James L. Kermes has been in the trust business long enough to know that it doesn't pay to mess with success.
Since taking over as chief executive of Glenmede Trust Co. last August, Mr. Kermes, a 30-year veteran trust and private banking executive, has been fine-tuning the Philadelphia private bank, not revolutionizing it.
"I did not join Glenmede to change the company," Mr. Kermes said during a recent interview at the offices of American Banker. "I joined it to take them to the next plateau of growth with the same values they had all along."
His game plan includes expanding into some new areas - for instance, adding institutional clients to a roster now dominated by wealthy families. Glenmede, set up in 1956 to manage the Pew family's charitable foundation, now manages $8.4 billion for 1,000 clients in 34 states.
Mr. Kermes doesn't have much choice in the matter. As the competitive landscape of trust and investment management becomes cluttered with players, even established firms like Glenmede have to work hard to maintain their position.
A progression to serving institutional clients, such as pension plans and university endowments, won't be much of a stretch, Mr. Kermes said.
He said improved technology is allowing small organizations like Glenmede to access research that enables them to compete with "mega- organizations" for institutional clients. For example, a Glenmede trust officer is now capable of presenting an array of information for private clients on a laptop screen.
Mr. Kermes, 55, seems well suited to lead the charge. He brings to the post substantial experience with companies that have successfully straddled the individual and institutional businesses.
He started his career in 1965 at Bank of New York and moved on to top money management posts at investment units of Citizens and Southern and SunTrust. Most recently, he spent three years at Northern Trust Co. as chief investment officer. At Glenmede, he succeeded Dr. Thomas W. Langfitt, who remains as chairman.
The Pew Charitable Trusts remain a big chunk of Glenmede's business. With $3.8 billion in assets, the trusts dole out $180 million a year to charities.
Handling the account is a much more demanding task than it was in 1956, Mr. Kermes said. "In those days there was only one asset - Sun Oil - so it didn't take a rocket scientist to manage it."
But as important as the Pew family remains to Glenmede, 72% of the company's total revenue now comes from other accounts. The company manages accounts ranging from $1 million to $100 million, though most clients have approximately $5 million to invest.
Gerard T. Morda, a Boulder, Colo.-based consultant who advises banks on trust and money management, said a company like Glenmede needs to snare new clients - and can do so by marketing itself as better-focused than banking behemoths.
"The smaller and more specialized the institution, the bigger competitive advantage they have," Mr. Morda said.
Institutional clients, he said, are particularly ripe for the picking. "Institutions may not be getting the relationship they want, but they may not know what else is available."
Glenmede already has a direct marketing campaign aimed at wealthy individuals in the greater Philadelphia area.
When it comes to investment management, Mr. Kermes said Glenmede has to compete with national nonbank competitors like Fidelity Investments, which has an office down the street.
As for more traditional rivals, Mr. Kermes cited PNC Bank and Mellon Bank offices in Philadelphia. That view is reciprocated.
"We've always seen them as a big competitor," said Ludlow Miller, vice president for PNC's private bank in Philadelphia. But he added, "We have more to offer the client with an enormous number of mutual funds and common trusts."
Glenmede's 12 proprietary mutual funds are primarily used by clients for what Mr. Kermes terms the "fringe class of investments" - small cap and international stocks.
A unit of Alex. Brown & Sons administers the Glenmede funds. Since 1993, the two have operated a joint venture - Brown Advisory and Trust Co. - as part of a national expansion effort.
Mr. Kermes stressed that proximity is a major factor in dealing with affluent clients. When Glenmede acquired a consulting firm in central New Jersey, it relocated the office to downtown Princeton in a restored firehouse for better accessibility.
Glenmede stresses consistency in personnel and maintains a stable of nine chartered financial analysts who meet with clients.
"At a brokerage, you don't have that level of professional experience available to individuals," Mr. Kermes said.
Glenmede officers tap into technology to help get information to clients, but Mr. Kermes said it can turn off investors if officers are overly technical.
He applauds the efforts of Securities and Exchange Commission chairman Arthur Levitt to simplify disclosure for investors.
He often finds that investment performance is presented in vague terms, like annual return, or in bewildering ones, like standard deviations and covariances.
"We've got to get the hell away from things that are statistics- oriented," Mr. Kermes said. "One of the things we do is express it in human, lay terms."
Mr. Kermes said problem-solving is at the core of serving wealthy clients. "The real theme of it centers around taxes - how can they be minimized or how can we postpone the tax bite?"