IN THE NEWS

City Law Firm Jumps Into Asset Management

A local law firm is hoping to cash in on a singular Bostonian tradition.

Mintz, Levin, Cohn, Ferris, Glovsky & Popeo P.C. is trying its hand at asset management. Officials at the firm hope to manage $1 billion through its newly created financial advisory subsidiary within five years.

"With the volatility of both the stock market and the global economy, we are convinced that this is a timely endeavor which will be of great interest to both current and future clients," said Mintz Levin managing partner Irwin Heller in a statement when the financial advisory subsidiary opened.

Law firms represent some of the most venerable players in Boston's powerful, highly competitive asset management arena. Firms like Hale & Dorr and Hemenway & Barnes manage billions of dollars in assets.

Observers say Boston is unique in the number of law firms involved in asset management. Many say the practice took root generations ago, when old-money clients turned to their lawyers for a host of different services, including wealth management.

It's rare today for a law firm to break into this business and compete against the slew of mutual fund companies, investment advisers and law firms working in Boston.

Few, however, find Mintz Levin's move all that surprising.

"It's an attractive business that at this point is going to others," said Hemenway & Barnes' managing partner, Michael Elefante. Hemenway & Barnes manages $2.7 billion in client trust accounts.

Mintz Levin Financial Advisors LLC, the new subsidiary, currently has 300 clients with a total of $300 million in assets most of which is longstanding business that the principals at Mintz Levin Financial Advisors brought with them when the subsidiary opened. Mintz Levin currently has seven financial advisers.

Unlike traditional asset management firms, Mintz Levin Financial Advisors does not directly invest client money. Instead, the firm helps their clients map out investment strategies, studies their current management programs and tells the clients if changes should be made.

"We're managing the money managers," said Robert Glovsky, president of Mintz Levin Financial Advisors. "We're helping clients with their estate planning, retirement, insurance needs and overall asset allocation issues. I would call that comprehensive financial planning.

Michael Puzo, a partner with Hemenway & Barnes, said Mintz Levin's "managing the manager" approach is common with institutional pension fund companies. Many of these companies like delegating the direct investment responsibility to other managers, he said.

"There are plenty of models around the country," he said.

Glovsky is a 20-year veteran of the local financial planning scene. Before joining Mintz Levin he was a principal at Tofias, Fleishman, Shapiro & Co. He is the co-host of "The Money Experts" on WRKO radio, the director of Boston University's financial planning program and was named one of the top planners in the country by Worth magazine.

Peter Riley, an asset manager with Beacon Fiduciary Advisors, said that while Boston's asset management market is competitive, Mintz Levin may be able to carve out a niche for itself.

"There's an awful lot of people out there trying to manage money, but there's also a tremendous amount of wealth, so there may be a market for Mintz Levin," he said. "Basically, everyone in business is looking for ways to increase revenue, and the best way to increase revenue is to have a recurring source of revenue. Money management is a recurring source of revenue."

Hale & Dorr LLP has been involved in money management for more than 70 years. The law firm, one of the largest in Boston, now manages $2.5 billion through a subsidiary company, Haldor Investment Advisors LP.

"Getting into investment services requires a lot of expertise, manpower, time, and financial commitment," said Jeffrey Anthony, Haldor's managing director. "Mintz Levin must feel they can do it."

© Boston Business Journal. November 13, 1998.
Reprinted with permission. All Rights reserved.