Piper Jaffray & Co. says it started a wealth management group last week to give itself a component lacking at the Minneapolis securities firm since it was spun off by U.S. Bancorp two years ago.
The wealth management unit, whose target market is individual investors with at least $5 million of assets, is to offer specialized services including financial planning, philanthropic services, insurance services, estate planning, and wealth transfer.
Bill Garrison, the group’s director, said Thursday that Piper is looking to “beef up” its service offerings to complement its investment consulting capabilities.
“The bank had a lot of capabilities that we took for granted,” Mr. Garrison said. “They had their private banking area, which was really similar to what we are looking to offer here.”
Piper’s strength since it was split off from U.S. Bancorp in February 2003 has been investment consulting, he said. The spinoff came five years after the Minneapolis banking company had bought Piper for $730 million.
Mr. Garrison said Piper did a client survey in late 2003 that found investments ranking behind estate planning, wealth transfer, and retirement planning among investors’ concerns. Piper had to adjust, he said, so that the company would not be satisfied just providing investment services.
To gain wallet share, it must become a wealth manager rather than just another investment consulting firm, he said.
“We want to solidify our relationships to help us retain our customers,” he said. “We want to become their primary adviser. We want to be able to handle all of their needs so that they don’t have to go to a lot of different people for all of the things they need.”
“All of these investment services are intertwined,” he added. “We want to help tie them together.”
The transition from asset management to wealth management is a consistent theme in the investment industry in recent years.
Rus Prince, an investment analyst at Prince & Associates in Shelton, Conn., said that investment advisers who change from asset managers to wealth managers will benefit from the resulting focus on personal relationships that grow from devising and maintaining a financial plan.
“Asset managers may be in trouble, but investment advisers that become wealth managers increase their income 35%,” Mr. Prince said. “If your job as an adviser is to help solve financial problems and not to just sell products, you will do well going forward after your customers retire.”
Mr. Garrison said Piper’s wealth management group would take a team-based approach. The nine-member group is to work with the company’s 900 financial advisers to supply a comprehensive approach to helping wealthy clients.
He said he is confident that interest in these services is widespread among Piper’s existing customers.
“This is what clients are telling us they need,” he said. “We are working with clients whose focus has changed from concerns about their daily returns to questions about ways to preserve wealth and transfer it to the next generation. Those are the clients we want to focus on.”
Mr. Prince said competition has intensified as ever more investment companies try to become wealth managers, but Mr. Garrison said he isn’t concerned about competition.
“There are a lot of clients that need this, and a lot of our current clients need this,” he said. “Competition will always be there. This is what we need to do for our clients, and these are the types of service we need [in order] to capture prospective clients going forward.”
