The chief executive of U.S. Bancorp Asset Management said his company has changed its name to FAF Advisors in order to expand distribution with other financial services companies.
Tom Schreier, the chief executive of the subsidiary of Minneapolis-based U.S. Bancorp and president of its fund unit, First American Funds, said in an interview that the strategy to break out the asset management business from the shadow of its banking parent would foster growth.
“If you look at us five years from now, I would be disappointed if we are not double the size we are at today,” he said. “This growth through other channels will play a part in that.” U.S. Bancorp Asset Management had $90 billion of assets under management at Dec. 31.
Mr. Schreier said he intends to change the company’s brand and culture as well as its name. FAF Advisors has increased its wholesaling force from three to 30 in the past 12 months, he noted.
“This isn’t just about a cosmetic name change,” he said. “From our perspective, we wanted to be ready from an infrastructure and an investment perspective. The brand was the last step. This should signal to the industry that we are ready.”
The name change, which does not take effect until March 31, creates a stronger association between the asset management unit and its mutual fund family, Mr. Schreier said. First American Funds won the 2005 “best overall fund group” award for three-year, risk-adjusted performance among 31 large U.S. fund groups examined by the Lipper Inc. investment research unit of Reuters Co., he noted.
Analysts said U.S. Bancorp is only the latest financial services company to change its asset management subsidiary’s name in an effort to create some marketing distance between them.
In January Merrill Lynch & Co. introduced a new brand for its U.S. retail asset management business. In May, Merrill announced, its U.S. retail products will be offered under the Princeton Portfolio Research and Management brand.
The big Wall Street brokerage firm said at the time that the rebranding was part of a growth strategy for Merrill Lynch Investment Managers to broaden distribution among non-Merrill financial advisers. Ninety-five percent of the estimated 299,978 registered advisers in the United States are nonemployees of Merrill, according to Cerulli Associates.
Robert Doll, the president and chief investment officer of Merrill Lynch Investment Managers, said in a January press release that many advisers view Merrill as a competitor so that the company’s own, well-known name becomes a negative.
Mr. Schreier agreed. Competitors do not want to sell another bank’s products, he said.
“We are a world-class asset manager with distribution across the country,” he said, “and by changing the name, it sends the market the clear indication that this is what we are focused on.”
Geoffrey Bobroff, an analyst at Bobroff Consulting in East Greenwich, R.I., said every asset manager wants to believe in growth opportunities beyond its footprint but that a name change alone will not create growth.
“A firm like U.S. Bancorp needs strong investment performance, not a new name, to draw assets,” he said. And competing nationally will be very expensive, he said.
“It will take a substantial capital investment to compete with firms for shelf space with financial advisers and third-party wire houses,” Mr. Bobroff said. “It takes foot soldiers and infrastructure, and most importantly, it takes a lot of money.”
Mr. Schreier said the decision to change his unit’s name had less to do with getting away from the bank and more to do with getting closer to the fund family. The asset management unit has a strong relationship with the bank, he said.
“I can tell you that we have immense support from the institution,” he said, “and that isn’t a universal truth in the banking industry. The bank and the asset management unit are linked, and there is a commitment to both, but in the marketplace it can be beneficial to have a name that is more closely linked to the funds.”
The asset management company has evolved steadily since Firstar Corp. bought U.S. Bancorp in November 2000, Mr. Schreier said. The unit carefully selected funds five years ago, he said, to establish strong investment performance and to ultimately bring a strong set of products to other channels.
“We recognized that we needed great investment performance in order to grow because ‘good’ isn’t good enough,” he said. “The strategy now is to continue to build and move into markets that previously we didn’t participate in.”
