Boutique investment platform hires former Merrill strategist Tom Sowanick. Last month Clearbrook Financial, a Princeton, N.J.-based third-party investment platform provider, made Tom Sowanick, former head of Merrill Lynch's wealth-management strategy group, CIO for its research arm. Clearbrook, which was founded about 18 months ago, says the move is in keeping with a strategy of establishing itself as an innovative force in wealth management.

It's tough to say who came up with the idea of bringing something approaching institutional-quality asset management to high-end retail investors. Some say it was E.F. Hutton, a long-gone New York-based brokerage whose ghost still flitters through Citigroup's Smith Barney; others point to smaller shops that were doing similar things without bothering to give the process a name.

Whatever its antecedents, by the late 1990s, the product of retail-oriented investment consulting, the separately managed account (SMA), was gaining traction outside the wirehouses that still dominate distribution because third-party investment platform providers like Brinker, Lockwood, FundQuest, Advisorport and Envestnet helped push them into middle-market and smaller brokerages and banks -- mostly in the name of providing comparatively customizable alternatives to pooled investments and a bigger roster of credible investor choices than in-house asset managers could hope to provide.

On its head

Now though ClearBrook is drawing on the approximate business models and technologies of these firms -- sometimes referred to as "turnkey asset-management programs" or TAMPs -- to target small institutions and ultra-high-net-worth families.

Clearbrook's founder and CEO John Morris challenges the notion that these investors already have easy access to institutional money managers. "Family offices and small institutions don't in fact get the same treatment as big institutions," he says. "A family with $50 million can be left wondering if they're really seeing what's out there or merely what's put in front of them." This applies equally to all but the largest endowments, he adds.

Morris, who ran Merrill Lynch's Global Selects consulting platform, put together a team of SMA-industry veterans from a laundry list of companies including UBS, Lockwood, Brinker, SEI, Advisorport's parent PFPC, State Street and Merrill, expressly to build leading-edge and customizable investment platforms to this otherwise "neglected" market segment.

"The TAMPs were innovative 10 years ago," says Morris. "But we've set out to provide all investment solutions on one web-accessible portal with daily performance reporting."

The point here -- as with any outsourcing -- is to "free up the clients' time to allow them to think about ways to improve their actual businesses rather than struggling with middle- and back-office burdens," says Morris. "We handle the whole process including manager agreements, custody, performance measurement and portfolio accounting."

Sans axe

Beyond convenience to the client, Clearbrook brings a new level of transparency to investors, according to Morris. "There are no soft dollars here; no internal agreements," he says. "We're truly product agnostic."

Similarly, Sowanick's role at Clearbrook is to provide un-conflicted and client-appropriate research. "Private clients usually get a watered-down version of institutional research," says Sowanick.

Though Sowanick says he was able to provide research and market commentary purpose-build for private investors while he was at Merrill, it simply wasn't possible to have the impact he wanted to have in a business with over 15,000 intermediaries.

So Sowanick says he jumped at the chance to join Clearbrook and provide research to high-wealth families and institutions. "We have no investment products; we're not out there trying to create [collateralized debt obligations]," he says. "This is advice without an axe."

In addition to providing investment and market research, Sowanick will be available to consult with "family offices and wealth managers that want access to strategist," says Morris. And Sowanick may also work with "larger clients as an outsourced CIO," adds Morris.

Clearbrook administers about $7 billion in assets across about 150 SMA models, 3,000 mutual funds, 100 hedge funds and 300 exchange-traded funds. -FWR

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