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Evercore Wealth Plans to Expand; Wants $5B in Assets in 5 Years

Firm Serving Pentamillionaires Sees Strength in 'Old School' Insightful Advice


Armed with a slew of wealth management veterans who chose to jump ship from U.S. Trust after it was acquired by Bank of America, Evercore Wealth Management has nearly doubled its assets under management to $1.4 billion in the past six months, but if that wasn't already impressive, the New York company's top executive expects to nearly quadruple that and reach $5 billion in the next five years.

"We are off to a good start in a turbulent environment," said Jeffrey S. Maurer, Evercore's chairman and chief executive officer. "But I would say we'd be disappointed if we weren't at $5 billion by our fifth anniversary. Right now, it is a question of how to get there. We are going to consider organic and inorganic means."

To get there, Maurer said Evercore, which is a New York-based division of Evercore Partners, wants to get back to "an old school asset management model" where advisers work more directly with investment clients. "My partners are talented individuals who are capable of managing money and portfolios and talking to customers," Maurer said. "At most shops, they can't do that."

Evercore, which launched in November 2008, serves clients with more than $5 million of investable assets. It has a staff of 35 people, including 15 partners. Probably 70% of those partners are former executives from U.S. Trust, Maurer estimated. "The backbone of this organization is skilled portfolio managers who felt they could no longer conduct business the way that they wanted to [at Bank of America]," he said.

Maurer, who was CEO of U.S. Trust in 2003 when it was owned by Charles Schwab, said he began recruiting executives from U.S. Trust after it was bought by BoA in 2007. "I think a lot of my colleagues realized that after Bank of America bought U.S. Trust, the basic wealth management service delivery model was going to change and they were not going to have as rewarding of a position," he said. "When you look at it in general, these advisers wanted to deal directly with their customers, and they weren't going to be able to do that at BoA."

Analysts said that consolidation has commoditized the wealth management business and for many larger companies "portfolio managers" and "wealth advisers" have become very different jobs.

Geoffrey Bobroff, president of Bobroff Consulting in East Greenwich, R.I., said giant asset management firms like Fidelity Investments and Schwab have "detached" their portfolio managers from customers, while smaller wealth management companies offer "more touch." Bobroff noted that Maurer "grew up at U.S. Trust serving high-net-worth clients and there was a lot of hand-holding and touch."

"Jeff is no fool," Bobroff added. "He spent years at U.S. Trust. He understands the economics and has priced his business accordingly. The old bank trust department model can work in this environment."

Furthermore, Bobroff continued, "I don't know that either model is right or wrong, and I think there is a place for both. The institutional approach allows you to scale a business better, but if you price products correctly either can work, and, ultimately, the investor decides what they are more interested in."

Maurer said most wealth management companies are built to create scale. "We are interested in partnering with our clients to produce the best results for them," he said. "If we do a good job at that, we are confident we can have a profitable business."

On Tuesday, SEI Investments announced it entered into a multi-year agreement with Evercore to provide outsourced back-office investment accounting and processing services.

In May, Evercore bought Bank of America Special Fiduciary Services Division and established Evercore Trust to focus on providing investment management, independent fiduciary and trust services to independent benefit plans and large corporations. A month later, Evercore opened its first satellite office in San Francisco and added four partners and a senior adviser based in the office. The senior adviser, Charles "Butch" Swindells, was the western regional vice chairman for U.S. Trust Bank of America Private Wealth Management, a unit of Bank of America.

Maurer said Evercore is interested in adding offices nationally. "When I think about adding offices I think about location where Evercore Partners has offices -Los Angeles, Houston, Washington, D.C., and Boston," he said. "Evercore Partners is global but Evercore Wealth Management is domestic so far."

Evercore Partners owns 51% of Evercore Wealth Management. The rest is owned by the unit's partners, Maurer said.

Evercore Wealth Management plans to expand both organically and inorganically, Maurer said. "We have had meaningful growth in our first year, and we want to go out and develop more business the old-fashioned way: by going out and developing clients," he said. "But we are also always talking to other professionals in the wealth management business who believe our platform is the right way to approach client and who will accelerate our growth as well."

Evercore will also look for potential acquisitions, which could speed up its growth curve, he said. "We have most of the capabilities that we need. We aren't planning to acquire to add capabilities," Maurer said. "We are going to acquire to add either professionals or locations that are compelling."

 

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