A year after Zions Bancorp launched it as its asset management unit for wealthy customers, Contango Capital Advisors is drawing assets from wealthy individuals by mining the parent's network of affiliates.
George Feiger, an executive vice president at Zions, said the unit has entered the "bottom of the top quartile" of independent asset managers in the United States. To enter this quartile, he said, a company must have at least $400 million under management.
Though he would not specify how much Contango now manages, Mr. Feiger said asset growth in its first year has been remarkable.
"The growth has been strong from our point of view, and it is continuing," he said. "The growth that we anticipated is occurring. We are bringing high-net-worth individuals a level of sophistication that was not readily available to them in one place."
The unit's name incorporates a term, "contango," for a trading situation in the futures markets in which prices for future delivery significantly exceed those for delivery today. The company chose it to reflect a focus on analyzing what may happen in the future, according to a Zions spokeswoman. Mr. Feiger, who was a commodity trader in Australia, came up with the name, she said.
Mr. Feiger said he expects Contango's growth to persist as it continues to tap Zions customers with more than $1 million of investable assets, including the owners of small and midsize businesses and entrepreneurs.
"We want to model ourselves after the success that firms like City National and Boston Private Financial Holdings have had," he said. "These are two entities that started late and were able to develop a substantial high-net-worth business."
Both City National in Beverly Hills and Boston Private have developed more than $20 billion of assets under management in the last 10 years. "Their growth is nothing short of remarkable," Mr. Feiger said. "These were essentially community banking businesses, but by focusing on the high-net-worth market, they have grown their business substantially through organic growth and acquisition. That is the model we want to follow."
Mr. Feiger, who is also Contango's president, said it would develop business by working through Zions' affiliated community banks. The $30 billion-asset Salt Lake City banking company operates six hometown banks in the West. Zions grew in the 1990s through several small acquisitions but more recently has turned its attention to growing from within.
Just more than one-third of its business is in Utah and Idaho; one-third more is in California; and the rest is in Nevada, Arizona, and Colorado. It also runs a $750 million-asset commercial bank in Seattle.
Once Contango establishes a reputation, Mr. Feiger said, it will move beyond the parent's footprint.
Analysts said it could be difficult to develop a customer base when a bank begins offering asset management after so many other financial services companies have established market share.
Mr. Feiger admitted that entering late could hamper Contango's growth.
"No matter how good the story is, people always ask how old the firm is," he said. "We have competitors that have been in this business for decades, and some for many, many decades. There is value in being in this for a while. People like working with a company that has that depth of experience. But the people we have hired are experienced. The entity may be new, but we are experienced."
Zions itself is a large, well-capitalized company with a long history, Mr. Feiger said.
"We have a strong bank behind us, and that is important," he said. "It would've been virtually impossible without the backing of a large, stable financial institution to get into this business. It is important that we have an effective and successful business behind us."
"We are a new story buttressed by a business with a substantial capital base," he added. "I mean, if I had a choice between 18 months or 18 years of experience, I know what I'd choose. But I am confident we can grow from where we are. … I am 100% convinced that we can develop into an independent financial adviser with $3 billion or $4 billion or $5 billion or $7 billion of assets under management."
Mr. Feiger said Contango wants to become a major component of Zions' overall business in the next 10 years. The goal for 2006 is to add to the roster of 20 advisers now working through Zions' banks, he said.
Contango, which is based in Berkeley, Calif., was started last year. It opened its first wealth management office in Phoenix in November 2004 and will continue to grow by hiring strategically - and, potentially, through acquisitions.
"We want to expand and grow deeper in the bank," Mr. Feiger said. "It takes several years to grow and a decade to get a volume of assets. We are confident we can get where we want to be."
