Charting A Financial Course
Wealth managers help clients with planning and investment advice
In 1980, Robert Balentine, then a 23-year-old fresh-faced wealth manager, was sitting in the Atlanta Merrill Lynch office when a prospective client walked in with a suitcase full of bearer bonds, the equivalent of cash at the time, and announced he wanted to open an account. Balentine whipped out the forms and prepared to have his day made. The first order of business was a proof of purchase, which the prospective client did not have. The saddened young financial investor had to send his prospect out the door.
Two days later Balentine picked up the newspaper and read that his pros-pect had been arrested by the FBI while trying to board a plane at New York’s LaGuardia Airport. “When you’re a young struggling wealth manager trying to break in the business and somebody brings in several hundred thousand dollars worth of securities, you’re dying to open the account and have a new client,” Balentine says. “But I think my greed took a backseat to logic and reason, and I said if this man can’t prove he bought these, they could very well be stolen and indeed they were.”
Balentine is a second-generation wealth manager, one of a cadre of credentialed professionals who guide and advise clients in financial planning and investing. He seems to have been destined for a career in the field. “Wealth management is what I grew up hearing around the dinner table at night,” says Balentine, now chairman of Balentine, an independent Atlanta wealth management firm.
After careers with a number of wealth management firms in Atlanta, Balentine says he noticed the number of millionaires in the city growing in the mid- to late-1990s. “That was when everybody up north figured out there was money south of the Mason-Dixon Line,” Balentine says. “Within a few years, Goldman Sachs, Bessemer Trust, Wilmington Trust, Mellon and all these firms decided to put a foothold in Atlanta.”
Dana Halberg is another 30-year veteran in the Atlanta wealth management market, beginning with her former company, The Arden Group, which was purchased during the out-of-state acquisition period by BNY (Bank of New York) Mellon, where she now serves as chairman in the Atlanta office. Her company, the seventh largest of its kind in the nation, has a total of $176 billion in assets under management, with $3 billion of that concentrated in the Atlanta area, a city that she says has grown a reputation for wealth. In fact, it was recently ranked the 10th wealthiest city in the country by The Atlantic Cities.
“That makes sense,” Halberg says. “Obviously, there are more people here – can you believe 30 years ago [Metro] Atlanta had a population of 800,000 and today the population is 5 million? – and there is more industry here. Georgia Tech is here; Emory is here; and there are other places where they’re sprouting some entrepreneurs, so there is a lot of wealth concentrated in the Atlanta area. But we have also found that in smaller towns in Georgia there are pockets of significant wealth, usually associated with a [local] business. Skidaway Island has a huge concentration of wealth.”
Wherever the wealth, Halberg says trends are pointing upward for any investor. “We’re in an unusual once-in-30-years kind of change on the secular side,” she says. “U.S. corporations are in the best place they’ve been in 30 years, in terms of clean balance sheets, low debt, relatively good profitability, raising their dividends, those types of things. The market always climbs a wall of worry. We’re still in that period of uncertainty there, but we see good and positive things on the other side.”
Forecasts for 2013 have the North American value of investible assets set to reach $12.7 trillion, up by a third over 2008.
Wealth managers, say the experts, are becoming a part of the family as the baby boomer generation ages into retirement, many with inheritances from their Greatest Genera-tion parents. As if gearing up for more boomer business, several 2012 online job search sites listed more than 200 available positions in 100 financial and wealth management firms in Georgia, from assistant portfolio officers to directors.
The prominence of wealth managers in Georgia today is a far cry from the time up to the 1950s when wealth management was largely handled by local banks as part of their menu of services. In fact, there was a time when independent wealth management was absent from the financial landscape of bustling Atlanta, but that changed in the 1960s, according to Balentine.
Range Of Assets
For Robert “Bucky” Leach, assisting in the management or growth of wealth for his clients can involve a wide range of assets. “We help everybody, [from someone] saving for college at $50 a month to the person who retires from a Fortune 500 company with $5 million or whatever it may be. They’re all different,” says Leach, a senior vice president at Albany’s HeritageBank of the South and an advisor with LPL Financial, the brokerage firm that processes his client investments.
“I’ve had, I think, three lottery winners, and one of them never spent a dime of the money and the other two are broke. But most people have to start with a 401(k) retirement plan or something like that.”
In many ways, Leach’s wealth management advice is shaped by his clients. “I have to manage money for people who are making money in this region,” he says. “Here it’s certainly always been agriculture, and everything seems to always go in cycles. Right now agriculture is wonderful. Farm-land is a very valuable commodity. Last year farmers probably made as much money as they’ve ever made.”
While Leach was pondering investment strategies and tax consequences for clients in Southwest Georgia’s rural zip codes, Russell Jacobs III, a founding partner in the Glynn County wealth management and financial advisory firm of Jacobs, Coolidge & Co., was mapping his own investment strategy for his clients, who live in some of Georgia’s wealthiest zip codes on the Golden Isles of the coast.
“The Golden Isles have always been associated with wealth,” Jacobs says. “Sea Island, for instance, is a place where people of means have homes or second homes. One of the myths is that these people move their assets here, but that is not the case.”
Still, he helps his clients plan for the future, whatever their circumstances are. “Whether a person is at the end of a $200,000 or a $200 million [investment decision], the key is diversification. Whatever end of the spectrum you’re on, it’s about your goals and objectives, your risk tolerance and your time horizon,” Jacobs says. “Once you’ve established those things and are looking at a properly diversified portfolio, you get participation in the upside and protection in the downside.”
Most wealth managers urge a conservative approach when advising clients on how and where to park their investment money. But there is another portion of wealth investment targeted for charities, the nonprofits that offer services to causes potential donors may find appealing. That’s when Alicia Phillipp likes to sell her organization’s resources.
“We help them develop a philanthropic plan, help them go on site visits and see organizations that may be [focused] around their passion and interest and establish meetings for them so their kids can get involved,” says Phillipp, president of the Community Foundation for Greater Atlanta, a kind of nonprofit brokerage house representing charities in 23 Metro Atlanta counties.
Last year the Community Foundation raised $72 million from donors, some quite wealthy, in a down economy year. Though tax benefits for the wealthy are certainly in the equation, it is another desire that motivates sizeable contributions, says Phillipp. “We just did a study of philanthropy in Atlanta in 2011,” she says. “And the No. 1 motivation is that they want to give back to the community. The people we generally deal with are high net worth individuals, and we’ve been working really well with wealth managers for about 20 years.”
Phillipp usually comes into contact with a wealth manager and client via what she calls a trigger event.
“A wealth manager is working with a very wealthy person and they will have a trigger event, meaning they will have the sale of a business or something will happen in their life where there is what I call money in motion.” With new money flowing to the client, the money manager may pose a question to his client, “What are your charitable intentions?”
Such questions often lead to the creation of a donor-advised fund, a Community Foundation device to help the wealthy in directing some of their wealth to an appropriate charity. The Foundation can offer a menu of charitable organizations covering a variety of causes. “The $72 million we took in last year tells me the wealthy are really digging deep to give back,” Phillipp says.
And just how is success measured by wealth managers across the spectrum? Having managed billions of dollars in his more than 30 years in the business, Balentine says it’s pretty simple. “You measure success in our industry by finishing your career with the same clients you started with,” he says.