Meet the Ex-Wirehouse Exec Turning the Rockefeller Family Office Into a Wealth Management Firm

Q&A February 23, 2021 at 02:53 PM

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A boutique firm may seem an unlikely venture for Gregory Fleming to helm. After all, he spent virtually his whole career at two wirehouses — Morgan Stanley and Merrill Lynch, where he topped out as president of wealth and asset management, and president, respectively.

But a smaller enterprise with an entrepreneurial mindset is exactly what Fleming, 57, is now running. The investment banker — who helped Bank of America buy Merrill's business and helped former Yankee Derek Jeter in the consortium acquisition of the Miami Marlins — is relishing the job of recasting the Rockefeller family office into a wealth management firm, as he tells ThinkAdvisor in an interview.

Offering an array of products and services for high-net-worth and ultra-high net worth clients, Rockefeller Capital Management has the welcome mat out for elite advisors nationwide. But Fleming is picky: Dovetailing with the firm's culture is of paramount importance, he stresses.

In 2018, Fleming, who spent six years at Morgan Stanley and 17 years at Merrill, formed Rockefeller Capital Management out of Rockefeller & Co., the former family office of the Rockefeller family, to help wealthy and super-wealthy clients with complex financial and investing needs.

The firm, of which Fleming is CEO, is owned by a Viking Global Investors private fund — Viking is the majority stakeholder — a trust representing the Rockefeller family, and RCM management.

Based at — no surprise — 45 Rockefeller Plaza in New York City, RCM is made up of three units: the Rockefeller Global Family Office, Rockefeller Asset Management and Strategic Advisory.

The firm was formed from the family office originated by John D. Rockefeller, founder of Standard Oil. The philanthropic Rockefellers funded Spelman College, the University of Chicago and the Museum of Modern Art, among many other renowned institutions.

As for the advisory firm with the iconic name and distinguished legacy, it is reportedly offering handsome signing bonuses to top-notch FAs. All Fleming has to say about that in the interview is: "We offer competitive packages, but we're not trying to win on the package. If the decision comes down to financial consideration, advisors should go to other firms."

He then discusses the ideal advisor for RCM's multi-family office and private wealth management businesses, and the firm's expansion strategy across the U.S.

As of January 2021, it has 19 offices in 14 states, including advisors in Atlanta; Boca Raton, Florida; Dallas; Greenwich, Connecticut; Los Angeles; and San Francisco. The Rockefeller Family Office operated in New York; Boston; Washington, D.C.; and Wilmington, Delaware, prior to RCM's founding.

First to onboard as an employee firm, in 2018, was The Bapis Group — renamed Vios Advisors — a nine-person team that left Hightower Advisors.

RCM's second family office acquisition — following that of Financial Clarity, based in Mountain View, California — is Whitnell & Co., a $1.4 billion wealth management and multi-family office services firm. It was a subsidiary of Associated Banc-Corp. until last month, when its sale to RCM was announced. In the interview, Fleming discusses what chiefly attracted him.

RCM's asset management arm is largely focused on ESG investing, particularly ESG "improvers," which companies have "a greater potential for generating uncorrelated alpha" versus ESG "leaders," as Fleming explains in the interview. The Rockefellers were pioneers in impact investing.

ThinkAdvisor recently interviewed Fleming, speaking from his office at home.

Amid the pandemic, RCM's well-off clients were "taking stock of their lives" and diving into comprehensive financial planning, including consideration of new investment opportunities, he said. And some were "stepping up their philanthropic efforts to help people hit hard" by the COVID-19 catastrophe. He also put in a word about plans to "upgrade" the Miami Marlins.

Here are excerpts from our interview:

THINKADVISOR: The culture of Rockefeller Capital Management is very different from that of Merrill Lynch or Morgan Stanley, the two wirehouses where you worked for 23 years. Please contrast the culture at those with that of Rockefeller Capital.

GREGORY FLEMING: [ML and MS] are large organizations with a multitude of businesses, so it becomes harder to be nimble and have the ability to deliver tailored solutions to clients.

