A Money Manager to High Society Cultivates the Art of the Schmooze
By RANDALL SMITH
October 24, 2006; Page C1
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.
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 Julius 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."
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.
In 2000, he joined Key Asset Management, a fund of
hedge funds owned by Norwegian 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 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 Karl Wellner in his New York office
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 rarefied 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. Wellner, 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.
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 Wellners
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."