Developing Webster Financial Corp.'s wealth management business may not be rocket science, but the Connecticut thrift has turned to a former rocket scientist to manage a doubling or tripling of its assets under management for the affluent.
"Engineering is a great way to learn how to think," said Bruce E. Wolfe, the director of Webster Financial Advisors; he designed ballistic missiles for TRW in the 1980s. "It gives you ways to look at issues and problems and situations that are extremely helpful when it comes to wealth management."
Mr. Wolfe, 40, said he expects to draw upon his experiences during the past 17 years as an engineer, management consultant, and executive at Morgan Stanley and Merrill Lynch to help multiply Webster's asset management business - even in the competitive Northeast.
"Webster is not too small and not too big," he said. "I have worked at very large places where developing through cross-selling is impossible. At a smaller institution, you just don't get the bang for the buck. We are the right size to be able to take advantage of these opportunities."
Through acquisitions and cross-sales to Webster's banking customers with $1 million to $5 million, Mr. Wolfe said, he is confident the company can double or triple its assets under management within four or five years as it looks to become a regional financial adviser.
Rus Prince, an analyst in Shelton, Conn., at Prince & Associates, said Webster has developed a strong reputation in Connecticut with high-net-worth investors because of the other banking products it offers. "They have access to the wealthy, but being a midsize firm is a nonissue," he said. "Size means nothing. Wealthy individuals want to work with a firm that is well respected. Being midsize is totally irrelevant."
"Clearly, we don't have all the things that a Merrill has, and I wouldn't try to pretend that we do," Mr. Wolfe said. "But for an institution our size and for what a lot of clients are looking for, at the end of the day we can deliver basic, strong products in an integrated way. That is what customers want."
Webster manages $2.2 billion of investment assets. During the past 10 years, the Waterbury, Conn., thrift has expanded its products and services to include investment and insurance products.
Last summer, Webster hired Mr. Wolfe as a consultant to determine the best way to develop the asset management business. Mr. Wolfe, who went to business school in 1989 after ending his engineering career, spent a decade working for Price Waterhouse, Morgan Stanley, and Merrill Lynch.
He admitted that, when he started at Morgan Stanley in 1996, he "didn't know fixed income from a fixed annuity," but over the next six years he developed strategies for expanding an asset management business. He helped Morgan Stanley realize 15% to 20% of its annual revenue from the asset management arm and took a role in its acquisition of Van Kampen Investments in July 1996.
Mr. Wolfe said he knows that, for Webster to develop its investment business, it must create a niche. The thrift compared its customers with census data, he said, and found that it had 5,000 millionaire customers.
"I think that this is a litle bit of a lost market," Mr. Wolfe said. "When you talk to the larger guys - the Merrills of the world - if you have a million in assets you are using their call center. That says a lot."
"For us to go out into the market and start knocking on doors and cold calling to build our business would be absurd," he said. "We have to tap into the client base. That will be the engine or the catalyst to growing in this business."
Mr. Wolfe said Webster must become a trusted adviser to develop cross-sales to these wealthy customers. Last October, the same month Webster hired Mr. Wolfe to run its wealth management business, it bought Fleming, Perry & Cox. The Norwalk, Conn., financial planning firm gave Webster the ability to create sophisticated financial plans for its wealthy customers.
In addition to organic growth, Webster plans to look for strategic acquisitions. It has developed its insurance business primariliy through purchases. Its agency business, the largest in Connecticut, expects to reach $40 million of revenue by yearend, up nearly 50% from $27 million in 2002. About 10% of this increase is expected to come from organic growth.
Mr. Wolfe said the parent Webster Financial Corp. wants to target investment management boutiques, smaller trust companies, and independent broker-dealers within its footprint.
He does not envision Webster doing as many as three or four deals in the next five years, Mr. Wolfe said, but it is likely to do one or two small ones.
