When the Catholic Church is your client, you've got a whole new set of investment criteria to consider. Like every other client, the church wants good returns, but they'd better not be from stock in drug companies that make contraceptives or from defense contractors that make first-strike nuclear, chemical and biological weapons.
Catholic institutions "will not invest in companies that go against Catholic teaching, but it's not like the Vatican sends out this list," said Eric Bailey, managing principal for CapTrust Financial Advisors. "Each cardinal or bishop might have his own specific areas of interest or exclusion. You really have to understand where they're coming from."
Tampa-based CapTrust advises Catholic clients on more than $4-billion of investments, nearly half the company's $10-billion client base. It took on the role last year when it merged with the Miami-based Schott Group, adviser to about two dozen diocese, archdiocese and other Catholic institutions across the country.
If the Schott name sounds familiar it's because CapTrust principal Stephen Schott is former executive vice president of the Cincinnati Reds and nephew of late owner Marge Schott.
"As you would pick good people at a baseball team, we also look to pick good managers as part of our investment programs," Schott said.
CapTrust helps clients develop investment policies and decide how they want to allocate their assets, then recommends money managers and monitors those clients select.
"They have the expertise and the knowledge to review the market and our in-house staff does not," said Dan Oliver, chief financial officer for the Archdiocese of Detroit. "I'm much more comfortable having them on board."
Other clients include foundations, pension plans, wealthy families and not-for-profits like the Florida Sheriffs Youth Ranches.
"There's so much scrutiny of nonprofits and of boards of directors to make sure they're managing money appropriately and handling their fiduciary responsibilities," said Roger Bouchard, president of the youth ranches. "We're pretty averse to risk and they understood that."
Clients pay a percentage of assets for CapTrust's services, ranging from as little as 0.02 of a percentage point to half a percentage point. Small clients and those with more complex portfolios pay the highest rates. The cost may be at least partly offset by CapTrust's access to money managers at lower fees than some clients would have paid on their own.
Schott says the Catholic clients haven't had to give up performance to keep their investments in line with their theology. Stocks that pass the screening test have outperformed the market as a whole, he said.
Employee-owned CapTrust got its start when three brokers and three support staff left PaineWebber's Tampa office 10 years ago, taking $300-million of client assets with them. Schott began working with Catholic clients 25 years ago as a broker at E.F. Hutton.
Helen Huntley can be reached at email@example.com or (727) 893-8230.