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Building Trust
finance by Mark Gordon | Managing Editor
A Venice-based family trust is receiving a big payoff by sticking to its independence.
Kelly Caldwell was in a constant rush through college, finishing the grueling five-year electrical engineering program at Georgia Tech in four years, while also competing on the school's swim team.
Law school was going to be his next rush. But back home in Venice after graduation in 1988, he wrote his dad a letter. Caldwell asked Roland Caldwell, who at the time was running Venice-based money management and investment firm Caldwell & Co., exactly "what it is that you do do."
Roland Caldwell told Kelly Caldwell about the highs and lows of managing other people's money, which was really a window into all aspects of person's life. But the key to running the business successfully, the elder Caldwell told his son, was independence.
Managing money, planning estates and overseeing wills, no matter how many zeros in the account, was just the details. Not selling out to a bank or another investment company, though, was the only way to continuously build up trust in the community - a lesson Roland Caldwell learned firsthand in the first part of his banking and finance career, where he worked for several banks in several locations, including Muncie, Ind., the Bahamas and eventually Sarasota.
The younger Caldwell gave the family business a try and he liked it so much he passed up law school. By 1993, the Caldwells opened a new firm with a primary focus on family trusts.
Nearly 15 years later, Caldwell, 40, is now president of that firm, Caldwell Trust Co., which has a headquarters in Venice and offices in Punta Gorda and Sarasota. Roland Caldwell is no longer actively involved in the firm.
And now, the company's will to stay independent through growth could be poised for its most significant test: Caldwell Trust is going through one of its biggest growth spurts. Its assets have grown at least 10% a year since 2003 and it passed $400 million in April.
Plus, Caldwell is accelerating its rate of breaking $100 million thresholds. It took the company seven years, for example, to go from $200 million in assets to $300 million, while it took just under two years to make the next jump.
The firm, one of only about six pure independent trust companies in Florida that are completely unaffiliated with any other bank, as well as one of the largest family trusts on the Gulf Coast, is growing its stature, too. It recently named prominent Sarasota-area banker Tramm Hudson, who has also served as president of the Sarasota County Republican Party three times, to its seven-person board of directors.
Kelly Caldwell predicts the asset growth will continue, too. His short-term goal isn't even $500 million. "That's too small," says Caldwell, "We want to double our assets."
He's just as adamant about not selling out to any bank or other institution that might come calling. "There's no incentive for us to do that," Caldwell says. "If we do that, we lose one of the features that makes us successful."
Picking potatoes
Outside of being independent, both in terms of ownership and where it puts its clients' money, another key feature of the firm, Kelly Caldwell says, is that it has a singular focus: The company's only product is that of being a fiduciary.
Next, the company and its 14 employees take on several different roles. The biggest is as a traditional family trust money manager and trustee, allocating assets into stocks, bonds and other investments. And as the accounts get bigger - some are in the $40-$50 million range - the company basically becomes an office manager/chief financial officer for the family.
Recently, Caldwell Trust added a third component, by starting a division that serves as a trustee for business putting together retirement plans for employees.
That segment represents only 2% or 3% of company revenues so far, Kelly Caldwell says, but he hopes to grow that over the next few years. The company recently hired a specialist in administering retirement plans just to handle that part of the business.
While looking for ways to improve those business lines, Kelly Caldwell has reached into his past, where he's finally able to use his hard-earned engineering degree.
He's created a few proprietary computer programs the firm now uses, both internally to keep costs low and externally, for customers to have Internet access to records.
And on the overall aspect of managing money, Caldwell Trust is similar to other financial firms, following a risk-reward strategy catered individually to each client. "Managing money isn't about performance," Kelly Caldwell says. "It's about risk-adjusted performance."
Risks and rewards were far from Roland Caldwell's mind as a young child growing up near Cleveland. Back then, just after the depression, he picked potatoes for seven cents a bushel.
As he grew up and grew into a career in banking, Roland Caldwell decided he wanted to work on his own in the industry. His first foray was Caldwell & Co., where he managed trusts and provided advice for other banks, such as First National Bank in Venice, Englewood Bank & Trust and Port Charlotte Bank & Trust.
Those banks were ultimately sold to other banks, and much like his working-for-others banking career, Roland Caldwell was left with the task of starting over.
This time, along with his son, he formed his own trust business. Says Kelly Caldwell: "We basically woke up every morning trying to figure out how to run a trust company."
'A great business'
The Caldwells found out quickly that to grow a firm, they needed to have both talented money managers who also had independence-first thoughts about the industry. Finding, hiring and then retaining those people has remained Kelly Caldwell's biggest challenge.
"It's hard to find someone that understands how much we are involved with our clients and then have them commit to that," he says.
By circumstance, one avenue of recruiting has been a happy accident. For example, John Tufaro, who was brought in earlier this year to run the retirement plans division, came to Caldwell after a 40-year banking career in New York and Atlanta, initially just to check out the firm, not for job. He did some consultant work for a few months before starting full time.
And Caldwell's vice president for the past 10 years, Lee Thacker, initially joined the firm as a client, not an employee. Thacker, now a well-known philanthropist in Greater Sarasota, literally strolled into the Caldwell Trust office one day soon after moving to Venice from North Carolina, where he had worked in commercial banking for Wachovia.
"I had no intention of coming to work here," says Thacker, "but I got to know the Caldwell philosophy, and it was a hit."
Both Thacker and Jan Miller, who runs the firm's Sarasota office, say the firm's fiercely guarded independence is a key reason they are there, and staying there. Miller says the independence of not having to sell a certain fund or answer to several supervisory layers breeds flexibility. "I even have the ability to negotiate a fee for a client," says Miller.
Kelly Caldwell says one area the firm is not likely to grow in, at least in the short term, is in new offices. Opening a branch in Naples, for example, which is home to many potential clients in terms of age and finances, is not on the horizon.
The firm does little advertising, as well, relying mostly on word-of-mouth praise to sell itself. It has high customer retention rates, Kelly Caldwell says, as many times the firm is brought in to manage portfolios through various family generations. Clients are mostly from the Sarasota area, although some are from as far away as Hawaii.
"When we get a client we don't lose them," Caldwell says. "It's a great business."
BY THE NUMBERS
Caldwell Trust Co.
Year Assets %Growth
2003 $279 million
2004 $309 million 10%
2005 $341.9 million 10%
2006 $388.7 million 12%
2007 $435.3 million 10%
(through September)
Source: Caldwell Trust Co.
REVIEW SUMMARY
Business: Caldwell Trust Co., Venice
Industry: Finance, Investing
Key: Maintain a strong growth rate in assets while retaining independence.
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