Earl Wright has seen the future and, frankly, he's not nervous. Not by head-on competition from financial services giantslike MerrillLynch and Fidelity andCharles Schwab. Not by client demands for a 1% all-in fee, which he promises is just around the corner. And not by the demands of wealthy baby boomers who will step up requirements for a wide array of services, including trusts, in the coming decade.
Why should Wright be apprehensive? With 110 employees, $1 billion in client assets and more than $10 million in revenue, the national advisory firm he's built with longtime partner Mike Bergmann over the past 30 years can compete in these areas. By the end of the year, their firm, known until this summer as AMG, plans to offer trust services and take custody of client assets (thanks to a recent merger with the trust division spun off by Guaranty Bank & Trust). The executives at the Denver-based firm, which is being rechristened AMG Guaranty Trust, have spent three decades building a company that, as Wright puts it today, "makes offering the services that clients want the priority." Wright and Bergmann remain majority shareholders in the new entity, and the bank has a minority stake.
That has meant building and managing a fee-only firm that includeshighlysuc-
cessful investment and alternative-investment departments, a benefits-analysis service, a tax division, a charitable-gift foundation and, at the center of it all, a planning division that includes 21 teams in four offices across the country. The creation of AMG Guaranty Trust is a defining moment for Wright. He, like the other executives of the firm, says that being able to offer trust services and custody their own clients' assets, instead of relying on a brokerage firm that soon could be a direct competitor, will give the firm control of its own destiny.
"We've created a financial organization that can take clients all the way through their financial lifetimes. That's a crucial service for them and for us," says Diane F. Reeder, who headed up trust and asset management at Guaranty Bank & Trust and has been named executive vice president and senior trust officer at the new organization, AMG Guaranty Trust. Full trust and custodial services are slated to go live by the end of the year.
At the same time, AMG executives are finding the stamina to launch an acquisitive binge that will, Wright says, result in relationships with seven to eight strategically placed advisory firms over the next two to three years."Five years out, we'll be a full-service planning and custody-trust provider with eight to 10 offices," Bergmann says. "We're not out to take over the world, but we're not going away, either."
How will that impact the $1 billion in client assets the firm manages directly and the $3.7 billion for which it serves as an advisor? "I'd be surprised if they don't grow 10 to 20 times what we manage now. Our current clients alone have an investable asset base of $5 [billion] to $8 billion (currently invested in retirement plans and other assets). At some point, they'll have to harvest that," Bergmann adds.
Wright, a Wharton MBA, and Bergmann, a Stanford-trained economist, both still perform financial planning for a small roster of clients, most of whom they've worked with for years. "It's our way of keeping our ears to the ground," Bergmann says. "We're not very ivory tower here."
They don't think small, either. Maybe it was their start together doing financial planning for one the Midwest's wealthiest families that gave the AMG partners the blueprint for setting up a family office-style practice long before the name became a buzzword. Or the fact that the small planning office they started subsequently could have easily been eclipsed and morphed by the big brokerage operation that acquired it. Or, maybe it's the near-perfect complement of Bergmann's fascination with finding and building near-perfect investments with Wright's business and marketing savvy. Whatever the influences, today Wright says he never saw the firm developing any other way.
A relatively small Denver-based planning boutique was never going to fit the bill. Wright and Bergmann wanted a national planning firm, plain and simple. And that's what they've built.