The first-ever chief investment officer of Compass Bank’s wealth management group will focus much of his energy on expanding the use of unified managed accounts in the bank’s trust and wealth management units.
John Sawyer, who was named to the post April 13, said unified managed accounts at Compass Bank, a subsidiary of Compass Bancshares Inc. of Birmingham, Ala., have assets of $2 billion to $2.5 billion.
“We want to more than double unified managed account assets under management in the next two to three years,” he said in an interview last week.
Mr. Sawyer oversees the investment management operations in the trust area and the investment arm of the wealth management group, which is based in Houston.
Those operations include individual, private client, and institutional portfolios. Mr. Sawyer oversees assets of about $5 billion, about half of which is in trust accounts; a six-member fixed-income team; nine portfolio managers; and nine analysts.
The tax advantages of unified managed accounts are one reason Compass is so enthusiastic about them, Mr. Sawyer said. The products are used to package multiple investment products, such as separately managed accounts, mutual funds, and exchange-traded funds, within a single, fee-based account.
“Beyond the product-specific area, I will continue to talk internally about the benefits of UMAs,” Mr. Sawyer said.
Compass was one of the first banks to sell its proprietary mutual fund family and one of the first to build a unified managed account platform. It sold the fund family in 2005 as part of a push into open architecture.
The industry has $29 billion of unified managed account assets under management, according to Jeff Strange, an analyst with Cerulli Associates of Boston.
That figure should grow swiftly, he said, but Cerulli has not yet made a growth projection. Within banks, the retail investment operations show the most promise, Mr. Strange said.
Unified managed accounts make less sense within the trust and private banking domains, because customers in those areas often require more customized treatment, Mr. Strange said.
Mr. Sawyer said the products are used heavily for Compass’ taxable private client accounts.
“The UMA approach to managing assets is one of, if not the only process, truly developed for the taxable private client,” he said.
Compass uses a customized unified managed account structure for each client, rather than a model-based one, and it acts as its own overlay manager, as opposed to outsourcing those duties, Mr. Sawyer said.
That is labor intensive, but the bank offsets some of the overhead through various technologies, including one that helps to automate portfolio analysis, Mr. Sawyer said.
He said his other goals include coordinating the services offered by Compass’ wealth management unit and the two asset managers the bank has bought in recent years.
“We’re trying to look across our footprint at our offerings, to determine client needs and provide a more consistent message of what we’re looking to provide,” said Mr. Sawyer, who was the group’s director of portfolio management before being named its chief investment officer.
He said he would like Compass to shift its attention “to becoming a core adviser.”
“That means understanding broader needs, not just the asset side of the balance sheet,” he said. “We want clients to look to us as the first place to go when they have financial needs.”
Bill Helms, the wealth management group’s chief executive officer, said the chief investment officer position was created “to demonstrate to clients and partners our focus on providing a distinct and integrated set of solutions.”
“John’s role as CIO will be to coordinate the investment activities of our RIA affiliates and to further expand our UMA platform,” Mr. Helms said.
The registered investment adviser affiliates are Stavis, Margolis Advisory Services Inc. of Houston, a financial planning and investment advisory boutique Compass bought in 2005, and St. Johns Wealth Management of Jacksonville, Fla., which it bought in 2002.
Mr. Sawyer said he wants to find opportunities to “cross-pollinate” specialized skills from the affiliates to clients throughout the wealth management group.
Compass Bank is always weighing product additions, and is right now it is considering adding private-equity funds and hedge funds to its lineup, Mr. Sawyer said. But he said he sees few large gaps in the lineup.
