Armed with a slew of former U.S. Trust wealth management veterans, Evercore Wealth Management has nearly doubled its assets under management to $1.4 billion in the past six months.
For the New York company's top executive, however, that's not nearly where he expects to be in five years: $5 billion.
"We are off to a good start in a turbulent environment," said Jeffrey S. Maurer, Evercore's chairman and chief executive. "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."
Maurer said Evercore, a division of Evercore Partners Inc., wants to get back to "an old-school asset management model" where advisers work more directly with investment clients.
"My partners are talented individuals that are capable of managing money and portfolios, and talking to customers," Maurer said. "At most shops, they can't do that."
Evercore, launched in November 2008, serves clients with more than $5 million of investable assets. It has a staff of 35 people, including 15 partners. Maurer said "probably 70%" of those partners are former executives of U.S. Trust. "The backbone of this organization are skilled portfolio managers that felt they could no longer conduct business the way that they wanted to."
Maurer, who was the CEO of U.S. Trust in 2003 when it was owned by Charles Schwab & Co., said he began recruiting executives from U.S. Trust after Bank of America bought it 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 B of A."
Consolidation has commoditized the wealth management business and for many larger companies, "portfolio managers" and "wealth advisers" have become very different jobs, analysts said.
Geoffrey Bobroff of Bobroff Consulting in East Greenwich, R.I., said companies like Fidelity Investments and Schwab have "detached" their portfolio managers from customers while smaller wealth management companies offer "more touch." Maurer "grew up at U.S. Trust serving high-net-worth clients, and there was a lot of hand-holding and touch," Bobroff said.
"I don't know that either model is right or wrong, and I think there is a place for both," Bobroff said. "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. If we do a good job at that, we are confident we can have a profitable business."
Bobroff said: "Jeff is no fool. 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."
Evercore has been adding capabilities and expanding nationally for the past year.
On Tuesday, SEI Investments announced it entered into a multiyear agreement with Evercore, to provide outsourced back-office investment accounting and processing services. In May, Evercore bought Bank of America's special fiduciary services division and established Evercore Trust Co. 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.
Maurer said Evercore is interested in adding offices nationally.
"When I think about adding offices, I think about locations 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 organically and by going outside, 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 that believe our platform is the right way to approach clients, and that will accelerate our growth as well."
Evercore will also look for potential acquisitions, which could speed up its growth curve, Maurer said. "We have most of the capabilities that we need, we aren't planning to acquire to add capabilities," he said. "We are going to acquire to add either professionals or locations that are compelling."