Former U.S. Trust CEO Jeff Maurer has brought his old magic to the new RIA

April 8, 2010 — 6:48 AM UTC by Brooke Southall


As a former chairman and CEO of U.S. Trust, Jeff Maurer spent most of his years in financial services as the very definition of a banking careerist. Now, with the help of that pedigree, he is rolling successful private bankers into an RIA.

So far, Maurer has attracted 17 former U.S. Trust financial advisors to join his new venture, Evercore Wealth Management, and most of the partners work from its Manhattan headquarters. The firm has more than $1.7 billion of assets under management and 35 total staff.

“We’re a little ahead of plan,” Maurer says. “We feel fairly confident of our business plan.”

He hopes to continue to grow the business aggressively by recruiting more wealth managers to offices across the United States, convincing more clients of existing breakaways to follow their former advisor and by winning new business — often with the help of the investment bankers of Evercore Partners. The investment bank owns 49% of his firm.

Maurer started working at U.S. Trust in 1970 and stayed there until, as its CEO and chairman, he was replaced in 2003. Charles Schwab & Co. acquired U.S. Trust in 2000 and sold it to Bank of America in 2006.

Stint at Lehman Brothers

After a stint at Lehman Bros., which he left in 2007, Maurer decided to try to recreate the magic that made U.S. Trust so successful before Charles Schwab & Co. acquired it.

He planned to launch Evercore in 2008 but found many of the U.S. Trust bankers he had recruited were unwilling to make the transition in fall 2008. They didn’t want to break away from their clients in the middle of a financial crisis. Evercore actually started rolling in January 2009.

There are a certain number of U.S. Trust private bankers that feel more comfortable in a boutique setting than being part of a subsidiary of a bank with 250,000 employees, he says.

U.S. Trust [a subsidiary of Bank of America] has about 2,000 employees.

Evercore Wealth Management is 49% owned by Evercore Investment Bank, which will buy out the other 51% of the wealth manager over the next 10 years. Evercore is a public company that trades on the New York stock exchange under the symbol EVR. The shares are largely owned by the investment bankers themselves and in particular Roger Altman who founded the company in 1996.

Whiz kid

He was a whiz kid in his early career at Lehman Brothers before spending four years in the Carter administration. Altman later worked as deputy treasury secretary in the Clinton administration. Evercore was a major advisor to the restructuring of General Motors, the acquisition of Burlington Northern by Berkshire Hathaway and the merger of Pfizer and Wyeth.

For Maurer, attracting the first 14 U.S. Trust advisors was relatively easy because they were among his trusted colleagues and employees during his time at the New York wealth manager.

“They worked for me,” he says. “I cherry-picked the list.”

The New York-based private bank had about $94 billion of assets when Schwab sold it to Bank of America. The first advisors who broke away with him he had hired, trained and worked closely with. Maurer was named U.S. Trust’s president in 1990 and chief operating officer in 1994. He became CEO of U.S. Trust in 2001 and was appointed chairman of the board in March 2002.

Additional San Francisco-based U.S. Trust advisors followed him to Evercore last June and there are now five of them working there in that city, according to the company’s website.

Small pools to fish

Relative to the brokerage industry, private banks are small pools to fish in for recruits, according to Boston-based Cerulli Associates. About 5% of advisors work for banks, managing about 2.2% of the assets under management in the nation, it figures. The number of advisors at banks is likely to remain about level through 2012, while their share of assets under management is expected to increase to 4.4%, it adds.

Evercore now is adding its first non-U.S. Trust partner, Bob Morse, who is folding his New York-based RIA with $180 million of assets under management into the company.

Bob Morse is surrounded by packing boxes and will soon join Evercore as a partner
Bob Morse is surrounded by packing
boxes and will soon join Evercore
as a partner

Morse says the decision to join Evercore was an easy one. “It’s kind of exciting,” he says. “They’re an RIA, which I have been for 28 years, but they also have a trust company.”

Evercore has 80% of its assets held in trust and the other 20% with RIA custodians.

Tremendous credibility

Morse also liked being part of a firm with Fred Taylor, former vice chairman of U.S. Trust, and Evercore senior advisor, and Maurer. “Jeff has a tremendous amount of credibility,” he says. “He’s a high-quality guy.”

