With the Milwaukee area’s wealth management market growing increasingly crowded, Jacobus Wealth Management Inc. is finding a competitive advantage by placing a high priority on managing its clients’ charitable giving.
Helping high net-worth families identify worthy and reputable charitable causes is potentially one of the most important services the Wauwatosa-based company can provide, according to Ken Evason, president and chief executive officer.
Evason believes the region has many high net-worth business executives who are interested in philanthropy, but
have not yet had time to become active in it.
"That’s where some of my own dreams for growing this place are," Evason said. "There are not a lot of families like the Jacobus family out there looking for us to come and take over (the management of) their assets. But there may be executives out there that are looking for this type of service that we could help them with."
Jacobus Wealth Management provides investment advice, tax administration and reporting and educational services, primarily for wealthy families.
The firm was established in 1996 by Richard Jacobus as an extension of his management of his family’s finances.
The independent company does not sell any products. The firm generates revenue from fees it charges clients for its wealth management services, instead of commissions from sales. That distinction keeps Jacobus neutral, allowing it to provide clients with unbiased advice to find the best products in the market, Evason said.
Although Jacobus competes with financial institutions such as Merchants & Manufacturers BanCorp, Northern Trust, PrivateBank, Irwin Union Bank, Ozaukee Bank Business Center, M&I Trust and other businesses that handle high net-worth families and individuals, Evason notes that Jacobus is not a bank.
"From our perspective, our independence makes us a unique advisor, independent of a product," Evason said.
Jacobus recently established a Foundation and Endowment Group specifically to help clients with philanthropic activity.
The new division could experience significant growth, Evason said, because of the increased interest in fund management by high net-worth individuals and an increased interest in giving by those individuals.
"I’ve watched the growth of interest in management and think we’ve got a lot of potential with the family searching for a firm that is independent of a bank, where they would like to see things managed directly, but not lose control of their assets," Evason said.
Jacobus currently has about 30 families as clients, most of whom are based in southeastern Wisconsin.
The clients typically have about $10 million in household assets and between $3 million and $5 million in investable assets.
Evason declined to disclose the firm’s assets under management, but he said those assets have increased by about 75 percent since 2001.
"We grow methodically," he said. "We think we can grow our market share at a measured pace to be a significant player in the financial management marketplace nationally."
Talking about issues such as endowments or foundations and charitable giving is a natural progression of managing a client’s finances, said John Gehlhaart, who recently left M&I Trust to become vice president of wealth advisory at Jacobus, where he oversees many of the company’s Foundation and Endowment Group.
"One of the things you do with clients is find out what their interests are or where their family’s interests are," Gehlhaart said. "In any relationship, you need to know your clients well. When it comes to the point in the discussion when you start talking about a foundation (or other philanthropic organization), you find out what the client enjoys doing. You ask questions like, ‘What would you like to leave for a legacy?’ and get a dialogue going. In many cases, you ask that question, and the floodgates open."
By helping families establish a foundation, trust or other vehicle to manage their charitable giving and by involving every family member, Evason said, the families are able to better manage their donations and teach their children the importance of giving at the same time.
The firm encourages wealthy family members to talk to each other about their priorities for the causes they want to support.
Julie Enloe, senior vice president with Jacobus, said she initially started encouraging clients to establish a foundation for tax purposes, but eventually learned that they can be used for other purposes.
"(For a family) their kids might not be philanthropic," Enloe said. "As part of a massive wealth transfer, they can be used to get their interests involved. It becomes part of the (foundation’s) mission statement as time goes on."
Evason said helping clients set up their own foundations or other organizations to manage their charitable giving can also be a tool for teaching their children the importance of giving something back to the community.
"A lot of my clients are my contemporaries – baby boomers who have established or are running family businesses," Evason said. "And they are increasingly worried about the well-being of their families."
Jacobus executives have expertise in examining nonprofit organizations, and that expertise can help ensure that a client’s dollars are being put to use in the way the donor intends, Evason said.
The company also can serve as a conduit between charitable organizations and wealthy families, Jacobus said.
"When families get discovered (by nonprofit organizations), they get a lot of people hitting on them," Evason said. "It’s a distraction to have (requests) coming through the community."
When a family becomes a client, all requests for donations are sent to the Jacobus office, which are then screened by staff before they are presented to the family during regularly scheduled meetings.
"They are all screened, so the family can stay committed to its mission," Evason said.
April 1, 2005, Small Business Times, Milwaukee, WI
