Your rich uncle just died, leaving you a sizable sum of money. But you don't know a mutual fund from a hole in the ground.
Where will you turn for financial advice?
You want a firm that has experience and a track record of making money grow. One that has made a name for itself nationally and will provide personal service to help you meet your financial goals.
Which means you will need to call a company in New York, right? Or maybe San Francisco? Certainly somewhere on the East or West coast.
Or maybe not. Take a look around little old Salt Lake City and you might find just what you're after.
Several local investment firms have grabbed national headlines the past few months. And although they may be flying under the radar in Utah, their leaders say these firms' successes prove that money managers can thrive in the Beehive State.
Consider Alta Capital Management in Holladay. The company has been around since 1981, and managing principals Michael Tempest and Eric Barlow, with nine other employees, manage about $600 million.
Barlow said a Wasatch Front location has not stopped Alta and its reputation from growing. Two of Alta's investment strategies recently ranked in the top five in categories tracked by Money Manager Review, competing with hundreds of firms nationwide.
"A lot of firms start out like ours on a local basis, but once they start getting a national reputation like we've been able to do. . . , then your clientele is from all over the country," Barlow said."Once you get good numbers, you can live a lot of places and make firms like ours successful."
Alta Capital isn't alone in finding success along the Wasatch Front.
John Bird, president of Salt Lake-based Albion Financial Group, was listed in the October issue of Worth magazine as one of the nation's "Top 100 Wealth Advisors." He was selected after a year of research by the Worth staff from among hundreds of nominations sent in by readers, as well as executives at private banks, wealth management and investment firms and industry associations.
"As I look at it and as my partner looks at it, it's really nice that a relatively small firm in the Intermountain West gets national recognition," said Bird, who has made the Worth list for three straight years. "It speaks to the quality of service available in Salt Lake City and along the Wasatch Front."
Albion's team of 13 people has about $440 million under management, Bird said. The firm works for about 200 families, with investment minimums at $1 million.
"To me, that seems like a big number, but in the world of wealth management, it's not a big number," he said.
Another Salt Lake company working well with big numbers is Wasatch
Advisors. The Wasatch Micro Cap Fund was named by the Wall Street Journal last month as the top diversified U.S. stock fund, with a 10-year annualized return of 23.5 percent.
Robert Gardiner, director of research for Wasatch and portfolio manager, along with Dan Chace, for the micro cap fund, said more than half of the company's business is through its mutual funds. The rest includes money management for pension plans of large companies and foundations, as well as some high-net-worth people.
"I think the philosophy of the (micro cap) fund is not that different than the philosophy of Wasatch," Gardiner said. "We've really tried to have what we call an enduring investment philosophy. . . . In a nutshell, we're trying to find great companies way before even thinking about their stocks. Our philosophy has been on getting the company right, and then we'll get the stock right."
Wasatch is employee-owned, Gardiner said, and its staff of more than 30 is dedicated to succeeding in Utah."We're a pretty big firm now and have about $10 billion under management," he said. "A disadvantage in the past was it was hard to get companies to come through Salt Lake. Now, with our size and reputation, we can pretty much get any company we want to come here if they're traveling."
Indeed, Alta Capital, Albion and Wasatch Advisors all have found that their reputations mean money is finding them.
Big investors discover money managers because of their returns, Barlow said, and they place money with firms because of their processes.
"You need to have your information on databases so consultants find you," he said, and those consultants will narrow their choices to perhaps 10 possible money managers.
"Then you do a request for proposal that is very lengthy and detailed. Then usually three firms are invited to present to the board. Then you go in and present, and if they like you, they hire you. We've been winning most of them lately, so it's pretty exciting."
Being "found" once may have required clustering with the big boys on the coasts. But advances in technology have made information more readily and widely available, Barlow said, which means Wasatch Front firms can compete.
"We have access to information as quickly as anyone else, no matter where they may be," Barlow said. "And the people we have have connections in all of the key financial centers.
"You're seeing more and more firms moving out of the cities, because as they become more national-driven firms with national reputations, you're flying out to see those firms, anyway."
Gardiner agreed that the global nature of the economy makes a firm's location less important.
"It doesn't really matter where you work," he said. "With technology, we have all of the information at our fingertips. We don't see too many disadvantages to being here."
However, Bird said firms like Albion keep up with what's happening on Wall Street."We make it our business to understand the financial landscape and what products are being created by Wall Street," he said. "Occasionally some good things come out of there. Unfortunately, more often than not it's stuff that's made to be sold, not bought."
Avoiding Wall Street pressures to follow the crowd in pushing such products is one advantage to a Utah location.
Barlow, Bird and Gardiner all described their companies as collaborative. Because they are not surrounded by dozens of peers, they do not feel as much pressure to conform to the "star system" prevalent among some money management firms.
"We're not on Wall Street, so we're not really in a herd mentality here," Gardiner said. "I think that helped us during the dot-com period. One of the things we've taken pride in is going to get to know companies on our own and not relying on Wall Street research."
Another advantage to operating in Utah is that many talented people want to work here, Barlow said.
"We have a lot of investment consultants coming in to visit us from across the country, and one point we make to them is we're able to hire some of the best people here in Utah for a number of reasons," he said. "The people of Utah are well-educated, and many of them go to some of the best schools. Many want to come back (after graduating). We have an opportunity, when we are hiring, to get some very good candidates in."
Bird agreed that the quality of life in Utah is an advantage for his company.
"We're here because we love living in Utah. We think there's a quality of life here, there's a geography here that we appreciate," he said."If we were in one of the bigger communities, like the Bay Area of California, odds are we'd be a much larger firm, because there's a whole lot more money there. But that's OK. The choice we've made is to do a great job for the people in the environment we want to live in."
Bird said the financial services industry in Utah could be poised for growth.
"The message is that if you're a resident of the Wasatch Front or Utah, look locally," he said. "There's a lot of quality locally, and I do think there's growth potential, for a number of reasons.
"One, there's already a solid foundation. And two is the quality of life. We get a lot of resumes coming across our desk of very qualified people who want to be in this area, in the Intermountain area, for quality-of-life reasons. . . . I suspect you're going to see that kind of capability continue to grow along the Wasatch Front."
Growth of the regional economy also could boost local money managers.
"Most people in the financial adviser world want to have somebody fairly close by, within a few hours, anyway," Bird said. "This is just the world we choose to live in. . . . But I certainly think there's potential for growth in the market."Comment on this story
That doesn't mean Alta Capital or Albion will become household names right away. Gardiner said he thinks Wasatch Advisors remains rather anonymous in its own community, despite its success.
"I feel like we're much better-known outside of Utah," Gardiner said. "We would love to see the investment community blossom here."
Barlow believes that can happen."People are getting to know us and our name," he said. "In our business, so much of where new assets come from is through word of mouth and through referrals. . . . We're being recognized now."