Bear, Stearns & Co. Inc. says it plans to expand its private-client services division nationally by opportunistically opening satellite offices.
Since 2003, it said, it has opened such offices in Seattle; St. Louis; Whippany, N.J.; and last week in Columbus, Ohio.
Barry Sommers, a senior managing director and the national sales manager for Bear Stearns' private-client services group, said the New York company is not specifically targeting certain markets but rather is looking for the right investment professionals so it can hit the ground running in new markets.
"We want to hire the most talented and successful investment professionals," Mr. Sommers said. "If we find top-tier investment professionals that are talented and successful and they aren't in a city where we have a branch, we will explore establishing a satellite branch."
Bear Stearns, which has $54.3 billion of capital, has seven private-client services branches in the United States - New York, Boston, Atlanta, Dallas, Chicago, Los Angeles, and San Francisco. The branches have more staffing and technological infrastructure than satellite offices. Mr. Sommers said the company plans to continue growing with the satellite strategy, though it has not established precisely how many it will open or where.
The strategy works, Mr. Sommers said, because it enables the company to grow in different regions nationally without incurring the expense of making an acquisition or the problems associated with launching de novo.
"The beauty of building with satellites is, we don't have to build the infrastructure we would with a typical branch office," he said. "We can leverage off our current resources."
The Columbus satellite office is a perfect illustration of how the strategy works, Mr. Sommers said. Bear hired Brad Kastan and Jim Bowman there to be managing directors in its private-client services division.
Mr. Kastan was a senior vice president at UBS Financial Services, where for the past 15 years he was a broker in the Columbus office. Mr. Bowman was a senior vice president at Legg Mason and an investment executive in its Columbus branch. Mr. Kastan and Mr. Bowman worked together for 10 years earlier in their careers at the former PaineWebber.
"We met these two very experienced and talented investment professionals and realized that they were a perfect match," he said. "They really give us an opportunity to penetrate the high-net-worth market in Columbus."
Analysts said that with this initiative Bear Stearns will face stiff competition from banks and other investment advisers well established in these markets.
"It isn't just a matter of hanging a shingle and building a business," said Burton Greenwald, an analyst at BJ Greenwald Associates in Philadelphia. "There is a lot more work that goes into this in order to be successful in a new marketplace."
Mr. Sommers said Bear Stearns has been successful because it is not selecting a market and then looking for investment professionals but rather is receiving feelers from the professionals first.
"These guys are already on the ground," Mr. Sommers said. "They have a business established, they know the market well, and they chose to come to Bear Stearns."
Bear Stearns established its Seattle office in September 2003 with a broker hired from Oppenheimer, and it hired another broker in 2005. It opened the St. Louis office with five brokers and the Whippany office with about 20 professionals.
"We are approached by the brokers, and we are opening these offices in a reactive manner," Mr. Sommers said. "It is a great strategy that has enabled us to go out and hire talented people in this business."
