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MANAGING WEALTH
IN ST. LOUIS
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By Brian R. Hook
Paul Vogel has had a front-row seat to watch the amount of wealth in the St. Louis region accumulate as the president and CEO of Enterprise Trust Co.
 Paul Vogel, president and CEO, Enterprise Trust Co. estimates that there are just over 80,000 households in St. Louis with investable assets over $1 million. |
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The trust division of Enterprise Financial Services Corp., headquartered in Clayton, currently has $1.2 billion under management from around the St. Louis region. Vogel notes that the total amount is up from absolutely nothing when he launched Enterprise Trust in 1998.
“This has all been organic growth over the last seven years,” Vogel says. He estimates that there are just over 80,000 households in the St. Louis region with investable assets over $1 million. He says that a majority of his clients have accounts of $1 million to $10 million.
While there are larger accounts at Enterprise Trust, Vogel describes this range as his firm’s niche. He says a large portion has come from clients who have liquidated their business or real estate holdings. Prior to that, he says most did not have liquid investments over $1 million.
Vogel says that by focusing his efforts on what he describes as non-liquid millionaires—those with their net worth currently tied up in their company or real estate—his firm will grow along with the client’s overall portfolio. When it’s time to sell, he says, “the client has no reason to want to go anywhere else. Then all of a sudden we get bigger and get bigger clients.”
This kind of wealth creation is part of what Paul Gottlieb, associate professor at Rutgers University in New Brunswick, N.J., refers to as “growth without growth” in a study for The Brookings Institution Center on Urban and Metropolitan Policy. He argues that an increase in per-capita income growth across a region, without population growth, is the best proxy for the local policy maker’s true goal—which is to improve the economic welfare of current constituents.
St. Louis was at the top of his “growth without growth” list, with real per-capita income growth of 2.11 percent from 1990 to 1998 and with population growth of only 0.33 percent during the same period. Pittsburgh, Boston and New Orleans followed St. Louis on the list.
“There are many more
millionaires today than
there were ten years ago.”
- Edward Higgins
regional manager of the private client group,
U.S. Bank
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Edward Higgins, regional manager of the private client group of U.S. Bank in St. Louis, part of U.S. Bancorp, has also seen the wealth in St. Louis accumulate over the years. He said that the U.S. Bank private client group has $8 billion in assets under management in St. Louis, which is double the amount when he started ten years ago.
“There are many more millionaires today than there were ten years ago,” Higgins says. He says it is simple demographics, pointing to the Baby Boomer generation that is nearing retirement age. “There is a good decade or more left where we are going to see a significant growth in our business” as the generation continues to accumulate assets for retirement, he says.
Among the St. Louis clients at U.S. Bank, Higgins says there are more people with
$1 million than $10 million. But he says there are some “extraordinarily wealthy clients” with amounts “significantly greater” than
$10 million. He says the private client group manages money for about a dozen families here in St. Louis with more than $100 million.
But Higgins says his main business strategy is not to find clients with more than $100 million in assets. “There is just so few of them,” he says. “You work very hard in your target market,” which he considers to be in the
$3 million to $5 million in assets range.
A study by Gateway to Giving, a coalition of executives from business, philanthropic and nonprofit sectors across the region, estimates that St. Louis households had a total of $426 billion in assets in 2001. The coalition estimates that during the next 55 years,
St. Louis households will transfer $532 billion to their heirs, charity, taxes and estate fees.
David Luckes, president and CEO of the Greater Saint Louis Community Foundation, wants to help manage the charitable dollars. He describes the foundation as a charitable service provider, helping set up funds under its umbrella. “The business that we are in is advocating for civic investment through charitable dollars,” he says.
The foundation has over $95 million in assets, representing over 300 funds. Of those funds, Luckes says about 220 represent an individual person, family or business. The rest are specific funds that have multiple donors. Asset levels managed by the foundation totaled about $62 million in 2002 and jumped to $86 million in 2003. It surpassed $94 million in late 2004. From those assets, $9 million were distributed at the direction of donors last year.
Luckes says that the foundation has a unique partnership with wealth managers across the St. Louis region. “We are in the wealth advisory world on a day-to-day basis, not telling people what they ought to do, but telling wealth advisors with clients that have a charitable interest… here are some of ways to think about it,” Luckes says, referring to investing charitable funds.
