MIAMI _ In 2004, Coral Gables Trust Company was founded by a small group of Miami-area investors who put up $3 million in initial capital and started out with a handful of clients, mostly shareholders.
Despite competing against much larger trust companies and financial institutions like Northern Trust, JP Morgan Chase and Bank of America, the small firm was able to grow successfully over the years. Today, it manages about $1.1 billion in assets for hundreds of clients, most of them from South Florida.
"We saw that a lot of people in the Miami area _ smaller investors with around $2 million _ were getting less attention from the big guys," said James Davidson, who co-founded the trust company with Dean Klevan.
Large financial institutions give close personal attention to major investors with $10-$20 million and upwards, he said, but small- and mid-sized clients typically did not have access to personal service or customized investment plans. When small investors called, no one wanted to bother with them, or they were offered in-house products (proprietary investment options) based on commissions.
"We recognized the need, especially among families and friends, did our research and took advantage of an opportunity," Davidson said.
A trust company, which may operate independently, as CGTC does, or as part of a commercial bank, acts as an agent, trustee or fiduciary for clients, who may include individuals, companies, charitable institutions, estates and other entities. The company, chartered and regulated by the state, does not own any assets it manages. CGTC does not have a lobby or tellers, and investors meet directly with the company's financial advisors in their offices.
"With large financial institutions, their primary source of business is something other than trust and wealth management, generally lending and checking accounts with retail and teller operations," said John Harris, chief wealth advisor.
CGTC, a full-service trust, estate and wealth management firm, provides fee-based services for managing assets _ stocks, bonds, property, etc. _ and does not sell proprietary financial products that other institutions offer on a commission basis, often with fees attached.
Most important, it offers personal, boutique investment services, stressing preservation of capital, investment safety and long-term asset growth, as opposed to risky strategies like trying to time the stock market and shooting for the high short-term returns. Its staff is made up of highly experienced financial professionals.
How did this small institution grow? CGTC, which now has clients with assets ranging from about $500,000 to $50 million, expanded through recommendations and referrals.
Since the company's shareholders were clients and local residents, management decided to advance an aggressive word-of-mouth strategy, using shareholders to tell other local investors about the benefits of a small trust operation that paid personal attention to every client and provided long-term growth as opposed to flash-in-the-pan investment tactics.
These in-house "salespeople," along with company employees, offered presentations on investment strategies and met with potential clients at social gatherings and charitable events.
