Family Office

EXCLUSIVE: Thomas Carroll On His First Few Months At The Helm Of GenSpring

Harriet Davies Editor - Family Wealth Report 27 March 2013

EXCLUSIVE: Thomas Carroll On His First Few Months At The Helm Of GenSpring

GenSpring Family Offices is in some ways a poster child for the multi-family office industry: it grew assets under management very quickly for many years but has recently had to tackle problems that come with this increasing scale.

GenSpring Family Offices is in some ways a poster child for the multi-family office industry: it grew assets under management very quickly for many years but has recently had to tackle problems, such as the allocation of capital, that come with this increasing scale.

Last October, Maria Lagomasino, then-chief executive, left the firm after seven years there. She was succeeded by Thomas Carroll, an executive from GenSpring’s parent firm SunTrust, in a move that raised eyebrows as to what that signaled for the firm’s direction.

Some reports suggested a “takeover” by the bank, which, as Carroll points out, is an inaccurate portrayal of the historical relationship between the two firms.

“What I think is a little bit ironic here is that SunTrust has never had less than 65 per cent ownership, and well before I was CEO was 100 per cent owner, and has done everything possible to support GenSpring’s growth,” says Carroll.

“And as I sit here today [SunTrust] is fully supportive of the open architecture and advice driven model,” he adds.

“We went through a leadership change but not a change in direction when it comes to the way we serve families,” says Carroll. 

Carroll’s background

Carroll came to the CEO role after leading SunTrust's sports and entertainment group. He has spent 16 years at SunTrust in various positions within the firm's private wealth management business, including serving as wealth services manager in Atlanta.

“I actually worked very closely with GenSpring back in the early 2000s - back then it was called AMA, but SunTrust and AMA had a really strong relationship,” he explains. “As an advisor I referred a number of my families who I served on the private wealth side of our business to GenSpring. So I had a great respect and admiration for what GenSpring did as a firm and the way that they served their families.

“Last fall our CEO, Bill Rogers, along with some other executives in the firm asked me to take on the role of CEO of GenSpring. I was particularly pleased that Bill Rogers and I took some time before I took the role, because Bill was the executive over wealth and investment management in 2000 when SunTrust purchased a stake in AMA. And so he worked very closely with our founder Hap Perry,” he says. 

What is changing

Despite this background and respect for GenSpring’s model, there will of course be some changes at the multi-family office. That is, after all, what a new CEO generally implies. And there are various prongs to the approach Carroll is taking. Firstly, there has been some consolidation.

“I’ve had to evaluate whether the way that the firm has allocated the capital is appropriate and it’s led to decisions around some offices,” he says.

The Phoenix, AZ, location was closed at the start of the year with West Coast operations consolidated into the Costa Mesa branch under Pat Soldano. The Denver office was also closed.

Meanwhile, the international business has been divested to its original owner. The business was created when GenSpring bought TBK Investments, a multi-family office founded by Santiago Ulloa and which focused on Latin American and Southern European clients, in 2000. The business had nearly $1.5 billion in assets under advisement when it was acquired in 2000.

Along with these changes some senior staff have left the firm.

The firm will also be strengthening the relationship with SunTrust, which Carroll says got a little “off track” over the years.

“Part of my goal is to reenergize that relationship with SunTrust. It’s a best of both worlds situation in that GenSpring is going to be maintained independently; it’s a separate legal entity; it’s a registered investment advisor held to the fiduciary standard, yet it benefits from many of the resources of having ownership by a large bank,” he says. 

“Think about having human resources, employee benefits, and finance - that corporate infrastructure that SunTrust has really helps GenSpring. And it allows me and my team to really focus our leadership more on strategic thinking and client-facing activities,” he adds.

One of the casualties of the financial crisis was the idea of large corporate ownership of wealth management departments – because of the idea that clients lost out to product pushing to benefit investment banking, for example. But perhaps this is a case of tarring everyone with the same brush.