Maurer believes that the next private bankers that he brings aboard are likely to be more difficult recruits. Bank breakaways face three significant hurdles not typically encountered by stockbrokers departing from wirehouse firms.

  1. There is no Broker Protocol to invoke as an advisor employed by a bank. The protocol is a truce between brokerage firms that allows a broker to leave without triggering employment lawsuits. A broker can also notify clients of his or her departure, if they live by certain pre-determined conditions. See: RIAs drive exploding growth of the Broker Protocol; signatories triple
  2. There is a provision in private banker employment contracts known as Garden Leave. It allows the bank the option of paying the banker to stop working for a period of time after their departure. “It puts the advisor on ice for a while,” Maurer says. [Garden Leave got its name because bankers literally could do nothing but go home and tend their gardens.]
  3. Private banks have strict non-solicitation clauses. Unlike stockbrokers, who can generally begin wooing their clients to join them at a new firm the moment that they resign if they abide by the Protocol, advisors in the banking channel are generally subject to strict non-solicitation clauses. Though the advisor can inform clients of their departure, they aren’t allowed to pitch them on joining the new firm until the client calls them and asks them for a pitch.

Enviable business model

Despite these challenges, Mitch Eichen, CEO of MDE Group, an RIA that manages $1.3 billion of assets from Morristown, N.J., believes that Evercore has struck on an enviable business model for acquiring high-level wealth management talent and assets.

A few months ago, 23-year-old MDE launched its own national search for private bankers to join its ranks. Eichen believes that private bankers are more open than they have ever been to joining an RIA.

“Banks have really hurt these guys,” he says. “Bonuses were way off last year. People took massive haircuts. [Private bankers] are pretty disgusted.”

Eichen prefers the advisors that come out of the private banking realm to ones in the wirehouse world.

Merrill Lynch guy

“The Merrill Lynch guy isn’t our culture,” he says. “We’re ultra-high-net-worth holistic.”

The MDE Group focuses on preserving and growing the wealth of active and retired corporate executives, according to its website.

Eichen says that he is getting a high level of interest from private bankers, but he has yet to get any to sign a deal with him. He is offering what he refers to as an equity and payout model, which, he allows, some bankers accustomed to guarantees of pay levels balk at.

Maurer says that he experiences similar resistance. “Most people that work in established firms might not have the entrepreneurial spirit to give up guaranteed pay,” he says. “[The Evercore partners] were willing to earn less current income.”

Referrals from investment bankers

Maurer believes that he can recruit wealth managers in Los Angeles, San Francisco, Boston, Washington, D.C., and Houston to join Evercore Partners’ investment banking offices in those cities. Referrals from Evercore’s investment bankers — often from their friends and families — are becoming an important source of new assets, Maurer says. He also plans to open a new office in Florida because so many clients retire there.

Maurer has one factor now working in his favor. U.S. Trust has one-year non-solicitation agreements and most of them have expired for his employees by now.

“Now we’re soliciting those clients we have had and adding a dedicated sales component,” he says.

The company also hired a sales manager from a competing organization and a lawyer from U.S. Trust. The lawyer, Karen Francois, will cultivate law firms and accounting forms as centers of influence by leading with her knowledge of estate planning issues.

Though Maurer has heavily recruited from U.S. Trust thus far, Maurer believes that Evercore can continue to grow rapidly.

U.S. Trust as a launching pad

“U.S. Trust was our launching pad, but our business plan doesn’t rely on shopping at U.S. Trust,” he says.

Evercore is adopting two business practices for which U.S. Trust was, at times, criticized: 1.) Using proprietary products to a high degree 2.) Having portfolio managers also serve as the client-facing account reps.

In contrast, many high-end wealth managers use strictly an open architecture approach to choosing asset managers. And client interactions and portfolio management are not handled by the same employees.

Maurer will continue to make use of many proprietary products because his firm can do it cheaply and effectively. “We think we have enough Alpha to justify our fees,” he says. Alpha is return in excess of a benchmark set by a market index.

And Evercore will have its portfolio managers wear a second hat as account reps.

Old U.S. Trust model

“That’s part of the old U.S. Trust model that we’re keeping,” he says. “The new norm is that salesmen serve as an intermediary. It’s important that our portfolio managers work directly with clients.”

No people referenced

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