Evergreen Investment Management Co. LLC is trying to expand by pulling together its disparate pieces, improving its ability to sell products and moving into more foreign markets.
Parent Wachovia Corp., has been growing in investment services for several years through a number of acquisitions (see related story, page one). In October, Wachovia acquired A.G. Edwards & Sons Inc. to create a retail brokerage firm with $1.1 trillion of client assets, nearly 15,000 financial advisers and offices in most states.
Against this backdrop, Evergreen has acquired Metropolitan West Capital Management LLC in 2006, a minority stake in Golden Capital Management LLC in 2005 and J.L. Kaplan Associates LLC in 2002.
Financial Adviser Army
Now executives at Evergreen say it is letting its investment teams keep using the same strategies they always have, while giving them access to a financial adviser army assembled through the acquisitions and supporting them with shared resources such as research and technology.
And Evergreen is cross-selling those investment teams' services, which range from European Credit Management Ltd.'s securities to Tattersall Advisory Group's own fixed-income asset classes in the United States.
"We don't just go and sell a product list," said Dennis Ferro, Evergreen's president and chief executive. "We try to create solutions for individual clients based on their needs."
Industry experts have raised concerns about how representatives from Wachovia sell Evergreen products along with those of rival companies.
"The fact that Wachovia might have one of the largest retail distribution systems in the country doesn't mean that the Evergreen funds are going to benefit significantly from it, absent superior performance," said Burton Greenwald, president of fund consultancy B.J. Greenwald Associates of Philadelphia.
"When they go outside, they have to deal with the image of being a bank-owned mutual fund."
Evergreen executives tackled that problem by recruiting salespeople to push its mutual funds to other banking companies. During the first quarter, it sold more through the New York brokerage firms Merrill Lynch & Co. Inc. and Smith Barney, a unit of Citigroup Inc., than through Wachovia Securities.
"The fact that we built strong working relationships with a number of other firms is key," said Peter Cieszko, president of Evergreen's global distribution. Wachovia is the second-largest broker in the country, but it is not the only way to get Evergreen's products to clients, he said. "If anything, we'd like to sell more through Wachovia."
A former employee who left Evergreen in recent years said that the fund managers actually had to meet higher standards to get their products distributed through Wachovia's system.
"In my experience," conflict of interest "was not a problem at all," the former staff member said. "In fact, it was more the opposite."
Cieszko and Ferro say they work with colleagues at Wachovia to ensure their confidence in things such as whether Evergreen products deliver consistent results and are staffed with the appropriate levels of research analysts.
"They're not, in any way, shape or form, holding us to a higher standard, but making sure we're held to the same standards" as rivals, Ferro said.
Evergreen has been dealing with some difficulties in recent years in the area of staff retention.
It lost a number of fund managers when it restructured in 2006. Christopher Conkey, its chief investment officer, left in August, and Evergreen has yet to find a successor.
Ferro said Evergreen's turnover in general has stabilized this year, while Cieszko noted the fund complex's retail sales head count has grown around 10% in the past year.
Evergreen is doing more business than ever in foreign markets. In January of last year, it purchased a partial ownership stake in London fixed-income investment manager European Credit Management. That firm has client management offices in Tokyo, Frankfurt, Chicago, Madrid, Lisbon, Singapore, Sydney and Cape Town.
In 2006, Evergreen began using the Wachovia Global Asset Management brand name to sell and distribute investment products outside the United States.
Evergreen's strategy is working "as they diversify through third-party channels," said Darlene DeRemer, a partner at the merchant bank Grail Partners LLC, who has provided Wachovia with support services for its product lineup in the past.
"They're not relying just on the bank, but they're becoming more successful selling" Evergreen products outside Wachovia, DeRemer added.
Last month, Wachovia announced that first-quarter earnings from its wealth management unit rose 10% from a year earlier, to $92 million.
"Today, as we speak about the strategic plan of building something that is of substance and moving in the right direction, we feel good," Ferro said. "The steps we've taken are consistent with our goals."
Sonja Ryst is a freelance writer in New York.
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