SunTrust has shown itself as an early appreciator of the benefits of having a high-end RIA in its book of business – something which is increasingly sought after by the banking industry – and of keeping this relatively separate from the bank. And while GenSpring is aiming to capitalize more on SunTrust’s infrastructure, this independence will remain, Carroll says.

What’s not changing

“In terms of the client experience, we haven’t changed our service model, we haven’t changed the way our advisors engage and interact with our families,” he says.

There was no material impact to GenSpring’s client-to-advisor ratio based on the Denver and Phoenix family office closings, the firm said. It does not currently have a target internally for this measure.

“We need to focus on getting better as a firm and not necessarily bigger, and as we get better as a firm we will get bigger organically,” said Carroll.

There’s also no move towards the sports and entertainment segment, as has been suggested. “By no means is GenSpring going to be a sports and entertainment RIA going forward,” says Carroll. He says the level of wealth GenSpring serves makes this sort of narrow segmentation an inappropriate strategy for the firm.

“I no longer run the sports and entertainment business. There’s a new head of that business who was hired on January first,” says Carroll.

Jeff Dunn has taken over Carroll’s previous role at the sports and entertainments business.

However, Carroll adds: “There were I think some good synergies about how that business was structured and run and what I’m trying to accomplish at GenSpring, in that the sports and entertainment business was a national business much like GenSpring; it was a separately contained business operating inside of a larger financial services company; and it was allowed to run very entrepreneurially and was ultimately very successful.”

The first 60 days

Communicating that message to staff, clients and the industry kept Carroll on his toes in the first 60 says in the job. He said he was aware of the dangers posed by this sort of transition in a business where front-line staff are important, and where advisor attrition can be damaging.

“I started on October fifth and I’ve been on a plane every week since I’ve started. Although I’m based in Atlanta I can’t say I’ve spent a lot of time in Atlanta over these six months,” he says.

“It was very important that the first 60+ days that I was in every one of our family offices, meeting every one on our team and making sure they knew who I was, that I was committed to the value proposition that many of them signed up for.”

He then went on a roadshow to meet GenSpring’s families, visiting 10 cities in six weeks. He was accompanied by the firm’s chief investment officer, chief investment strategist, chief advisory officer and one other panelist who focused on non-financial issues families of wealth face. He met with 300 clients and prospective clients in that time.

“And really the point of that was to make sure that the client base knew that, although there was a change in leadership, the reason that they signed up to be a client of GenSpring was still relevant today with the new leadership,” he said.

“The next thing is to make sure the industry knows that the demise of GenSpring is greatly exaggerated,” says Carroll. “It’s a very strong firm with very strong professionals and a great client base. We are still recognized in the industry as a tough competitor.”

Indeed, GenSpring was just ranked the number one competitor by firms within the multi-family office industry in The Family Wealth Alliance’s latest study of it, in which the Chicago-based organization asked participants to list their top three competitors.

A “wait and see” approach

When a new leader takes over, it will inevitably take some time for their new form of leadership and ideas to take hold, and for this to bear fruit. Carroll knows he has taken on a big brand within the MFO business and that the proof of where he takes this “will be in the execution.”

“I think that there’s a little bit of a wait-and-see approach and I’m okay with that, because I know that we’re going to be able to execute and prove to our staff and clients, and the industry, that we can have large corporate ownership and deliver boutique advice service in a family office model,” Carroll tells Family Wealth Report.

What’s more, he says that “SunTrust is still committed to providing the capital for long-term growth and sustainability.”

“I think that our growth is going to be organic, it’s not necessarily going to be through acquisition in the short term, but it’s going to be through targeted, surgical hires external to SunTrust in markets that we believe there to be growth opportunities,” says Carroll.  

“Right now we’re looking at Southern California and making some additional investments in the Southern California marketplace. We’re going to look at the Northeast as well in 2013 and look at making some additional hires there. And I think we’re incredibly well positioned in the mid-Atlantic, the Southeast and Florida,” he adds.

Meanwhile, an industry in which many firms grapple with challenges over how to set and charge fees, how to evaluate cost-to-serve, and how to deliver scale, will no doubt watch his progress with much interest. 

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