Philadelphia — For decades, Philadelphia's investment advisory industry was as prosperous and low-key as the aristocratic families whose quiet money it managed.
Bank trust departments flourished on the fees earned from old-line family accounts. Established advisory firms like Cook & Bieler, founded by two prominent Princeton men, and the original Drexel & Co., respected counselors to the well heeled, also thrived.
Today, the money management field in Philadelphia is as fertile as ever -- or more so. But a lot has changed.
Most of the premier players are different, and the stakes are considerably higher. In fact, the region's hottest money managers cater not to Main Line scions but to institutional investors around the country -- large corporate pension funds and foundations and endowments.
These rising stars, such as Miller, Anderson & Sherrerd and Delaware Investment Advisors, have largely supplanted the First Pennsylvanias and the Drexels, which have been either unable or unwilling to muster the marketing skills, research capacity, and performance numbers needed to attract and retain major institutional money.
''Our success lies not where the old money has always been but where the new money is being created,'' John Durham, president of Delaware's advisory group, points out.
Of course, this trend is hardly unique to Philadelphia. But one of the community's members was among the first managers in the country to take advantage of those trends. When Paul Miller walked out of his post as Drexel president in 1969, with three top associates in tow, and formed Miller, Anderson & Sherrerd, skeptics wondered whether such a venturesome move would work.
It worked, all right. Not only did huge institutions switch chunks of their portfolios to his boutique, but instant celebrity status forced him to set a steep $20 million minimum. The firm's average account is now $60 million. ''We've taken between $500 million and $600 million out of the banks,'' he boasts.
The boutiques springing up in Philadelphia since then have taken away more than trust department money; they've also taken away talent from their once-powerful counterparts. Many of the new management firms, in fact, have been started by former investment officers and bank portfolio managers who have grown disillusioned with the large institutions.
Ever since early 1979, when two money managers left Provident Bank's money management subsidiary to form Cashman Farrell Associates (ironically, Provident has the only highly regarded trust unit among all the Philadelphia banks, some say), investment managers have been exiting from banks at a record clip. And none too soon, apparently.
First Pennsy's commercial side, for example, has been in such disarray that the investment officers have been unable to staunch steady client departures. Seeing the handwriting on the wall, four of the bank's investment men, including the chief, left in 1980 to form Wolff, Webb, Carlisle & Co.
Principal Jerry Wolff says with a shiver: ''Of the $1 billion in assets I brought to the bank, I don't think it has a single account left now.'' And since the exodus of Wolff and associates, the chief investment officer's chair at First Pennsy has had several occupants.
While banks have been slow to retaliate against their aggressive new competitors, some of the once-white-shoe investment counselors in Philadelphia have not, it appears, even felt the need to rise to the challenge.
Yet, there are signs that even the oldest of the old-line Philadelphia investment advisers cannot pass up the lure of larger pension account dollars. Cooke & Bieler, long a haven for entrenched family money, has been moving by degrees into the jumbo institutional market, and, indeed, it will now no longer even accept new individual-account business. While 20 years ago 90 percent of its fees came from private sources, and only 10 percent from institutional sources, today ''the reverse is true,'' says James McClennen, the president.