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Evercore Wealth Management in New York has recruited a team of portfolio and asset managers from a division of Wells Fargo Bank to staff its new Midwest regional headquarters in Minneapolis.
September 6 -
Bank of America Corp. is beefing up its wealth management team by hiring more than 80 financial advisers in the metro Northwest region.
October 14
Wells Fargo & Co. is consolidating some of its wealth-management operations into a new unit, in an effort to get its hands on more of its customers' money.
The San Francisco bank said Tuesday that it is combining its Wells Fargo Family Wealth and Lowry Hill units into a new division called Abbot Downing, which will seek to gain business from customers with at least $50 million in investable assets.
The new unit will be "the best of both worlds — it's a boutique with low client ratio, but we also have the financial strength of Wells Fargo," says James Steiner, managing partner for Wells Fargo's Lowry Hill private asset management unit.
Steiner will lead the new Abbot Downing unit, which Wells will launch in April. The combined firm will have $27.5 billion in client assets and a staff of about 300, and will be part of Wells Fargo's wealth, brokerage and retirement group, which the bank says had $1.3 trillion in client assets at Sept. 30.
Banks are increasingly trying to bulk up their wealth-management operations, in an effort to gain more business from their most affluent customers. Their more traditional sources of revenue, including the bread-and-butter deposit-taking and lending operations, have been challenged by weak consumer loan demand, persistently low interest rates, and increased regulation of the fees banks once could charge for mass-market products like credit cards.
"Traditional banking is challenging right now, and banks large and small are trying to diversify," says Scott Siefers, managing director of the equity research department at Sandler O'Neill & Partners L.P.
"One of the best and easiest ways is to do that is wealth management. A bank is already a place where they park money, so if you can grab someone's financial planning, that's a natural extension for anyone," he says, adding that Wells Fargo has an advantage because of its size.
After buying Wachovia Corp. during the financial crisis, Wells Fargo wound up with three similar wealth-management operations, according to Steiner. Lowry Hill, Wells Fargo Family Wealth and Calibre provided similar services, with 15 to 30 customers per financial adviser. Calibre, originally part of Wachovia, had already been folded into other Wells operations in 2009.
The consolidation started at the beginning of the year. Abbot Downing will include four service areas — fiduciary and trust, asset management, private banking and consulting services.
The unit will attempt to draw customers who already bank with Wells Fargo. The bank already relies heavily on its much-touted ability to sell multiple products to its customers.
"Wells Fargo has a strong small business and middle market lending capability, so they may have a previous relationship with them," Siefers says. "Probably for Wells Fargo, ideally they have an existing lending or deposit relationship with that customer years in advance."
Abbot Downing will also look to capitalize on merger and acquisition activity. Steiner says that as baby boomers who own businesses and accumulated wealth begin to retire, they may look for new options, such as selling their businesses and diversifying their portfolios.
Wells Fargo notes that U.S. middle market merger and acquisition activity was up 30% in the first half of 2011 from a year earlier. Privately held firms made up almost 60% of M&A deals.
"The goal would be for Wells Fargo to get the entire pie," Siefers says. "If the customer has a traditional banking relationship and sell their business and then have a windfall, Wells Fargo can manage that money."
