Frank Ulf, the former chairman of U.S. Trust Co. of California, has formed his own investment firm and brought with him $200 million in assets and six executives who defected from U.S. Trust.
The move comes after a shake-up of senior management at U.S. Trust, the old-line New York money manager that was acquired in 2000 by online broker Charles Schwab Corp. U.S. Trust’s pre-tax profits have fallen 80 percent in the four years since Schwab took over the company.
The new Los Angeles firm, Covington Capital Management, was formed last month by Ulf, 73, who retired from U.S. Trust last year but remained as a consultant through April. A co-founder was Robert Raney, the former chief investment officer of U.S. Trust in Los Angeles, who left the firm in October.
Joining them as managing directors are Gary Arakawa, John DeGroot, Rebecca Dutka and Kim Wilkinson, with Dwight Liu as chief financial officer. All hailed from U.S. Trust.
“What you need in this business is gray hair and investment management experience,” said Ulf, referring to his third shot in as many decades at running his own firm. “We are new in name only.”
The move is part of a larger trend of consolidation after the go-go days of the late 1990s, when many banks and insurers bought up prominent money managers.
Ulf himself arrived at Schwab through a buyout. He started his money management career teaching stock market classes at the Ambassador Hotel for his own firm, American Investment Counseling Co. After a decade, his firm was bought by Boston-based Scudder Stevens & Clark Inc.
His second firm, Summit Management, was acquired by U.S. Trust in 1982, when it had 15 employees and $300 million under management. In the ensuing decade, the Los Angeles division of U.S. Trust grew to six offices on the West Coast with 250 employees and assets of $12 billion. After U.S. Trust was sold to Schwab in 2000, Ulf became chairman of the California unit.
Other wealth management firms that were acquired in recent years include Provident Investment Counsel, a Pasadena-based investment manager that has struggled to perform under the ownership of South African insurer Old Mutual Plc.
The former Scudder Stevens never lived up to the expectations of Swiss insurer Zurich Financial, which sold its merged Zurich Scudder Investments to Deutsche Bank in 2002. A better match has been Paris-based Soci & #233;t & #233; G & #233;n & #233;rale’s 2001 purchase of a controlling interest in TCW Group Inc.
“It’s just a recurring syndrome,” said Raney, of the consolidation trend. “What’s really fun is being master of your own destiny.”
Covington, named after the Pasadena street where Ulf lives, accepts a minimum of $1 million in manageable assets.
Raney said the company is advising clients to be over-weighted about 55 percent in cash, with the remainder split 25 percent in stocks and 20 percent in bonds.
One of Covington Capital’s first clients is Jackie Autry, director and chairman of the Autry National Center of the American West, where Ulf is a board member and trustee.
Kate Berry
