Newport Beach-based Roth Capital Partners LLC has started a money management advisory service as part of its bid to diversify during tough times for investment banks.
Roth Capital won’t be managing money. Instead, the firm plans to help clients find the best money managers for a 1% to 2% fee. Roth also aims to help clients analyze their portfolios and adjust the allocation of their money.
“Our initial target audience is the executives of local companies,” said Gordon McBean, a consultant at Roth Capital. “Those are the guys with whom we have relationships.”
Roth plans to use SEI Investments Management Corp.’s database to find money managers for clients.
SEI, part of Oaks, Pa.-based SEI Corp., also will monitor the performance of money managers for Roth and its clients.
The firm is entering a field that’s grown increasingly crowded.
Not long ago, wealth and money management services were dominated by smaller shops, which offered custom services to a select group of wealthy people.
But with changing demographics and an aging population, almost every financial services firm has gotten into money management.
The move comes as Roth has reorganized to cope with the slowing economy and a soft stock market.
In the past, Roth generated most of its revenue through investment banking deals, which have dwindled in the past year or so.
Industry sources said that earlier this year Roth had sought to buy a local money management firm. Barring that, the pact with SEI offers Roth an easy entry into the business, they said.
To market its money management services, Roth has set up four teams focused on client servicing and relationship building. The firm plans to mainly target clients with a net worth of $1 million to $5 million.
Roth has offered money management services in the past. What’s different now is a concerted push and the partnership with SEI. The partnership and referral service will allow Roth to hold its own with more established money managers, according to McBean.
“If the managers are well established and have good track records, we may even suggest that our clients employ them to manage a portion of their assets,” he said.
Roth Capital is the largest locally-based investment bank. Last year, the firm raised $610 million for 29 companies through private and public offerings. The firm also acted as an adviser in nine mergers and acquisitions. Salt Lake City-based Zions Bancorpoartion owns about a quarter of Roth Capital.
SEI Investments counts $78 billion in assets under management. The firm offers mutual funds and also has ties to some 3,000 money managers.
“SEI provides us access to more of the world’s leading money managers that are normally not accessible to individual investors due to high direct-access minimums,” McBean said.
But why go through a middleman? McBean said Roth is seeking to position itself as an unbiased source for clients.
“We are a manager of money managers,” he said. “Managers are chosen based upon performance and experience.” n
