The ex-US Trust CEO has seen Evercore Wealth growth rates taper since a lightning start; now the hard work is done he sees deals on the horizon

April 10, 2018 — 5:34 PM UTC by Brooke Southall

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Brooke's Note: When your RIA is owned and funded by a crack investment bank, you'd think -- seriously think -- that your growth strategy would include a healthy dose of M&A. In the case of Evercore and its wealth unit, Evercore Wealth Management, you'd be dead wrong. In nine years the firm made one small purchase that represents about 10% of its assets. See: Former U.S. Trust CEO leads his RIA to the $4.5 billion mark -- and gains a Left Coast presence -- acquiring $645 million Mt. Eden. CEO Jeff Maurer has built Evercore Wealth as though neither deal capital nor M&A expertise grows on trees, though for him they kind of do. But now there is a shift precipitated not by an event but more by a sense, he says, of having built a foundation in terms of critical mass and critical operating efficiency. Expect deals. This is the first article we've written about Evercore since 2014 after several stories about its fast rise. Evercore always held my interest as the ultimate breakaway, even if it was buttoned-down as hell. Maurer is clearly creating a better place for advisors to work and for clients to place their trust than the big-bank world where most of them came from. And Maurer is living out his own entrepreneurial destiny in the process.

Every inch of the way, Jeff Maurer has built Evercore Wealth Management LLC his way, which is to say he has relentlessly recruited advisors, executives and their assets from ultrahigh-net-worth units of national banks. See: How Jeff Maurer is now ploughing into Florida using his old Evercore tricks but with new GenSpring wrinkles.

What the former CEO of U.S. Trust mostly refrained from doing in taking his New York-based RIA startup to just over $7.3 billion in AUM, according to its March 30 ADV, was buying talent and assets by acquiring RIAs.

Until now. Two weeks ago, Evercore Wealth hired Thomas Olchon as a managing director. Previously, he was with Bessemer Trust, a multifamily office with $100 billion in assets under supervision, according to the firm, and $34.6 billion of AUM according to its ADV, dated March 2018. Prior to joining Bessemer in 2004, Olchon worked as a portfolio manager at U.S. Trust, where he started his career in 2000. See: U.S. Trust seeks to add hundreds of wealth managers with West Coast-facing poaching campaign.

Evercore keeps talent busy by leaning on its investment bank side for referrals, which includes employees of the firm. Evercore, an investment bank, owns the majority of Evercore Wealth. 

Mojo working

But now that Maurer, 70, has gotten most of the gettable U.S. Trust band back together, he hints strongly that he is preparing to make moves that will make M&A news and grab AUM up in larger chunks. 

"We still have our mojo going," he says. "We're back to figuring out our next inorganic growth step." See: Helena Jonassen bids farewell to US Trust after 18 years to rejoin breakaway colleagues at Evercore.

Certainly there was mojo early on when Maurer -- after a U.S. Trust exit under the ownership of Charles Schwab & Co. Inc. -- took a measure of revenge by nabbing a 15-person raft of talent. In its first two years in business, Evercore already had about $2 billion of AUM. See: In its latest talent grab, Evercore Wealth Management hires a 'young, up-and-coming player'.

"Evercore is a really, really strong brand and highly respected in the investment banking world and for advisors used to having an investment bank, it's a really appealing model," says Louis Diamond, principal of Diamond Consultants. He adds that he sees the M&A pool for Evercore's wealth unit as extremely limited because of its self-custody and high use rates of proprietary products -- never mind the small number of firms concentrating on the UHNW investors, which "PE firms you've never heard of" in addition to roll-ups are ready to pounce.

Evercore counters by saying that its investing is only proprietary in a sense. It distinguishes between "strategies" and "funds" saying it uses strategies and that it has a "a blend of proprietary and external investments." Also different is that the proprietary investing adds no fee -- unlike the J.P. Morgan and U.S. Trust models.


"It’s cheaper for clients and the returns are good," says Evercore's spokeswoman, Aline Sullivan.

Not only did he bring along HR assets and financial assets but a business model and culture that resembled private banks like U.S. Trust, GenSrping, Bessemer and Abbott Downing. See: A $4.7-billion RIA-under-investment-bank in NYC softens its macho edge by headhunting a top woman from GenSpring.

But those private banks were missing a critical ingredient that aging, ultrarich investors pick up on.

"Most people develop problems with cognition and complexity so identifying an advisor they can trust is very important to them," Maurer says. "A lot of our clients are leaving the large banks that don't want to deal with complexities and where 1-800 numbers are more prevalent."

Choppy M&A waters

M&A experts, however, warn that any RIA with designs on inorganic growth in 2018 face twin obstacles of competition from fellow roll-ups and a high-valuation environment, with asset-based-fee-driven firms buoyed by the Dow Jones industrial index at about 24,000. See: A big Boston rainmaker joins an RIA startup in New York with meteoric growth.

In addition, there are new entrants like Greg Fleming's Rockefeller & Co. and a recapitalized HighTower Advisors -- never mind AMG and Focus Financial -- prowling about.

But Maurer doesn't see those roll-ups as big competition for the kinds of wealth managers that he seeks.

"The HighTowers and Rockefeller & Co. have models where they lift-out firms from brokers. This is a different strategy," he says. See: Evercore feasts on veterans of an elite Wells Fargo wealth management unit.

But Maurer perhaps ought not rule out bringing aboard wirehouse brokers, says Diamond, based on the quantity and quality of prospects he is seeing in his Manhattan-based recruiting office -- attracted by the new Fleming/Rockefeller combination.

"I think they'd be more successful going after the right wirehouse advisors who are used to proprietary products," he says.

Evercore Wealth, he says, seeks RIAs with clients of $10 million to $100 million -- and up. "We don't want a firm with a lot of small relationships," he says. See: Recruiters salivate as Greg Fleming completes marriage to Rockefeller & Co. to fill 'HighTower' void but now begins the wait for a business model.

Investors as clients

The big difference is that at Evercore, investors are clients of the firm, which encourages collaboration, he adds.

"I had a stint on the other side and people so zealously guarded their clients.

Though Maurer admits his firm uses an "old-fashioned" business model that includes keeping about 80% of its AUM in custody with Evercore Trust, he has taken steps make his firm technologically modern. Recently the firm switched its portfolio accounting system over to Advent APX and added InvestCloud to allow clients online access to their accounts. See: How much of SS&C's $5.4-billion buy of DST Systems trickles down to Black Diamond RIAs? Maybe a good bit.

Another old-fashioned twist is that Evercore largely puts a large minority, about 45%, of client assets in about 40 stocks and additional bonds of its choosing, which Maurer says has been justified by market-beating returns -- bolstered by healthy positions in Apple, Alibaba and Amazon. See: After Fidelity Investments and its owners get blasted by Reuters for alleged high-level conflicts of interest, Morningstar accepts the Boston-based giant's explanation.

"Results matter," he says. "You can have the best relationship but if you don't deliver, it's very difficult to sustain a relationship."

This article was clarified to show that Evercore Wealth's "proprietary" investing does not involve purchase of separate funds and that for most portfolios. The majority of assets get invested in third-party funds.

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Stephen Winks said:

April 11, 2018 — 8:12 PM UTC

Maurer has none on the conflicts to innovation and modernity of a brokerage format, as a consequence advisors will find a refreshing new attitude toward advisory services in areas that b/ds will not go. SCW

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