53.7 F
San Diego
Thursday, Mar 28, 2024
-Advertisement-

Headhunter Boils Business Down to Wealth Management

Eric Armstrong said he saw the handwriting on the wall as the financial world his Carlsbad recruiting business serves began collapsing last year, forcing him to make some serious changes.

“In September and October, I’ve never experienced anything like that in my life,” said Armstrong about the months when the international credit markets seized up, several major investment banks failed or were forced into mergers, and worldwide stock markets cratered.

In response, Armstrong held a meeting with his staff at Armstrong Financial Group and decided to focus their energies on one of the few sectors of the financial services industry that appears to be doing OK: wealth management.

“We lost a lot of our clients, and decided to spend more of our time serving few clients,” Armstrong said. “We focused on the things we knew we’d be pretty good at and left the rest.”

As a result, the fees they are making today are on track to break $3 million by year end, far exceeding the less than $2 million in revenue generated last year.

To handle the increased business, Armstrong said he’s planning to hire two more headhunters, bringing the total to 10. At the peak of the late 1990s, when the banking sector and much of the rest of the economy was in its full flower, he had five recruiters.


Filling Jobs

The jobs the recruiters are filling come from large banks, investment management companies and other financial services firms. The positions include private bankers, money managers and financial planners. Salaries range from $150,000 to $400,000, Armstrong said.

While he declined to reveal clients, Armstrong said they include some of the nation’s largest and better known banks.

How come the wealth asset segment is flying high when the rest of banking is in the dumps?

A major reason is timing. When times are good, services such as money managers and financial advisers tend to get overlooked, but in tough times, customers are more inclined to turn to professional help.

The industry is also shedding many experienced private bankers, and there are fewer experienced bankers to take their place, he said.

Adding to these trends is the overall contraction of larger banks due to the massive losses they’ve incurred. Lower performing bankers are getting cut, but there are fewer wealth managers to take their place, he said.

Bob Bauchman, regional president at Northern Trust, a Chicago-based institution that has two San Diego offices, said his company has been building its client base, and has grown its portfolio by 30 percent last year.

“We’ve gained clients across the spectrum, both on the investment side and the commercial banking side,” said Bauchman, who was appointed to the job in November.

As turmoil enveloped much of the financial services world and the troubles at some banks were publicized, customers of those banks got jittery and moved their money, he said.


Avoiding Lending Problems

Northern Trust, with about $3 trillion in assets under custody, was able to avoid many of the lending problems of other banks because it isn’t involved in land development loans, subprime mortgage lending or credit cards. Its two business lines are investment management and commercial business lending.

In the past year, Northern Trust has increased its staff by two people in its trust and investment group to bring the total to 25 at its offices in La Jolla and the University City area.

Unlike commercial banks which generate most of their revenue from interest income on the loans they make, Northern Trust obtains 75 percent of its revenue from fees related to the management of its clients’ assets, most of whom are wealthy individuals, Bauchman said.

“The type of clients that we’re working with are not the type who need a subprime loan,” he said.

-Advertisement-

Featured Articles

Oberon Eyes Europe for Renewable DME

Leaders of Influence in Law 2024

-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-
-Advertisement-