Next goal for Hantz’ one-stop banking empire

Don’t call John Hantz a financial planner. In his view, that would be like comparing him to a buggy-whip maker.

Instead, the former head of American Express Financial Advisors’ Detroit region prefers to be called a private banker.

Since his high-profile, messy divorce from AmEx in 1997, Mr. Hantz has been building Hantz Group Inc., a holding company he touts as a private bank for the upper middle class.

After forming a broker-dealer and purchasing a mortgage company, he is getting close to adding the final piece: a bank that will offer a full line of credit and depository services.

“Financial planning merged asset management and insurance together,” says the 39-year-old Mr. Hantz. “The next wave that’s going to hit the market is personal banking. What you’re going to get is asset management, insurance and debt management. If a person can’t do all three of those, he won’t be able to compete.

“Private banking will arrive to the middle class and upper middle class,” he adds.

Mr. Hantz is in the vanguard of advisers who are broadening their practices to meet rising competition in the planning field.

He predicts that in the next five years conglomerates of law firms, accounting firms and financial institutions will compete for clients. To survive, planners must grab a larger share of their customers’ wallets, offer more products and provide a distinct service.

Mr. Hantz is moving in the direction described in a recent study by the Dallas-based mutual fund firm Undiscovered Managers LLC.

The study says planners must broaden their services and expertise because advice — some form of which is being offered by everyone from brokers to E*Trade — has become a commodity.

“It’s a land grab going on right now,” says Mark Hurley, president of the mutual fund company and author of the study.

The moves by Mr. Hantz don’t surprise those who know him. While with AmEx, he developed a reputation for being creative as well as having a big enough ego to tip over sacred cows.

“He’s always been one to think outside of the box,” says a former AmEx planner familiar with Mr. Hantz. “When he was at AmEx he said just because you’ve been doing something one way for 20 years doesn’t mean you still have to do it that way.”

Mr. Hantz bolted from AmEx to start his own business in the fall of 1997. He left after AmEx rejected his plan to purchase part of the Detroit practice and amid rumors he had been having affairs with employees. Mr. Hantz denied any wrongdoing.

AmEx responded with a lawsuit, suing him for breach of contract and misappropriation of trade secrets. The two settled the bitter dispute last year.

While the legal battle, which he called an irritant, simmered, Mr. Hantz tried to focus his time and energy on creating a new company. “The lawsuit had to take a back burner every day because so many people were wondering, `John, what are we going to do tomorrow?”‘

“I’m glad I did it, but I wouldn’t want to do it again,” he says.

Mr. Hantz has been busy the past two years. He has built the Roseville, Mich.-based company into a firm with $20 million in 1999 revenues, $550 million under management and 250 employees, 136 of whom are planners.

The holding company includes a broker-dealer created late last year (after leaving AmEx, Mr. Hantz at first traded through Vestax Securities, an affiliate of the Dutch insurer ING Groep); a group of accounting firms; Tranex Inc., a mortgage firm; an insurance agency and a technology group that handles the software and hardware needs.

The firm is marketing its services to small-business owners and people with $100,000 of investible assets, a group more upscale than the one Mr. Hantz pursued while at AmEx.

Mr. Hantz believes that although these people want to keep most of their financial relationships in one place, they want to work with experts, not just generalists.

To meet that demand, Mr. Hantz has created a structure he likens to a health maintenance organization. Customers will be assigned to a planner who attends to their plain-vanilla planning needs.

Should an issue arise requiring more expertise — say, estate planning or divorce planning — that planner can direct his clients to a specialist.

“Financial planning is just a ticket to get into the game,” Mr. Hantz says.

Currently, Hantz clients have an average of six relationships with the organizations. By adding a bank to the mix of services, Mr. Hantz hopes the holding company can snare 10 relationships with each customer.

Mr. Hantz plans to file an application for either a Michigan state banking or a federal thrift charter within 30 days, he says. The bank would have one-room branches in the group’s 22 offices and offer everything from checking accounts to lines of credit to credit cards.

“Everyone has a preference to use their bank; they just don’t have confidence that their bank is competent,” Mr. Hantz says.

Opening a bank has some precedent; some planners have applied for bank charters to open trust subsidiaries.

Mr. Hantz is weighing whether to offer trust services, but initially the focus will be on loans and checking accounts. While a bank likely would reel in more accounts, one observer questions the value of offering such transaction-based services.

“Banking seems less of a fit” than trust, says Andrew Guillette, a consultant for Boston-based Cerulli Associates. Additionally, basic banking services don’t generate a lot of revenues.

Mr. Hantz has ambitious plans for this year, hoping to boost revenues 50% to $30 million and add another 50 employees. To remain successful, however, the firm will have to clear some hurdles.

For instance, managing disparate businesses can prove challenging to any executive, says Mr. Hurley of Undiscovered Managers. Determining priorities and where to invest money becomes tricky as a company broadens its reach.

Mr. Hantz says the biggest difficulty for the firm will lie in training planners to determine the needs of their clients, particularly as the firm expands its services. “Training is key but training the right stuff is even more important,” he says.

Mr. Hantz remains optimistic that he can build the group into a dominant player in the Michigan and northern Ohio markets.

“We have two big advantages: We are new and we don’t have any past baggage,” he says.