We're a boutique firm with a very focused business model. Our culture is entrepreneurial. For example, when a client comes to us with a unique problem, we try to figure out how to solve it. The mindset is everywhere in our culture — trying to solve the problem and being able to meet the client's needs.

Why did you think RCM was right for you personally?

When I left Morgan Stanley, I had a vison of how I thought wealth management for high-net-worth and ultra-high-net-worth clients could be put together to take care of the full range of their needs.

The Rockefeller name is iconic, and the family is an integral part of what we're doing here. So I thought, with that name and this unique business model, we could attract best-in-class people who want to help build something special — something different in what is certainly a crowded market.

How challenging is it to build a broker-dealer when hiring both private wealth advisors and investment advisors, as you are?

The Private Wealth business is core to what we're doing. The brokerage model has increasingly evolved into an advisory model for the clients that we're focused on. So I don't think of it as a challenge; rather, it's an opportunity to serve them in ways that are tailored to their specific needs.

We have a unique model that brings family office services across our entire platform, enabling all clients to access things like tax preparation, bill pay, trustee services, philanthropy advisory, and financial multi-generational education and planning services.

When you launched RCM in 2018, your goal was to have under management $100 billion in client assets within five years. How are you doing?

As of 12/31/20, we had over $72 billion. We're pleased with our progress.

Broadly, just how much progress have you made in general?

We think we're carving a place for ourselves in the crowded market. We're making good progress but feel humble about what's stilI in front of us.

Amid the pandemic, billionaire wealth in the U.S. rose nearly 10% from March 18 to April 10, 2020, according to an Institute for Policy Studies report. That was due in large part to the booming stock market. So has the pandemic just meant business as usual for your high-net-worth and ultra-high-net-worth clients?

No. They're taking stock of their lives, their families, their future. They've found themselves with more time to do in-depth, comprehensive financial planning.

Our private wealth team has been in in-depth dialogue with them on a broader basis about, for instance, new investment opportunities, reviewing estate plans, trust documents, creating strategies around the future of closely held family businesses.

And while many are seeing incremental wealth creation through a robust set of financial markets, a lot have stepped up their philanthropic efforts to help people hit hard by the pandemic.

Please describe the ideal financial advisor for your firm.

We look for seasoned advisors that have a history of success in growing their practice, a strong track record of client retention, a clean compliance and regulatory background, and the type of experience and clients that would allow them to fully utilize what we're building.

Please elaborate on that last criterion.

We want to know that their clients have the sort of financial complexity that would benefit from an integrated family office and private wealth solution. And, importantly, we look for people who will fit into our culture, which is collegial and collaborative. If you don't want to be collegial and collaborative, this isn't the place for you.

Are you seeking teams versus solo FAs?

Mostly teams, because the elite advisors we're looking for are working with clients that have the magnitude of wealth and needs not just on the investment side, but for generational planning, tax advice, bill pay [among numerous other services].

And, because we have a strategic advisory business, we can provide advice on a client- or family-owned business. That package of needs and requirements is typically met by a team.

You're reportedly offering large signing bonuses. Is that right?

We're competitive in financial packages. But if the decision comes down to financial considerations, advisors should go to other firms — and they do. We're interested exclusively in premier advisors who share our view that the Rockefeller model is a superior one in which they can better serve their clients.

Are you offering very generous signing bonuses?

We offer competitive packages, but we're not trying to win on the package. Advisors come here because they can better serve their clients with a broader and deeper set of products and services.

If someone is looking just for the financial package, this isn't that place. We want the elite teams that understand why they can succeed better for their clients here. If they don't see that or if they're not a good fit for it, they should go somewhere else.

You are about to close a deal acquiring Whitnell & Co. — a $1.4 billion wealth management and multi-family office services firm — as a division of the Rockefeller Family Office. Whitnell had been a subsidiary of Associated Banc-Corp. Did you approach them, or did they come to you?

