A Money Manager to High Society Cultivates the Art of the Schmooze
By RANDALL SMITH
Published: October 24, 2006
Karl Wellner, money manager to the ultra rich, recalls club hopping in a convertible Bentley with one of his clients last winter in Palm Beach, Fla., when the $350,000 car ran out of gas. His client thumbed a ride to a gas station and soon the two were on their way.
All in a day's work for Mr. Wellner, a high-profile figure in the competitive business of catering to the ultra wealthy. With the bull market in its fourth year and stock indexes setting records, financial services for the rich are booming. The number of U.S. households valued at $10 million or higher more than doubled from 1995 to 2004, to 530,000, according to the Federal Reserve.
The competition includes some of the biggest names on Wall Street, many of which are themselves ramping up their efforts to tap the lucrative business. Longtime private-banking giants J.P. Morgan Chase & Co. and Citigroup Inc. are facing stiffer challenges from European companies such as UBS AG and U.S. brokerage firms such as Merrill Lynch & Co.
The firm Mr. Wellner heads, Papamarkou Asset Management, is a relative small fry, with about $3 billion under management. But he represents a growing niche in the market that offers personalized treatment approaching concierge service. In addition to hitting the clubs, Mr. Wellner and his staff occasionally find themselves offering their elite clientele help with airport pickups, finding theater tickets and other errands.
The giant investment-banking rivals "are very attracted to this kind of fee business, as opposed to the deal business," says Mr. Wellner. But they may not offer "the personal treatment we will give our clients, because $10 million isn't what it used to be."
As his Palm Beach adventure suggests, it is a business that relies strongly on personal relationships with prospective clients. The firm's founder, the late Alexander "Alecko" Papamarkou, developed extensive ties to European royalty, starting with his college roommate, Luis Gomez Acebo a Spanish businessman who later married the sister of the current king of Spain.
Mr. Wellner himself was recruited for the job through social ties forged by him and his wife, Deborah Norville, the host of the syndicated TV show "Inside Edition," who served briefly as co-host of the "Today" show. They met a trustee who oversees the Papamarkou firm, John Georges, while they were guests of Tim Forbes during a six-day cruise to Alaska aboard the Highlander yacht used to promote Forbes, the family-owned magazine.
Messrs. Wellner and Georges and their wives got to know each other over a "late-night, 'til-the-finish death-round gin-rummy game," Ms. Norville recalls.
Part of the selling point in this rarefield world of brokerage is the promise of social entrée. "People become clients to become part of that world," says Thorne Perkin, a Papamarkou vice president, and "recognize they will meet other people through him." Last winter, Mr. Perkin says, he and Mr. Wellner traveled to a ski resort in St. Moritz, Switzerland, in search of wealthy clients.
Mr. Weller, a 52-year-old Stockholm native, had a varied career before joining Papamarkou in 2003. The son of a Swedish water-skiing champ who sold industrial machinery, and grandson of an industrialist in Estonia, he came to the U.S. in 1983 to manage an investment arm of Swedish vehicle maker Volvo AB. After he met Ms. Norville in 1985 on a blind date, he chose to remain in the U.S. rather than return to Volvo's home base.
Mr. Wellner became chief executive of an auction house, Habsburg Feldman Auctioneers inc., formed in part to challenge the two giants in that field, Sotheby's and Christie's International PLC. After the art market crashed in 1990, Mr. Wellner recalls, his "investors got cold feet" and pulled the plug, losing "huge amounts of money."
Moving to Swiss bank Julias Baer Holding AG, Mr. Wellner tried commuting to Estonia after the breakup of the former Soviet empire to acquire and manage newly privatized state assets there, such as real estate for a McDonald's restaurant. But after six years of travel, he says, he "was pretty burned out."
In 2000, he joined Key Asset Management, a fund of hedge funds owned by Norweign Morton Kielland. Key and Papamarkou forged a "strategic alliance" when Mr. Wellner became Papamarkou's CEO.
He and Ms. Norville have three children, an apartment on Park Avenue in Manhattan and a weekend house in Mill Neck, Long Island. In Manhattan, he belongs to the exclusive Brook Club and Union Club, and on weekends they swim or golf at the Piping Rock club in Locust Valley, on Long Island.
The royal ties of Mr. Papamarkou, who died in 1998, extended to the House of Windsor. In 2000 Prince Charles gave a dinner for 65 people, attended by Camilla Parker Bowles, whom he later married, in honor of a medical-school scholarship fund named after the Prince and Mr. Papamarkou.
Robert Higdon, executive director of the Prince of Wales Foundation, says his nickname for the Wellner's is "Barbie and Ken, because they're so perfect." It was Mr. Higdon who introduced Mr. Wellner to Thomas Quick, owner of the Bentley that ran out of gas. Mr. Quick, a Wellner client whose father founded Quick & Reilly Group Inc., the discount broker sold in 1998 for $1.6 billion, invests in hedge funds suggested by Mr. Wellner, such as a fund run by Knott Partners Management LLC.
The Knott fund, which has returned 18% annually after fees since its inception in 1987, is down slightly this year, reports manager David Knott, a neighbor of Mr. Wellner's on Long Island. Mr. Wellner's firm receives annual fees of 0.5% to 1% of the amounts invested in addition to the hedge fund's fees.
In search of clients, Mr. Wellner attends a broad array of functions, including a surprise birthday lunch for Blackstone Group chief Stephen Schwarzman in March. One day last month, Mr. Wellner had lunch with client Gordon Getty, the San Francisco oil heir who was visiting to attend a funeral, and dinner with John Mack, the chief executive of Morgan Stanley.
Rapid-fire schmoozing is the norm. At one fund-raiser for the Irvington Institute for Immunological Research in April, as Ms. Norville and Mr. Wellner moved through the serving line, Ms. Norville greeted current "Today" show co-host Matt Lauer. Mr. Wellner also chatted with Cendant Corp. CEO Henry Silverman, Sotheby's auction executive James Niven, Newsweek correspondent Lally Weymouth, former PaineWebber Group Inc. CEO Don Marron, and dress designer Vera Wang.
Later, at their table, the Wellners gave toasts to luxury-handbag designer Cece Cord, who had recently been married. But when the two women first tried to bite into a cake wheeled out to celebrate, they discovered the layer they had served themselves was made of white plastic foam. Ms. Norville says she joked at the time that it was "the only way to keep me from eating a piece of cake."
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