Philadelphia a bedrock of assets

Old money and a broad, cohesive market make it a haven for RIAs

Dec 8, 2013 @ 12:01 am

By Bruce Kelly

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The city of brotherly love is a haven for financial advisers. Philadelphia's unique combination of old money, a vibrant market for endowments and institutions, and a smattering of defined-benefit plans left over from the city's era as a manufacturer have provided an ample base of assets for registered investment advisers to manage.

Add in the disruption of the financial crisis and the ensuing flow of clients and assets to fee-only advisers from commission-based brokers, and the foundation for advisers' businesses in the market — which broadly encompasses Philadelphia's immediate suburbs, Southern New Jersey and Northern Delaware — grows stronger.

Many advisers have strong ties to the city. They grew up there and returned after college.

Or they may have gotten their undergraduate or law degrees in the area, met and married a local sweetheart, and decided to build a career there.

“It's a community,” said Jonathan Scott, a partner at Veritable, which manages $11.8 billion in client assets and has offices in suburban New Town Square.

“You can walk down the street in Philadelphia and see people you know. You walk down the street in New York City and don't see anyone,” Mr. Scott said.

“It's a small big town,” he said.

Looming behind the greater Philadelphia RIA marketplace is the figure and investor-friendly philosophy of John C. “Jack” Bogle, the founder and retired chief executive of The Vanguard Group Inc., one of the largest mutual fund companies in the world, with more than $2 trillion in client assets.

Indeed, Vanguard's emphasis on keeping costs low permeates much of the asset management and RIA businesses around Philadelphia, according to industry professionals.

Investment advisers in the city also point to the highly regarded money manager SEI Investments Co., along with Vanguard, for attracting and training talented investment advice professionals, many of whom will later move to other companies.


“Vanguard and SEI both do things very well, and it's great to see large institutions training people,” said Grant Rawdin, president and chief executive of Wescott Financial Advisory Group, which is located in downtown Philadelphia and manages $1.46 billion in client assets.

“We've hired from SEI, as have other advisers, and we've hired [from] Vanguard,” he said.

“Our chief operating officer had been a senior officer at Vanguard. He comes from an exemplary culture,” Mr. Rawdin said.

Therefore, it isn't only Mr. Bogle's belief in keeping costs low and transparent that local advisers warm to.

The Philadelphia RIA marketplace to some extent feeds off of Vanguard's training programs. One, the Vanguard Accelerated Development Program, takes 30 candidates each July.

“Vanguard is a big candidate pool,” said Terri Boyd, managing partner of Boyd Consulting Partners, a Philadelphia-area headhunter with a focus on support jobs for RIAs.

“Vanguard recruits from colleges across the country and brings in a diverse group of candidates for the 15-month training program. It's for students who just finished their undergraduate degrees,” Ms. Boyd said.

Philadelphia has lived in the long shadow of New York in many areas, including the financial advice business. But that shadow may be abating somewhat, Ms. Boyd said.

“We've seen a real change in the last five or six years, with Philadelphia getting more candidate flow from New York,” she said. “It's like we're a newer suburb of New York.”

Ms. Boyd's firm doesn't recruit or place investment advisers, but she said that no disparity in pay between New York and Philadelphia exists for associated financial professionals such as analysts.

However, professionals looking for work in areas such as operations and marketing could expect to make 15% less in Philadelphia than in New York.


“Philadelphia is a small town with large firms that train people,” said Richard Stevens, chief executive of Mill Creek Capital Advisors in suburban Conshohocken, which manages $2.8 billion in client assets.

He is a prime example of a Philadelphia adviser.

Mr. Stevens is a veteran of Vanguard, working there from 1995 to 2001 as principal of high-net-worth services. And he is a New Yorker who graduated from law school locally and whose wife is from the area.

There are financial concerns particular to Philadelphia, Mr. Stevens said.

Philadelphia has a local wage tax of about 4%, while the similar tax in Conshohocken is about 1%, he said.

That can be an advantage to RIAs that set up shop in the suburbs around the city, Mr. Stevens said.

Others noted that despite the Philadelphia wage tax, the downtown area is a hub for commuters from Southern New Jersey, who receive a tax credit on the wage tax.

Philadelphia doesn't match New York or San Francisco in pay for financial advisers, Mr. Stevens said.

“Salaries are less than in the bigger city, but it's a wonderful trade-off,” he said.

“The suburbs of Philadelphia are absolutely magnificent,” Mr. Stevens said. “You're 15 miles from the city for big-city culture.”

Despite the potential difference in wages, financial advice professionals, particularly those in their late 20s to early 40s who are starting families, are increasingly looking to Philadelphia for work, Ms. Boyd said.

“Folks putting out job feelers are starting to include Philadelphia in their searches, and in every case, it's been a quality-of-life issue,” Ms. Boyd said.

“It's a great place to raise kids. It's got great private schools and great public schools in the suburbs, and you can buy a home for significantly less than in the Washington or New York City suburbs,” Mr. Scott said.


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