Atlantic Trust seems to have discovered a money management model that works.
The firm reports that for the past 16 quarters, which takes it back to mid 2007 before the financial crash and the market collapse, it has experienced consecutive uninterrupted net inflows of investment funds from clients.
“Even at the worst of the market collapse, when many of our competitors were experiencing major net outflows, our clients stayed with us and we had funds flowing in,” says Jack Markwalter, chairman and CEO of the company, the private wealth management division of Invesco Ltd. of Atlanta.
“There were some months when our performance was negative, of course,” he says, “but throughout, we kept adding clients, and having net inflows of client funds. That’s a record of coming through the storm that we’re pretty proud of.”
Markwalter, who is also chairman and CEO of Invesco National Trust, claims that the key to Atlantic Trust’s client loyalty, and its appeal to new investors, lies in its fee-only approach. “Yes we have some proprietary investments,” he says, “but these are treated no differently from any investment option in our platform.” He says clients are only charged a clearly explained advisory fee. “There are no commissions, no paid placement fees and no transaction fees,” he says. “So you know that the advisor and the client are on the same side of the table all the time. The only way for our advisors to increase their fees is to grow the clients’ assets.”
The only exception to this rule is in the case of a few limited partnership investments, he says.
The other attraction Atlantic Trust has for clients, he says, is its “broadly diversified platform,” which features the firm’s own fixed-income and core equity funds, and a range of 100 outside fund managers, offering investments in bonds, equities, cash, commodities, energy and alternative investments. “Our clients are concerned about keeping and protecting their wealth, and about growing it at reasonable rates--single and low double-digits,” he says.
One result of the popularity of this highly diversified and fee-only approach, and to the company’s performance record, is that the firm saves a bundle on advertising. “We don’t buy any ads on TV or in newspapers or magazines,” says Markwalter. He reports that 75% of the $1 billion in new client assets that came into the company last year were the result of referrals by clients or by intermediaries. “The number of our referrals by clients has grown exponentially over the last few years,” he says proudly.
The only outreach the firm does, according to Markwalter, is to organize informational meetings. This year there are 60 such meetings planned at 30 cities around the country. “We typically get 50-60 people at these meetings,” he says, adding that recently 150 people showed up at one session organized in Palm Beach, Florida.
Atlantic Trust, with 200 “client-facing” professionals, currently boasts 2400 clients and has $17.5 billion in assets under management. The target market for the firm is people with at least $5 million in investable assets. The company has been on a hiring spree, adding some 15 senior hires over the past year. “The recent downturn caused a lot of disruption,” says Markwalter, who came to Atlantic Trust himself in 2002 from a position as managing director and national director of the client strategy group for Morgan Stanley Private Wealth Management, “and we were able to take advantage of that.
Looking ahead, Markwalter says he is “cautiously optimistic” about the US and global economies. “US companies have repaired their balance sheets,” he says, adding that for well diversified portfolios, “people should see pretty decent returns this year.”