With its expansion strategy for wealth management in place, Compass Bancshares Inc. plans to continue to acquire investment advisory firms in cities and regions where it already has bank branches.
"We are adding advisers in all the markets we are in in Colorado, Arizona, Texas, Florida, Alabama, and New Mexico," William C. Helms, an executive vice president and the head of Compass' wealth management business, said in an interview last week. "Any fast-growing market that has a strong population of affluent clients where we have a bank is somewhere that we want to have investment advisers on the ground."
Last week the $34.4 billion-asset Birmingham, Ala., company announced that it had bought Capital Investment Counsel Inc., which had advisers in Phoenix and Denver and managed $1.3 billion of assets.
Capital Investment was the third investment advisory firm Compass has acquired in the past five years. It bought St. Johns Investment Management Co. of Jacksonville, Fla., in 2002 and Stavis, Margolis Advisory Services Inc. of Houston in 2005.
Compass has 164 bank branches in Texas, Alabama, Arizona, Florida, and Colorado. Mr. Helms said his unit wants to add more advisers in Jacksonville, Houston, and Denver and enter other markets where the parent company already is established, specifically in Texas.
"We'd love to be in Dallas, San Antonio, and Austin," he said. "We'd like more of a presence, but again, this is all about finding the right advisers."
Mr. Helms, a former executive in Bank of America Corp.'s wealth management unit, said that since Compass hired him in January 2003 he has approached "over 100 advisers or wealth managers" about a potential acquisition. "But we have only done three deals," he said. "We want to be careful to find the right fit."
Over the past five years his company's wealth management unit has increased its assets under management 135%, to $7.5 billion as of March 31. Mr. Helms said the unit would have $12 billion after Banco Bilbao Vizcaya Argentaria SA of Madrid completes its acquisition of the company and merges its U.S. wealth management operations into Compass'.
(That deal, announced in February, is expected to close this year, according to Compass.)
Analysts said it has established a unique, fee-based strategy as it has remained ahead of most trends in wealth management over the past several years. In 2005 it was one of the first banking companies to sell its proprietary mutual fund arm and adopted an open architecture unified managed account platform.
The fund unit had $1.2 billion of assets under management when Goldman Sachs Group Inc. bought it. Two years later the account platform has $2.05 billion.
Geoffrey Bobroff, an East Greenwich, R.I., analyst with Bobroff Consulting Inc., said that once a banking company has established an approach to wealth management, it is critical to get advisers on the ground that can make the strategy work.
"Banks are wise to bring in advisory firms with an established brand in a specific region that can work with customers," Mr. Bobroff said. "For an adviser, being bought by a bank means access to a lot of affluent customers."
Mr. Helms said Capital Investment, which was established in 1990 and specializes in providing wealth management, financial planning, and investment advisory services, will operate as a subsidiary of Compass but will retain its brand and its senior management team.
"We'll cobrand with these investment advisory firms that we acquire, but we want to make sure that clients know that they are who they are still," Mr. Helms said. "We want to also make sure that the clients know they are part of a larger financial institution that is focussed on providing high-level, cost-effective advice."
Compass wants to add advisers "carefully" in regions where it has already made acquisitions, Mr. Helms said.
"We don't want to add advisers that will just be competing with our existing adviser force," he said. "If we are adding advisers in markets where have an advisory presence, such as Denver, Houston, or Jacksonville, we will be looking to add the right advisers that are complimentary or can fit well into Capital Investment, St. Johns, or Stavis Margolis."
Mr. Helms, who is headquartered in Houston, said that Compass is interested in acquiring "investment advisory firms, rather than investment management firms," because such firms have more potential for growth and cross-selling.
In addition to adding advisers, he said, Compass wants to "perfect" its unified managed account platform.
Over the past five years the company has developed technology so that it can integrate the open architecture of products and services of advisory firms that it acquires into Compass' own UMA platform.
With a strong platform and an expanding team of experienced advisers, Compass will be able to maintain 20% growth in assets under management for each of the next five years, Mr. Helms said.
"We can't just go out there and put out an ad and expect customers to come," he said. "People want to invest their money with a trusted adviser. We have to find the right advisers that can make that happen."
Mr. Bobroff said it will become harder to find well-established advisers in markets such as New Mexico, but Mr. Helms said that his unit is not in any sort of rush to get in every Compass market.
"I think we want to continue to be opportunistic," he said. "We'll key in on the higher-growth markets first. The higher the growth in the market, the more interest we have in them."
