John Murphy, Jr. has many talents, but retirement isn’t one of them.
Murphy was chief investment officer of First Asset Management, which became U.S. Bancorp Asset Management; he later was named chairman of U.S. Bank Minnesota, and retired from U.S. Bank in December 2002. That lasted a whole six months. Murphy’s long-time friend Mike Dougherty, chairman and CEO of the Minneapolis-based Dougherty Financial Group, lured Murphy back into the financial world. Together, they started Somerset Asset Management, a Minneapolis-based private wealth management firm for individuals and families who can, over time, place a minimum of $5 million under management.
Somerset’s client list now numbers around 115 individuals and households. Clients tend to be entrepreneurs and current or former C-class executives. Growing largely through referrals, Somerset serves clients in more than 20 states as well as in several other countries, including Germany, the United Kingdom, and France. According to Michael Ott, Somerset’s president and managing partner, the firm’s growth is due primarily to attributes that are distinctive in the asset-management marketplace—a breadth of services along with a team of advisers with notable, big-company résumés that provides close, hands-on service.
“We do everything—cash flow analysis, budget planning, sophisticated tax compliance, business advising for client firms, and estate planning,” says Ott, who joined Somerset after serving as head of equity research at Piper Jaffray Companies in Minneapolis. Somerset Asset Management works with clients’ outside advisors, such as lawyers and accountants, to dovetail the financial and legal sides of estate and tax work. The firm also manages trust investment portfolios as well as charitable funds and endowments. In addition, Somerset can prepare tax returns for its clients, which enables it to advise them on making investments that carry lower tax liabilities.
“Our clients like our active management style—we’re actually touching their assets—as well as our ability to manage taxes as well, looking at both sides of the ledger,” Ott says. “That intimacy seems to be somewhat rare.”
In additional to traditional investments, Somerset offers clients distinctive equity opportunities. “Our investment approach is a hybrid,” Ott says. “We do a lot of fundamental work and pay attention to technical trends in the market.” Somerset clients funded mezzanine debt and equity in Minneapolis’s RiverWest condominium development; the firm also is the only institutional investor in the new W Hotel that will be built in downtown Minneapolis’s Foshay Tower.
A big driver of Somerset’s growth is the rash of new hires who’ve taken their clients with them from their previous firms. Jennifer Arps, Somerset’s vice president and senior advisor, came from the personal financial group in the Minneapolis office of accounting and management firm KPMG. KPMG had a conflict between auditing books for publicly held companies and doing financial planning for executives of the same companies, and decided to keep the auditing business. “People like Jennifer were given the option to leave and take some clients,” Murphy says. Somerset also gained clients when it hired two Merrill Lynch vice presidents who were high–net worth advisers, Thomas Rash and Paula Schad.
Murphy expects Somerset to grow from a current $325 million under management to $500 million by the end of this year. Wealth management, he notes, is a trillion-dollar industry: “We just need a few billion of that trillion or two and we’ll be fine.”
