While many financial advisors continue to seek either the comforts of a mega-firm or the independence of a registered investment advisory firm, Adam Sherman, David Fleisher and their team have found a home in the community banking channel.

For the past 11 years, they have grown a strong book of business from within a community bank, navigated through a merger, become independent and emerged right where they started – selling wealth management services from inside the friendly confines of a small bank.

“Community banks are really a unique environment,” said Sherman, the chief executive officer of Firstrust Financial Resources, a unit of Firstrust Bank in Conshohocken, Pa. “The clientele has a strong, lasting, trusting relationship with the bank. The larger banks are less customer-oriented and more transaction oriented. Community banks have been able to maintain that mom and pop feel.”

In 1999, Sherman and Fleisher worked for Axa Advisors in Philadelphia when the Gramm-Leach-Bliley Act was enacted and allowed commercial banks to offer investment products and services.  Sherman, who has worked in the financial services industry for 25 years, said he saw this as opportunity to develop a wealth management firm with a community bank.

That year, he and his team opened Progress Financial Resources with Progress Bank in Blue Bell, Pa., and over the next four years developed a wealth management unit that offered a suite of investment services, including annuities, mutual funds, stocks, bonds and life insurance. It grew to 25 registered reps with a total of $500 million in assets under management before Fleet Financial Group bought the bank and the wealth manager in 2004.

Later that year, Bank of America Corp. [BAC] bought Fleet and Fleisher, Firstrust’s president, said he and the rest of the executive team knew it had to get out of there because of BofA’s “bureaucratic nature” and the “multiple layers” of employees between clients.

“At BofA there are, or at least there were at the time, separate silos for insurance, asset management, investment management and retail,” Fleisher said. “We worried that our clients would end up being ping ponged around. … We decided to become independent. We knew that we didn’t want to jump in bed with anyone unless we could find the right partner.”

So in 2004, Sherman, Fleisher and Andrew McIlhenny bought the wealth manager from BofA and became an independent firm for two years, but the company's assets actually declined as it languished outside of the confines of a community bank. In 2006, they partnered with Firstrust, a $2.5 billion bank with 25 branches in the Philadelphia market. It opened Firstrust Financial Resources with $450 million in assets under management and despite difficult economic conditions has grown to $600 million as of Dec. 31.

Firstrust Financial Services, which has 17 full-time advisors and six licensed bankers, plans to add six advisors in the next 12 to 18 months and expects to have $1 billion in assets under management within the next two years.

“We are going to look at a lot of different avenues for growth,” Sherman said. “We are going to consider growth through acquisition and by increasing the number of advisors that we have on the street. We are looking for ancillary business lines to acquire and we are looking to see whether we should be manufacturing our own investment advice rather than using just an open architecture approach.”

Sherman said the company is interested in buying a money manager within a 100 mile radius of Philadelphia. He said Firstrust is a well-capitalized, privately-owned bank that can make an acquisition if the right opportunity comes along. “Firstrust is in a position to take advantage of the weaker players that are out there,” he said.

“We feel that 2009 in our industry was the ultimate survival of the fittest and 2010, in our opinion is a time for growth,” Sherman said. “People that have the balance sheets to grow their wealth businesses are the ones that will succeed going forward. We think we are going to be one of the winners. We are on the prowl for the right opportunitites.”

Analysts said it is difficult for most community banks to compete with larger financial services companies because they don’t have the economies of scale to offer a competitive price structure. “It all comes down to the bottom line,” said Geoffrey Bobroff of Bobroff Consulting in East Greenwich, R.I.

Burton Greenwald of BJ Greenwald Associates in Philadelphia said Firstrust is not a big player in the Philadelphia region, but if they can attract top producers they can build asset under management. “They won’t compete with PNC or Mellon, but they can build a tidy business and operate as a strong open architecture wealth manager,” he said.

Over the next three to five years, Firstrust Financial plans to double the size of its revenue and net income, Sherman said, though as a privately-held company it would not disclose how much it generated last year.

“Community banks need wealth management both from an offensive and a defensive posture,” he said. “If a bank like Firstrust is competing with a giant like Bank of America for a client, Bank of America just has a litany of resources to woo that client. A community banks can rely on a strong relationship and better customer service, but they also need the wealth management offering if they want any hope of getting that client.”

Fleisher said Firstrust is in an “excellent position to grow exponentially over the next five years.”