Another study by Gateway to Giving, reports that St. Louis households, businesses and foundations gave $2.53 billion to nonprofits in 2002. Of the $2.53 billion donated in 2002, more than 70 percent or $1.78 billion went to local charities. More than 83 percent of households in the St. Louis region gave to charity in 2002, compared to the national average of 70 percent.
Luckes says that the Greater Saint Louis Community Foundation is in a unique position to make charitable investments more efficient and “build confidence of donors to come into the civic arena.” He says that charitable giving is about more than just writing a check. It is about investing in and building a long-term asset like the Missouri Botanical Garden or other area civic institutions, for example.
Luckes says the Garden is not only a critical asset to the region with respect to leisure and education, but he says that the original gift given by Henry Shaw is now also helping the St. Louis region leverage its potential as a biotech center. “That is pretty amazing,” Luckes says.
This Missouri Botanical Garden received $26.9 million in total public support and
revenue in 2004. Of that 21.1 percent
or $5.6 million was from contributions, bequests and memberships. 14.4 percent of the total received or $3.8 million was from investment income.
Patricia Arnold
director of development,
Missouri Botanical Garden |
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The Garden is also wrapping up a campaign to raise $71 million, according to Patricia Arnold, director of development at the Missouri Botanical Garden. “What we try to do is really get to know these constituents so that we can match their interests with the projects that we have going. So it really becomes a dialogue as opposed to single individual gifts,” she says.
“We have a major commitment from our community to reinvest in cultural institutions. Then these institutions are able to grow and become the pride of the city, which is really key.”
Accumulating wealth is also important at the Saint Louis Symphony Orchestra. Randy Adams, president and executive director at the symphony says the endowment at the Symphony was at $18 million four years ago. He says the endowment is now nearing
$115 million and he hopes to eventually reach $150 million. “We’ve come a long way and it says an awful lot about the St. Louis Community, both the wealthy and the average patron,” he says.
Randy Adams
president and executive director,
Saint Louis Symphony Orchestra |
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Adams says that for every dollar the Symphony spends, it gets about 35 cents from earned revenue and ticket sales. It gets another 20 to 25 cents from annual giving and it has close to 8,000 donors. He says the remainder should be coming from the earnings from the endowment. He says that about 80 percent of the money for the endowment came from 50 donors.
“A number of people who gave money to the Symphony really do not attend the Symphony, but they view the symphony as a civic asset that is important to preserve,” Adam says. “The amount of money that the Saint Louis Symphony has raised in the last four years is phenomenal. What it says is the community, if it wants to, can support a great institution.”
Angel Investing | IN ST. LOUIS |
The St. Louis Arch Angels—a group of local investors, established by the RCGA and the NIDUS Center, dedicated to funding early-stage companies across the region—is open for business and looking for a few good entrepreneurs.
 Gilbert Bickel, chairman, St. Louis Arch Angels |
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Gilbert Bickel, senior vice president wealth manager at Morgan Stanley and chairman of St. Louis Arch Angels, says it is not an investment group. Rather, it is a group of individuals that promise to each invest a minimum of $50,000 a year to startups. There are currently 35 members. Bickel says that he would eventually like to see 50 members.
As individuals, the group plans to provide start-ups with capital in the range of $250,000 to $2.5 million, a range that is not generally served by venture capital funds, Bickel says.
The startups are selected after applying at the group’s Web site StLouisArchAngels.com. A committee first reviews the applications and then selects promising St. Louis-based firms to present to the full group. If that goes well, another committee performs due diligence and then the individuals of the group decide whether or not to invest and how much to invest.
Bickel says that since the Arch Angels launched earlier this year, the group has been receiving a steady flow of three to five new companies applying at the site per week. He says that so far about three-quarters of all the companies that have applied are either science or technology orientated. But the group has not limited itself to any particular sector.
“The whole concept here is this is not a charity. It is not a feel-good-about-small-business in St. Louis. It is strictly meant to be that we’re in business to do the best job we can to help these early-stage companies grow into being very good quality companies in St. Louis,” Bickel says.
“The key is how do you best get them from their lab or from their garage to the point where they’re an operating company with employees that pays taxes and hopefully a profitable business, and hopefully it helps the economic prospects of the entire area.” |
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