A unit of Lydian Trust Co. of Palm Beach Gardens, Fla., hopes to double the number of banks, trusts, and advisory firms it assists in meeting the investment needs of the very wealthy.
To help it has hired a Riggs National Corp. veteran, Henry Morneault, as the chief operating officer of the unit, until recently named Advisor Solutions Group and now renamed Fortigent.
Fortigent provides technology, research, risk assessment, asset allocation tools, and back-office services to companies that want to offer a wide selection of investment managers. It is a subsidiary of the trust company's Lydian Wealth Management of Rockville, Md.
"We are at the point now where we are ready to expand," said Gary Carrai, Fortigent's managing director. "The technology is in place, the service team is in place, and we'll staff up as we grow this thing."
Though Fortigent is open to serving large banks, Mr. Carrai said, those more likely to be in interested in its services are "regional and community banks that are looking get a foothold in this market."
Fortigent's client list has doubled in the past year, to 20, which collectively advise on more than $2 billion of assets, Mr. Carrai said. Two are trust companies and six are banks, including its biggest customer, National City Corp. of Cleveland, which became a customer last July.
National City's private client group has $30 billion of assets under management. Fortigent does due diligence in selecting asset managers for its clients and helps its consolidate performance reporting.
Fred Asbeck, the director of products and services at the Nat City group, said it decided to outsource the duties at least temporarily before committing to building its own capabilities.
"We think we have the critical mass, and we may want to do it ourselves in the future," he said, "but Fortigent had a track record, lots of experience, and almost a turnkey operation."
Another reason for choosing Fortigent, Mr. Asbeck said, is that Fortigent agreed to add some of Nat City's separate-account managers to the Fortigent platform.
Banks have offered retail investors access to proprietary and third-party mutual funds for several years. But such "open-architecture" platforms can be trickier to build and run from a fiduciary standpoint when complex trust products are involved, Mr. Asbeck said.
"There is lots of demand; the fact that we are offering third-party money managers has resonated well with our clients," he said.
Mr. Morneault was an executive vice president at Riggs National Bank and its head of wholesale banking. He left in late May after PNC Financial Services Group acquired the scandal-plagued bank; he joined Fortigent on July 5.
He ran Riggs' wealth management business, including private banking and trust and a broker-dealer, and he oversaw the outsourcing of Riggs' wealth management services to client institutions.
Mr. Morneault said that his understanding of issues facing banks that want to provide open architecture to their trust clients should help make Fortigent appealing.
"It's a very complex decision-making and strategic process as you try to build out a platform that's going to have scalability and high appeal, not to mention the regulatory and compliance issues that go into building it," he said.
Fortigent's rivals include turn-key asset management providers such as SEI Investments Co. of Oaks, Pa.; AssetMark Investment Services Inc. of San Mateo, Calif.; and Lockwood Advisors Inc., a subsidiary of Bank of New York Co.
Fortigent has another advantage, as Mr. Morneault sees it, in that it belongs to a company that has its own wealth management clients. Lydian oversees more than $11 billion of assets under management for about 250 clients, he said.
Aside from banks and trusts, Mr. Morneau said, Fortigent's customers are mostly registered investment advisers, from independents to such larges ones as Friedman, Billings, Ramsey Group Inc.
