banks are very interested in managed accounts."

A report from TowerGroup, a financial services research firm in Needham, Mass., has predicted a compound annual growth rate of 18.5% for managed accounts in the next five years - from $398.7 billion of assets at Dec. 31 to $1.1 trillion by the end of 2007 (see related story, page one).

Wirehouses have managed 70% of the assets in managed accounts, but banks and regional broker/dealers have begun programs, and third-party providers like GlobalBridge are targeting banks with managed accounts.

EnvestnetPMC, a New York managed account provider that has developed $6.5 billion of assets under management in fee-based products since opening in 1999, has relationships with 12 banking companies, including U.S. Bancorp, Bank of America and J.P. Morgan Chase.

The company said in May that it is in talks with many midsize banks with $1 billion to $2 billion of assets looking to offer third-party managed accounts and mutual fund wrap accounts.

In addition to EnvestnetPMC, FundQuest has relationships with 25 banking companies, including Bank of America, Comerica, Huntington Bancshares and FleetBoston Financial's Quick & Reilly brokerage subsidiary. It has said it expects to add 10 bank relationships this year.

Insurer Nationwide Financial began distributing its managed account program to banks in April. It manages $102.9 billion of assets and said it plans to leverage its 400 banking relationships for fee-based business.

Analysts said that there are many opportunities to improve distribution through the banking channel but that a firm like GlobalBridge must be sure the product is offered to the right type of customer.

"The affluent individual' gets less and less wealthy as a bank gets smaller and smaller," said David N. Brown, a New Jersey investment analyst. "Firms have to be certain that their managed accounts aren't offered to people that can't be properly diversified in the product."

GlobalBridge's Rogers said managed accounts are for wealthy people with more than $100,000 of assets. He said banks that want to offer these products to investors with less are directed to mutual fund wrap accounts.

Rogers, 54, ended his tenure as president of U.S. Bancorp's private advisory services unit in 2001 for personal reasons. During his five years at U.S. Bancorp Piper Jaffray, assets under management grew from $1 billion to $5 billion. Rogers said he sold his first managed account in 1981 while working at Merrill Lynch. He said he is confident he can increase awareness of GlobalBridge among banks and expand its assets under management.

"These products make a lot of sense for the market right now," he said. "They are just a strong product for a small company that is looking to grow."

He began his career at Merrill Lynch and later worked for Salomon Smith Barney, where he was director of national sales.

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