Private Money

Southwest Florida, not surprisingly, is home to many private wealth management firms. With its high number of Fortune 500 retirees, visionaries who've made a fortune in development, entrepreneurs, speculators, and risk takers who've cashed in, the region is known as much for its wealthy populace as it is for its beaches and palm-lined boulevards. And, it turns out, private wealth management is not one, but many things-as varied in interest and application as the backgrounds and profiles of the investors themselves.

Been There, Done That

The differences between entrusting your investments and retirement accounts to a private wealth manager, and going with a bank or brokerage firm, are significant. At least that's how Sharon Treiser, senior financial adviser with HBK Financial, an independent money management and accounting firm in Naples, sees it. And she should know. Treiser has worked on both sides of the fence; she was with a large brokerage firm for many years before striking out on her own. She provides plenty of reasons why an investor would-or should-choose to invest with a private money manager.

"We don't have quotas, and we do not sell proprietary products," Treiser says. That means Treiser can invest and divest clients' dollars in any number of funds and other investment vehicles, instead of just one family of funds, like Fidelity or T. Rowe Price. She's not required to sell a certain number of shares in any one stock or mutual fund, and no bean-counting supervisor is standing over her to watch that she makes her monthly goals with clients' money. "We are fee-based, meaning we charge a set percentage based on assets under management," she explains, rather than charging a commission for every transaction, as is the practice of brokerages. "We can access institutional money managers, a variety of mutual funds, stocks, bonds, I-shares . the whole world is at our disposal." That flexibility allows your money manager to pull investments from a fund that is performing poorly and move them to a more attractive spot, and to keep a closer eye on funds that have recently had a management or major investor shake-up.

"We're not married to these funds," Treiser says. "We approach our relationships from the client's point of view; we interview them, learn about their lifestyle, wishes, dreams, risk tolerance, insurance needs, what money means to them. I can't tell you how many times a new client will say, 'No one's asked me this before.'" Plus, she adds, many clients come to them after they've already burned out at a brokerage or a bank. "We don't want everybody, and not everybody wants us. People who come to us have been through the broker mill and they're done with it. They want boutique approach-not a snobby approach-but a hands-on approach."

Nematodes to Turn Revenues

A hands-on approach is certainly what Richard Molloy and Gordon River Capital offer-and then some. Molloy and his partner, Dan Keller, are so involved with the companies in which they invest their clients' money that they often have a seat on the board. The firm specializes in private equity and venture capital investments. Gordon River doesn't sell bonds or mutual funds or insurance. Rather, Molloy and Keller take investors' money-and always some of their own-and buy large stakes in privately held firms or start-up businesses built around a new idea or product-risky investments that can have huge payoffs.

"There are an awful lot of private investors in Naples you never hear about," says Molloy. "They have offices with no names on the doors. They're a mix of younger guys making a living, and other semi-retired business owners who realized they can't play golf seven days a week." Molloy's clients have significant, income-generating portfolios managed elsewhere, but still enjoy doing deals and keeping a hand in the business world. "They're educated investors who don't want to spend the time looking for deals," says Molloy. "Many individuals who invest in these type of deals tend not to seek publicity."

Although there are risks involved with venture capital, Molloy's clients can afford to take them. "Any sensible, wealthy person will allocate in different areas, some in safe investments, and a portion in more risky investments. Our deals are classed as fairly risky-so hopefully they do not represent a large portion of anyone's portfolio-but with potential for high returns."

In a typical venture capital deal, Molloy and his investors provide the start-up funds for a prototype of a product in which there is a prediction of rapid growth once the product is launched. This usually means high-tech or medical companies where a product can have revolutionary impact. Molloy's firm researches the market, performs due diligence and takes a controlling or significant stake in the new company, always at the board or management level.

If it all sounds exciting, mysterious or sexy, well, that depends on your definition. Take, for instance, Molloy's latest venture investment: nematodes. That's right, nematodes. The world's most prolific animal, a nematode is a worm that can range in size from the microscopic to about eight meters long. There are good nematodes and bad nematodes. The bad ones are responsible for $100 billion worth of crop damage per year, but there's a new global ban on the toxic gas used to kill nematodes. Enter Molloy and Gordon River Capital, which have invested in a company that has developed a bacterial solution to nematode control. It's a small company, primarily composed of scientists. Molloy serves as chief operating officer, and he and his associates provide the business skills the scientists need to market their product. The product is set for release in 2005 and Molloy predicts revenues of $125 million by 2010. Suddenly worms are starting to sound a lot sexier.

Size Doesn't Matter

When private investment managers like Sharon Treiser need someone to handle their clients' bond portfolios, they call bond managers like Marty Wasmer of Naples-based Wasmer Schroeder and Company. All Wasmer Schroeder does is bonds. No stocks, no mutual funds, no million-dollar life insurance policies; just bonds. His clients are high-net-worth individuals (those who can afford to invest at least $1 million with Was-mer Schroeder alone), institutional firms and wealth management platforms such as those represented by Treiser.

"We are independent and registered investment advisers," explains Wasmer. "As a boutique or specialty firm, all we do is manage fixed-income, or bond, portfolios-unlike a trust company that will try to do everything." As bond managers-and we're not talking the $25 savings bonds that Grandma used to put in your Christmas stocking-Wasmer buys any fixed- income security, such as Treasury bonds, real estate investment trusts, corporate bonds, convertible bonds, utilities bonds and municipal bonds. All pay a fixed yield to the investor.

Although 40 to 50 percent of Wasmer's clients are from the Gulfshore, including individual investors, financial institutions, health care and higher education, Wasmer Schroeder is by no means a local, small-potatoes firm. In Nelson's rankings of money managers, a national performance report to help investors select fund managers, Wasmer Schroeder consistently ranks among the top 10 in the nation for what they do-meaning that they're competing against the big bond managers of Wall Street and holding their own right here in Naples. "The reason we get hired is because our clients screen money managers all over the country, and we have a good track record for what we do, our specialization is appealing to people, and we charge a flat rate on market value of assets managed," Wasmer says. For the most part, Wasmer's individual clients come from brokerage firms or larger investment houses where they've become disillusioned or unhappy. "They're looking for someone who's smaller, more service oriented, and more performance oriented," he says. In Naples, where the firm has done business since 1987, and where Wasmer has lived since 1980, the firm practically has a corner on the market. "There's no competition for what we do-there are no other independent boutique bonds firms in the area," Wasmer says. From the national perspective, Wasmer's Naples location is no deterrent.