GlobalBridge Inc., a separate account asset manager for individual investors, expects to at least triple its $500 million of assets under management by the end of next year as more banks look to add fee-based products to their menus of investment services.
Ross Rogers, the Minneapolis company's president, said he expects assets under management will be $1.5 billion to $2 billion within 14 months. In March, the company had $350 million of assets and a more expansive goal - $3 billion under management within two years.
Growth will continue, he said, because of strong momentum in the bank channel. The company is offering its separate account asset management programs for affluent individuals and small to middle-market institutional investors through two dozen independent banks and advisers nationally.
Mr. Rogers said he expects to have 30 to 40 banks under contract by yearend.
"We are seeing an overall shift in attitude even by the most conservative banks," said Mr. Rogers. "The popularity of separately managed accounts is more than just lip service. We believe bank trust departments want to be wealth managers rather than just custodians, and this is the product that can help them take that next step."
"Trust departments can go to market as wealth managers," he added, "and as long as they can deliver competitive products, they can compete and win against the wire houses."
Analysts said many banks' wariness about fee-based products leaves a lot of opportunity unused. The Money Management Institute has reported that managed account assets grew 34.9%, to $528.7 billion, from the end of 2002 to June 30 this year, and banks' share of the market has grown from 4% to 6.3% during this period.
"Banks want to work with a firm that has established a strong foundation in the managed account business," said Burton Greenwald, an analyst at BJ Greenwald & Associates in Philadelphia. "There are only handfuls that have the track record to succeed."
GlobalBridge's competitors have exhibited strength at the upper end of the banking spectrum.
EnvestnetPMC Inc., a New York managed account provider that has developed $6.5 billion of assets under management in fee-based products since opening in 1999, has relationships with 12 big banking companies, including U.S. Bancorp, Bank of America Corp., and J.P. Morgan Chase & Co.
FundQuest Inc. has relationships with 25 banking companies, including Bank of America, Comerica Inc., and Huntington Bancshares Inc.
Mr. Rogers said GlobalBridge gained the foundation to succeed with banks in March through a partnership with Northern Trust Co. to offer the GlobalBridge managed account platform to a network of trust companies that are correspondents of the Chicago banking company.
Northern Trust offers GlobalBridge's Open Custody SMA managed account platform to 140 bank trust departments that use Northern Trust's Trust/Rite accounting system. This was the first offering of managed accounts to these customers by Northern Trust.
"It is a huge benefit to have the endorsement of a large bank like Northern Trust," he said. "It gives you the track record and a history to bring on more institutions."
Mr. Rogers said the bank is in conversations with banks various in both size and geography. His company has established a strong national footprint, he said, and will look for strategic hirings to help generate opportunities with banks and brokerage firms.
The Minneapolis company hired Sally Oberstar and Mary McMahon from U.S. Bancorp this month to be principals and relationship management directors.
Mr. Rogers, who was the president of U.S. Bancorp's private advisory services unit until 2001, said Ms. Oberstar will focus on developing business with banks and Ms. McMahon will develop business through brokers.
GlobalBridge wants to hire at least two to three more people in the next six months, he said, and he expects these people to have a strong track record in relationship management and the ability to help clients develop business within their own organizations.
"We want to find people with tremendous knowledge and connection in the banking and trust channels," he said. "We are building a team of individuals from different backgrounds with a common thread."
"With a company of our size, it is a big deal when you get your first few clients. Now that that is behind us, we are gathering business and helping clients win business. The growth takes care of itself from there," he said.
