Not many clients can invest in a fund that regularly beats the Standard & Poor's 500 index, with less risk, and enjoy the ability to call the managers' cell whenever they want.
But that combination of acumen and access has helped Brock Kidd become an $830,000 producer at the $5 billion-asset Pinnacle National Bank in Nashville.
A dual employee of Pinnacle and Raymond James Financial Services Inc., Kidd began investing after high school and soon after college turned $1,000 into $50,000 in four days by using technical analysis and buying call options on the software company Lotus Development. The win was so big that the Securities and Exchange Commission called to question it. But when it became clear that Kidd had held the stock for years, "the SEC woman congratulated me," he said. "That's how I learned about options."
Kidd now concentrates on creating more gradual returns. He started and co-manages a $175 million, large-cap stock separately managed account that has beaten the market every year but one since it was introduced in 2003. "Our success was good enough where Pinnacle decided to invest in the concept and we opened up a separate investment advisory practice under Pinnacle," he said. "We basically created this from nothing."
Since then the investment committee has added a bond specialist, an equity-income offering and several trust officers. To round out allocations, the team uses exchange-traded funds for small-cap, midcap and international exposures.
In its first year, the Pinnacle Advisory Investments and Trust fund beat the S&P by 9 percentage points. In subsequent years the performance gap became a lot smaller, except for 2008 when the fund was down 29% and the S&P 37.9%.
Many of Kidd's clients want conservative growth, which is a perfect match for the equity fund, he said. And then there's the glam factor. "There's an appeal to high-net-worth clients that they're having individualized, customized service in their portfolio," he said. "They're not subcontracted out to other money managers used by everyone in the business."
He works with about 200 clients and had $123 million of assets under management last year. His account minimum is $250,000, but he takes referrals from Pinnacle partners for clients and others with less. He helps his clients develop individualized asset allocation based on their comfort levels and goals for their money, he said.
Kidd does no financial planning. If clients want that service, he introduces them to a Pinnacle certified planner or refers them to an estate attorney. "We're not a sales group, and that sets us apart," he said.
He credits Pinnacle and Raymond James for taking his production "to the next level" — though he got off to a good start on his own.
He went straight from college in 1994 to First American National Bank's investment group. At 22, he was so young-looking his boss made him get glasses with clear lenses so he would look older. "But I worked harder than anyone else," he said. He did a lot of cold calling and pursued a local multimillionaire who "finally let me come and see him because I called him so often, and about a year later, I was managing $22 million," he said.
The prospect told Kidd he moved his money to him because Kidd talked loudly on the phone and the prospect was hard of hearing. "People noticed I was the young guy working for him," he said. "Nashville is a town where reputation goes really far."
Kidd spent six years at First American, graduating from junior broker in about a year. But in 2000, First American was sold to AmSouth, and the local brokerage, J.C. Bradford, was sold to PaineWebber, leaving Nashville with no locally based bank or brokerage company.
Some top executives of First American formed Pinnacle to cater to Nashville's affluent community.
Moving to Pinnacle and Raymond James in 2000 meant a selective clientele for Kidd but also a painful transition to a fee-based platform. "Not only did the market tank, but we also took a hit to our revenue in the first few years," he said. "It was hard on my pride to go from producing $350,000 to $250,000."
Long-term relationships with clients have been crucial to Kidd's success and to keeping his production losses to 14% when the market dropped 37.6%.