They approached us. One of their senior executives is someone that worked with me in the past. I've built a big network over the years. Associated [phoned and said], "We're thinking of doing something with our high-net-worth wealth management arm, and we think you'd be a good fit."

What attraction did the firm hold for you?

Whenever we look to partner or acquire, the first thing we look for is a cultural fit. Whitnell had that unique combination of deep roots in the local market and experienced advisors.

We saw tremendous similarities in our respective stories: Our firm was [originally] created to serve the needs of the Rockefeller family; Whitnell originated as a single-family office for the Kelly family. The most important part is that we're very much aligned in our view of the strategic opportunities for family offices. This made it a good fit.

Any other reason why Whitnell, based in the Chicago suburb of Oak Brook, Illinois, was right for you?

[The Midwest] was a part of the country that we weren't in yet. So it was natural for us to enter. But that wasn't what led this. It was that Whitnell comes from similar roots and has a similar approach to family office services and wealth management.

Where else in the country do you want to expand your footprint?

Our proxy for [location] is the combination of top-tier financial advisors and high-net-worth and ultra-high-net-worth clients in a particular place who are looking for [top-level] advice. We follow those pockets of wealth around the country.

Do you see an inorganic growth strategy as a trend that will carry on?

It's been around for a while — advisors leaving wirehouses to set up their own RIAs [or join other RIAs]. I see no reason why that won't continue into the foreseeable future as advisors keep looking for better ways to serve their clients. This is particularly true for the most experienced elite advisors who are serving clients with complex needs — the advisors we're targeting.

There are three big components to your firm: Global Family Office, Rockefeller Asset Management and Strategic Advisory. That seems like a huge undertaking.

It is. But we don't think the model currently exists [in the industry], and we're focused on building it in a way that we're uniquely competitively advantaged. We want the Rockefeller name to be honored by what we build. The Rockefeller philanthropy helped create a lot of the brand resonance today.

I note that two products you launched this year, the Bloomberg Rockefeller U.S. All Cap Multi-Factor ESG Improvers Index and the Rockefeller Climate Solutions Fund, address ESG. Is that the main focus of your asset management business?

In great part, but not exclusively. A big part of the reason that we have a robust focus on the ESG space is because the Rockefeller family were pioneers in that area and have been focused on it for decades. In fact, the phrase "impact investing" was coined by one of our sister organizations, the Rockefeller Foundation, in 2007. The family has been very philanthropic [with] and focused on sustainable investing.

To what do you attribute ESG's expanding popularity?

It's an area that's experiencing significant growth among clients, particularly in Europe but increasingly in the U.S., too, [especially] with millennials and Generation Z, who care about climate change and a lot of other issues that are part of the ESG landscape.

Regarding your "… ESG Improvers Index," what's the difference between an ESG leader and an ESG improver?

An improver is a firm that's showing the greatest improvement in their ESG footprint. A leader is already performing well among ESG benchmarks. We think that investors will increasingly differentiate between leaders and improvers.

The market today overemphasizes ESG leaders, while undervaluing improvers. But improvers offer a greater potential for generating uncorrelated alpha — excess return — over the long term. So we're focused on improvers in a lot of our investing.

You represented former New York Yankees shortstop Derek Jeter in his 2017 consortium acquisition of the Miami Marlins. Do you personally own a piece of the team?

I'm part of the ownership of the Marlins. The group is led by Bruce Sherman [chairman] and Derek Jeter, who is the CEO.

What was hardest about putting the deal together?

Ensuring that we represented a group of owners that could function in a collegial, collaborative way in upgrading the franchise and in trying to create excellence. Ownership needed to be like-minded in terms of what we're going to do and how we're going to turn the Miami Marlins into a first-class organization — investing in the farm system, in younger players, building the team from the ground up and making sure we have a great culture. So putting a group together that was aligned in that vision was the biggest challenge.

(Pictured: Gregory Fleming, CEO of Rockefeller Capital Management.)

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