While high-net-worth clients often tend to be more sophisticated than the average investor, Silvercrest Asset Management Group LLC claims that its clients are even more investment-savvy than the typical wealthy investor.
That's because many of the registered investment advisory firm's 300 clients made their money in the financial services industry.
“Several of the most prominent and visible people in the investment world are our clients,” said G. Moffett Cochran, chairman and chief executive of Silvercrest, which manages $5.9 billion in discretionary assets. “They challenge every aspect of what we do and how we do it. They definitely keep us on our toes.”
Silvercrest's average client has $30 million in investible assets, with the highest-end clients having $1 billion or more, Mr. Cochran said.
Having worked at Bessemer Trust Co. NA, Donaldson Lufkin & Jenrette Inc. and
Credit Suisse Asset Management, where he was president, Mr. Cochran has the experience to know quite a bit about such high-end clients.
Part of his rationale for setting up Silvercrest in 2002 was “to have an independent organization that was unaffiliated with a bank, insurance company or anything so that there was no potential for conflicted advice,” Mr. Cochran said. “It's hard to maintain that objectivity if you are part of a larger financial services construct.”
Not only do clients have access to the firm's investment management services, but they can also get help with taxes,
estate planning, bill paying and other administrative services. “We are designed to give those clients the ability to use us as their family office,” Mr. Cochran said.
To cater to his sophisticated clients, he has tried to emulate the culture at Donaldson Lufkin & Jenrette.
“We really liked the DLJ atmosphere because of its entrepreneurial drive and general working environment,” Mr. Cochran said. “We have tried to replicate their best practices.” DLJ was bought by
Credit Suisse in 2000.
Because of its elite client base, Silvercrest relies heavily on referrals, rather than using sales reps to mine prospects. “The people we are offering our services to have significant barriers around them to protect them from salesmen,” Mr. Cochran said.
As such, one of Silvercrest's main challenges today is meeting more clients face to face.
With 85 people spread out among its New York, Boston and Charlottesville, Va., offices, Mr. Cochran also would like to expand Silvercrest's reach. The West Coast would be an obvious target, he said.
But for now, Mr. Cochran said, word of mouth is working fine, particularly since many of Silvercrest's clients were invested heavily in bonds. “That dampened the downside quite a bit,” Mr. Cochran said.
But even many of the firm's equity portoflios did well.
The return of Silvercrest's focused value strategy for the one-year period ended Sept. 30 was 2.39%, compared with a return of -10.79% for the Russell 3000 Value Index.
