Boston Private Bank and Trust Co. has hired the former Boston Bruin hockey star, Derek Sanderson, from State Street Global Advisors to help it develop a line of business managing wealth for professional athletes.
Mr. Sanderson said he will bring with him the roster of athletes whose portfolios he had managed at State Street before the private asset management unit was sold last June. The 13-year professional hockey veteran had joined the unit of State Street Corp. in 2001 after establishing State Street Research Sports at State Street Research, a Boston unit of Metropolitan Life Insurance, to manage assets for current and former athletes.
Mr. Sanderson's group was merged into a private asset management portfolio team at State Street Global Advisors in 2001. But this June, U.S. Trust Co., a unit of Charles Schwab Corp., bought State Street's private asset management group, including the professional athlete group.
After not being active with the group since November 2002 while recovering from his ninth and 10th hip replacement surgeries, Mr. Sanderson said on Monday, he decided to move to a new bank in order to keep his clients.
"I got back into the business because I didn't know what would happen to my clients with U.S. Trust and Schwab and that world," he said. "My comfort level was with State Street Global Advisors. I wanted to make sure that the athletes are comfortable and taken care of. That was my whole reason for getting back into the business."
Mr. Sanderson said that during the summer he began talking with Jay Henderson, an executive vice president and head of investment management trust at Boston Private, with whom he had worked at Freedom Capital 10 years earlier.
"I never intended to move from State Street Global Advisors," he said, "but the upheaval in a huge place like that is the best kept secret. They are so big that the left hand doesn't know what the right hand is doing. In a small firm everyone knows what is going on. I feel better, and the players are comfortable."
Mr. Henderson said Mr. Sanderson will be a vice president and senior investment professional. In that role, he is to help people and institutions make investment management decisions. Mr. Henderson said Mr. Sanderson will not focus just on developing business with professional athletes.
"We hired Derek to be a business builder. We have confidence he can do it with athletes and wealthy people that aren't athletes," Mr. Henderson said. "In this stage in his life, he is a competent investment person; I look at him as I look at my other six salespeople. He will help us build this business. He is more than just a former Boston Bruin."
Boston Private manages $1.85 billion of assets. Mr. Sanderson said his entire roster of professional athletes, which at its peak reached 105, is coming with him to Boston Private.
Smaller boutique firms have found a niche managing assets for athletes. Merrill Lynch & Co. formed McCormack Advisors International in July 2000 to cater to athletes. Similar boutique firms include Assante Corp. in Winnipeg, Manitoba, and SFX Financial Advisory Management Enterprises Inc. in Washington.
Mr. Sanderson said he will try to keep developing business relationships with athletes, particularly younger ones. At State Street Research in 1998, he launched the Athlete's Fund, a large-cap growth fund developed specifically to help young athletes invest for a low minimum investment. State Street Research closed the fund in August 2001 after Mr. Sanderson left for State Street Global Advisors, but he said it might be time to resurrect it.
"I try to explain to companies that this is the Nomar Garciaparra rule," he said, naming the Boston Red Sox All-Star shortstop. "When I approached him with the Athlete's Fund, he was in 'A' ball [a low minor league] making $900 a month. You need to have a product that athletes can invest in at $50 a month. You need to help them get a comfort level with you. You have to get them as clients before they become multimillionaires."
"It is so difficult to explain this business to a board of directors," he added. "It is hard to explain that there will be a three-year window before profitability is realized. You need to work with a company that understands what we are trying to accomplish with athletes."
