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11/14/2017 An Inside Look at Rockefeller & Co. - Barron's

[Image Caption] Reuben Jeffery III, Rockefeller Financial's CEO Evan Kafka for Barron's

and their assets intact over several generations and right through the upheavals of history.

Any new clients will be dealing with Rockefeller Financial Services, the trade name of Rockefeller & Co. Some $7 billion of Rockefeller Financial's $35 billion pile are "assets under management"; the rest are assets under advisement or administration. Rockefeller provides its 298 clients either financial, trust, and tax advice, and the like, or service through its portfolio-tracking product for wealthy families, Rockit Solutions.

Rockefeller offers financial products from other firms but still believes in running its own funds in 10 core areas, such as global equities and fixed income. David Harris, Rockefeller's chief investment officer, says large multinationals with their triple-A ratings and mountains of cash need to be viewed as "the new sovereigns" during a period when government finances are deteriorating. The firm claims that its global funds are stars, but it keeps a lid on details. Prodded by Penta, Rockefeller reluctantly produced a "confidential" performance sheet on its 10 core funds but barred us from publishing the results. We can confirm that out of 10 offerings, seven global-equity and small-cap funds have consistently outperformed indexes over long periods of time.

One area of Rockefeller & Co. know-how has been built out of the Rockefeller family's 50-year record of integrating environmental, social, and governance concerns into its portfolio and investment decisions. Last fall, for example, Rockefeller hooked up with the Ocean Foundation, a nonprofit focused on marine conservation, to find "profitable investment opportunities that restore and support the health and sustainability of the world's oceans."

Through such distinctive offerings, Jeffery hopes to reel in new money, both family and institutional. "We're talking to sovereign entities," he says. "They have pools of capital that need to be deployed, and they need to find competent, trustworthy managers in [relevant] areas of investment activity."

Fees for managed assets invested in house funds typically run from 1% (for up to $25 million in assets) to 0.5% (over $50 million). Rockefeller targets families with $30 million; new clients are generally subject to a minimum $100,000 annual fee. Pure investment advice on a $50 million to $100 million portfolio typically costs 40 to 60 basis points, says the firm's president, Austin V. Shapard. Rockefeller has priced its services, he says, for "a fair profit margin, not a crazy one."

Portfolio-tracking service Rockit deftly handles exotics like intrafamily loans and the fluctuating price of ranch cattle. Its 23 clients typically pay 3 to 7 basis points on the $13 billion that runs through the Rockit platform. This, too, is a hidden asset that Jeffery is leveraging into a boutique powerhouse.

E-mail: editors@barrons.com

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