They own what may be the most powerful brand name for wealth in U.S. history. Now, for the first time, the Rockefeller family is eager to exploit it.
After several years of confusion over direction and turnover at the top, Rockefeller & Co., the money-management office that serves 178 family members, is intent on making itself a more profitable business. And that means bringing in more money from the non-Rockefeller megarich, who now account for about half of the $5.5 billion under Rockefeller management.
So, like an upstart Internet firm or a trendy retailer, the Rockefellers have rolled out their own Web site. There is also a stylized new branding icon for the business. And most striking of all, the family is even considering attaching its name to its own mutual-fund product.
"We're trying to move toward a brand-name image," says Rockefeller & Co.'s chief executive officer, William Asmundson, who worked for Europe's Rothschild family before joining the Rockefellers in 1984. "Our perception is that we haven't taken advantage of it. I think we should double our assets to $10 billion in three to five years. It's pretty ambitious. But it's absolutely essential."
The Rockefeller family shares a worrisome issue faced over the years by numerous other wealthy families. Its fortune is being spread among a widening pool of family members, a group expected to grow to 400 from 178 within 25 to 30 years, says Asmundson. Managing the finances of so many people is costly.
Playing to its perceived strengths, Rockefeller & Co. in November invited about 60 client families and prospective clients to a "Next Generation Conference." It was held at Pocantico, the fabled Tarrytown, N.Y., family compound built by the John D. Rockefeller Sr., founder in 1870 of the Standard Oil Co. octopus of companies, which produced historic riches for his family and led to today's antitrust laws.
Settling into the cavernous, rustic living room of "the Playhouse," a Tudor-style manor with a bowling alley, swimming pool, squash courts and ice-cream parlor that the family patriarch built for his sons, attendees heard Rockefeller family members and experts opine on topics such as "Raising Kids in Abundance," "Philanthropy with a Passion" and "How to Change Your Parents."
This is all a big change for the hidebound institution, originally formed in 1882 as John D. Rockefeller Sr.'s family office. Rockefeller & Co. has begun allocating money to 11 outside hedge funds specializing in "absolute return" strategies not offered in-house, and is looking for ways to broaden its venture-capital offerings beyond Venrock Associates, a successful venture affiliate currently closed to new investors. It has agreed to act as outside manager of a new so-called socially responsible mutual fund run by Credential Group of Vancouver, British Columbia.
But in the age of Gates and Dell, have the Rockefellers waited too long to court outside investors?
The family's own market research suggests that, in an era of instant Internet fortunes, the Rockefeller name seems a bit old-fashioned to some. Moreover, Rockefeller & Co. — which manages the fortunes of most but not all family members — hasn't been delivering the kind of high-octane returns that have generated so much wealth in the technology arena. Its largest sector, $596 million of global stock accounts, generated an average annual return of 24 percent over the five years through 1999, compared with 28.6 percent for the Standard & Poor's 500-stock index.
"They're not marketing themselves on the basis of world-beating performance," says Alec Wiggin, whose Darien, Conn., consulting firm, with the quirky name aabalone (red), has worked with Rockefeller & Co. on branding. "I suppose if they had it, they might. It's about preserving and enhancing wealth."
David Rockefeller, the 84-year-old former chairman of both the family office and Chase Manhattan Corp., says Rockefeller & Co. appeals most to those who "empathize" with the family's philosophy: "People of wealth have a responsibility to society over and above the need to invest profitably." Like some other family members, David has made substantial personal investments outside of the family office, such as his 1995 participation in the acquisition of the namesake Rockefeller Center in New York. The family's offices remain on the 56th floor there.
How much drawing power do the Rockefellers still have? Recent family marketing surveys show that the Rockefeller name suggests "integrity," not "glitz," says Suzanne Schutte, the firm's marketing specialist. "If there was any negative, it could be perceived as old-fashioned, stodgy."
Yet the pool of potential customers is ample. "We have a tremendous number of people who have made a great deal of money all of a sudden," marvels Abby O'Neill, eldest of the fourth generation of Rockefellers, known as "the cousins," and chairwoman of the family office. In 1999, 590,000 households had net worths of $5 million or more, up from 410,000 in 1998 and just 90,000 in 1994, according to Spectrem Group.
Rockefeller & Co. isn't playing for the business of run-of-the-mill millionaires. But it has lowered its investment minimum to $50 million from $100 million for full-service money management, which includes bill paying, tax preparation and other pampering services enjoyed by Rockefeller family members. For separate-account money management, the minimum is $20 million, and to simply invest in a Rockefeller fund, the minimum is $5 million. That compares with just $2 million for U.S. Trust Corp., the blue-chip asset-management firm set to be acquired by Charles Schwab Corp.
High-net-worth advisery is one of money management's most lucrative sectors, offering twice the profit margin as managing institutional money, estimates consultant William White, an affluent-market consultant for Spectrem, a financial-services consultant. Wealthy families are willing to pay more for a level of personal service not offered by less expensive money managers, he explains. Moreover, it is "the stickiest market," according to Wiggin. "Its customers stay with you the longest."
Consequently, Rockefeller & Co. faces keen competition. Wall Street's Goldman Sachs Group Inc. and Morgan Stanley Dean Witter & Co., for example, are beefing up in the area.
Rockefeller & Co. first opened its doors to outsiders in 1980, but only to a handful of foundations and endowments. In 1989, the family decided "to invite other families with like styles and outlooks in life," recalls David Rockefeller. But with the then-$100 million minimum, and clients welcome by invitation only, capital didn't pour in. Marketing was regarded as unseemly. "There was hardly any effort at all," says Asmundson. "In fact, it wasn't even encouraged."
Moreover, the office was hamstrung by turnover of top nonfamily professionals. There was friction between two top executives during the 1980s over overlapping responsibilities and how to best structure the office. Both left. A third chief executive left a year ago, as the family struggled to strengthen the business.
"People didn't plan for succession," says the current chief executive, Asmundson. "I made a promise to the family. No more revolving door at the top."
Asmundson is intent on increasing assets under management. "At $5 billion, we're going to be too small to attract and retain good people," he says, explaining that to pay top dollar to investment professionals, the firm needs to increase management fee income.
Still, Rockefeller & Co. has no intention of appearing too eager. It has never advertised, and has no intention of starting. "It's a family that likes its privacy," says Ms. O'Neill. The new Web site (www.rockco.com) receives only a few hits a week.
In addition, the family is contemplating attaching its name to a mutual-fund product that would be marketed beyond the megarich. Under consideration are the two socially responsible funds Rockefeller currently manages inhouse, which have yielded moderate returns investing in alternative energy, affordable medical care and "green" agricultural-product companies.
"It would be the first time we attached the Rockefeller name to a product and marketed it to the outside," says Asmundson. "We're still going through whether a mutual-fund approach makes sense," and whether there is "enough of a market" for it.
Concludes Ms. O'Neill: "We want to do it pretty carefully, so we protect the brand."