DARIEN, Conn. - While many rivals downplay traditional consulting, Rogers, Casey and Associates Inc. is renewing its commitment to consulting and may bring in outside partners to help, according to the firm's management.
Rogers Casey officials have talked to several firms about alliances in areas such as technology and global operations, said Stephen Rogers, chairman of the firm. Mr. Rogers would not identify the firms, but sources say one is State Street Bank & Trust Co., Boston. It is too soon to tell what shape those alliances will take or whether they will involve equity ownership, said Mr. Rogers. A spokesman for State Street Bank would not confirm or deny the discussions, saying it will not discuss specific cases.
In theory, the idea of a major multiproduct provider like State Street joining with a consulting firm makes sense, said Jeffrey Lovell, principal of Putnam, Lovell & Thornton Inc., a New York mergers-and-acquisitions specialist. He noted multiproduct firms sometimes have client relationships that verge on consulting, recommending among asset classes and strategies.
Rogers Casey has made a raft of changes during the past year, including searching out alliances, expanding its staff, passing more responsibility to other members of management and bringing in outside directors. Management says the changes are another stage in the firm's evolution, centered on its historic strengths in the fund consulting field.
Mr. Rogers said Rogers Casey began looking outside of its ranks last year, after observing the trend of consulting firms entering money management.
"A lot of our competitors decided to move into the higher margin investment management industry. We decided to go outside the firm and talk to major organizations, to talk about our own vision, to see if we're on the right track," said Mr. Rogers. "We want to continue to be an investment consulting firm and niche provider of special asset services and products."
During the consultation process, Rogers Casey officials spoke to various complementary organizations about the possibility of various kinds of alliances, said Mr. Rogers. Some alternatives have emerged, which the firm will analyze and decide about as time goes on, he said.
Technology is the most logical area for such alliances, followed by expanding into global operations, said Mr. Rogers. He noted technological capability is an area of increasing importance, but a very expensive proposition in the long term, which readily lends itself to joint ventures.
Rogers Casey has not committed to any alliances and talks about its structure would be premature, said Mr. Rogers. "It would have to be something that we feel good about and is good for our owners and our clients," he said.
An alliance could include some sort of revenue or royalty arrangement short of outright ownership, speculated Mr. Lovell. However, he said he has seen limited success on joint ventures without some cross-ownership. Putnam, Lovell tends to be skeptical of joint ventures or market arrangements that don't include some element of capital risk because there is less motivation to make the union work, he said.
The alliances are only part of an evolutionary process for the firm, said Mr. Rogers. Rogers Casey is growing while trying to position itself for the long term. He guessed the firm's number of consulting clients has roughly doubled over the last five years. Rogers Casey now has more than 80 retainer clients and handles projects for many more, said Mr. Rogers.
The firm started a program two years ago that aimed at recruiting and developing new talent, and it yielded a significant result this year, said Mr. Rogers. Rogers Casey hired 10 new staffers this summer from colleges and graduate schools to add to the roster of analysts and senior analysts in the firm's consulting groups.
The firm has brought on a number of young staffers with diverse backgrounds, which is an advantage given the current globalization trend, said Jon Lukomnik, deputy controller of the New York City Retirement Systems, a Rogers Casey client.
"They have done as good a job investing in human capital as I can think of," said Mr. Lukomnik. One good trait among its consultants is that they balance their opinions with the knowledge they might be wrong. They neither push their opinions on clients nor tell them what they want to hear, he said.
Rogers Casey has been the general consultant to New York's $24 billion Teachers Retirement System for more than a decade, and it has never deviated from its commitment to consulting, said Mr. Lukomnik.
The addition of junior people comes at a time when Rogers Casey is spreading the management responsibility to free Mr. Rogers and John Casey, president and chief executive officer, to spend more time with clients and staffers.
Mr. Casey had been dedicated to the firm's investment management services group, which acts as a consultant to money managers and other financial institutions. Mr. Casey will continue to spend the bulk of his time working in that area but will be able to dedicate more time to other areas, said Mr. Rogers. Because of the firm's growth, Mr. Casey now has a half-dozen staffers working with him who are taking on more responsibility.
A number of staffers now with the firm for at least five years are ready to take on more responsibility for clients, so the firm decentralized accountability for the day-to-day operations to its different business and service groups, said Mr. Rogers. Because there already are 21 senior executives who own equity in the firm, it made sense to pass on the responsibilities to them as well, he said.
Along with that change, the firm changed its top internal management structure from an executive committee made up of Messrs. Rogers and Casey to a five-member board of directors that for the first time includes outside directors.
The first director added was Philip Cooper, chairman of Rogers Casey Alternative Investments, an investment unit overseeing approximately $800 million in assets. The first external director was Terry Martin, chief financial officer of General Signal Corp., Stanford, Conn.; another will be appointed later.
"We do want to confirm the business that we want to be in," said Mr. Rogers. Rogers Casey has been a consulting-based culture more so than other consulting firms, he said. If other firms want to downplay the consulting business in favor of entering high-margin businesses like money management, then Rogers Casey can benefit from their absence, he said.
The high margins in investment management are not enough to lure the firm away from its core strengths, said Mr. Rogers.
"Is it the most profitable business in the world? No. Is it profitable enough? Yes," he said. "I think our skills and opportunities are in this area and opportunities will be considerable."