Equilar’s Social Atlas Helps Advisers Lure Wealthy Facebook-Skipping CEOs
Equilar, a provider of executive compensation data, is offering those who manage money a social- networking tool to attract high-net-worth clients.
Financial advisers at 10 nationally ranked brokerage firms have joined Equilar Atlas, which officially goes live today and contains professional profiles of about 250,000 chief executive officers, board members and executive directors at almost 5,000 public companies and 5,000 nonprofits, according to David Chun, CEO and founder of Redwood City, California-based Equilar.
After subscribers load their contacts, the system automatically identifies and populates connections, so users can see who their contacts are connected to and use that as a reference point when reaching out, Chun said in an interview. The database initially is being marketed to brokerage firms, registered investment advisers, universities and nonprofits.
“This extends the social graph to see how you may be connected to a very exclusive network of individuals that frankly aren’t out there on other sources” such as Facebook Inc. and LinkedIn Corp., said Chun, who worked for six years as an investment banker at Donaldson, Lufkin & Jenrette. “We give people a turnkey social network that’s already been built based on public information out there.”
The database of potential clients may be vital as brokers and investment advisers try to attract more assets. Brokers at the largest full-service brokerage firms managed 38 percent of the $13.5 trillion U.S. wealth-management market in 2010, compared with 41 percent in 2007, according to data from research firm Aite Group LLC in Boston. Independent registered investment advisers have gathered an additional 2 percent of the market since 2007, bringing their share to about 11 percent.
Facebook, the world’s largest social-networking service, doesn’t share the number of CEOs at public companies who are users. LinkedIn counts executives from all 2011 Fortune 500 companies as members, said Krista Canfield, a spokeswoman for the Mountain View, California-based professional-networking website.
Unlike Palo Alto, California-based Facebook and LinkedIn, people in the Equilar database don’t sign up to be a part of the network because they’re automatically entered using public filings.
People in the database also don’t have to agree to connect with subscribers and let them view their contacts. To be linked together, executives generally must have served on the same board for at least one year together or been at the executive level at the same firm for at least one year, Chun said.
‘Money in Motion’
Equilar Atlas also contains compensation information, which is derived from filings including proxy statements and Form 4s, so users can see when payouts, such as stock vesting, are scheduled. The cost is $10,000 annually for unlimited access to the database for the first three users and $2,400 for each additional person.
“It gives you money in motion at a point in time when it matters,” said Eric Harrison, a partner overseeing portfolio construction and investment in private vehicles at Los Angeles- based Luminous Capital investment advisory firm, which manages $4.6 billion for about 300 families.
One way Luminous has traditionally tried to acquire new business is by cold calling executives at firms going through mergers and acquisitions, said Harrison, whose firm joined the network in its testing phase about six months ago.
“It allows us to click and see who we know knows and how they know that person, which is a very powerful tool,” Harrison said. The limitation of Equilar Atlas is that it doesn’t include executives at private companies, he said. Luminous doesn’t use Facebook or LinkedIn to connect with prospective clients, said Harrison.
Equilar Atlas has begun adding private companies and is expected to have more than 4,000 by the end of the year, said Chun.
Since people in the wealth-management industry already know who the wealthiest CEOs are, the database may be most helpful in revealing names and compensation for CEOs of smaller public companies that may be below the radar, Chun said.
Firms are more interested in finding worthwhile prospective clients than just reaching the maximum number of prospects, said Chuck Richard, vice president and lead analyst for business-to- business trade publishing and company information at Outsell Inc., a research firm based in Burlingame, California.
That means they may be more interested in a product like Equilar’s database, especially as companies reduce staff and spending on sales and marketing, Richard said. Outsell doesn’t have any shares or investment in Equilar.
WealthEngine, an internet-based wealth identification service, offers nonprofits, financial institutions and luxury goods companies a way to find new clients. The database has 100 million households in it, 16 million of which have a net worth of at least $1 million, said Kimberly O’Donnell Mullins, a spokeswoman for the Bethesda, Maryland-based firm.
The online service, which has more than 3,000 clients and begins at about $3,500 for an annual subscription, started in 2000, O’Donnell Mullins said.
Justin Fulton, a principal and client strategist at Signature, a family office in Norfolk, Virginia, with $2.2 billion in assets under management, said in an interview before the Equilar site went live that his firm traditionally attracts clients from referrals or sponsoring local events where prospective clients may be.
“I don’t ever see a social-networking tool as a replacement for face to face” in attracting high-net-worth clients, Fulton said. “It would purely be a complement.”
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