Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Industry Spotlight > Women in Wealth

Challenges Addressed in Bank Wealth Management

Your article was successfully shared with the contacts you provided.

“With fewer liquidity events, these are tough times,” said Bill Sappington, discussing the challenge in finding new wealthy clients for his private banking group at BNY Mellon Wealth Management. To get and keep those clients, he suggested, you need to offer clients transparency and convenience, and build trust between the client and the wealth advisor.

Sappington’s dilemma is exacerbated by the fact that every bank, broker-dealer, independent advisor, and online brokerage firm wants the same client: the high-net-worth (HNW) individual with investable assets of, say $1 million. But who is actually gaining that client, and how are they doing it?

HNWs Need 'A Champion'

In a session at the Pershing 2010 Customer Conference at the Gaylord National hotel in National Harbor, Md., on Oct. 15, three bank executives addressed wealth management in the bank channel, presenting their own banks’ approaches to finding success with the HNW.

Bill Curtis, COO of M&I Financial Advisors, the wealth management arm of Milwaukee-based M&I Bank, said that to succeed in the bank channel, you need “a champion to break down the traditional silos, allowing for cross-pollination” across the bank.

Chris Randall, president and CEO of M&T Securities, a division of Buffalo-based M&T bank, warned that while you “can succeed with a silo approach, it won’t be for long,” arguing for

an integrated approach, such as at M&T, where the brokerage and wealth advisor arms were combined, and where the client decides who her primary relationship manager will be.

Wealth Management and the Banks

So far this year, 129 FDIC-insured banks have failed in the United States. Internationally, wealth, as measured by the annual Merrill Lynch CapGemini World Wealth Report, rebounded in 2009, so that by the time of the survey at year-end 2009, the number of high-net-worth individuals—people with more than $1 million in investable assets, not counting their residences, collectables, and consumer durables—rose 17.1% to 10 million, returning to the levels last seen in 2007. Total wealth held by those 10 million individuals rose 18.9% to $39 trillion.

Europe and the Asia-Pacific regions now can count roughly the same number of HNW individuals, but the total amount of wealth in Asia has now eclipsed Europe’s, with North America still in the lead in terms of total wealth. The U.S., Japan, and Germany still accounted for 53.5% of the world’s HNW population at the end of 2009, according to the World Wealth Report, with the number of wealthy North Americans rising 16.6% in 2009 to 3.1 million, with the wealth held by those HNW individuals rising 17.8% to $10.7 trillion.

The CapGemini report says the number of ultra-high-net-worth individuals—with more than $5 million in investable assets—rose 21.5% in 2009 after losing 24.0% in 2008.


Have the banks done a good job at attracting those wealthy individuals? Research by London-based Scorpio Partnership released this summer hints at the challenges but also the opportunities that exist for banks in managing wealth.

Scorpio's research found that AUM at banks surged by a median of 17% from 2008 to 2009—what Scorpio calls the global wealth industry now manages $16.5 trillion in HNW assets (up from $14.5 trillion in 2008, noting inefficiencies, such as that cost:income ratios have risen to an average 78.2.)

Scorpio managing partner Sebastian Dovey put it neatly in a written statement accompanying release of the report:

“The wealth management engine is still misfiring for many," Dovey said. On the one hand the asset management machine is working and this is shoring up numbers, while, for virtually all banks, in terms of attracting new business it has been a case of "Net No Money."

Dovey said there “are strong signs of wealth creation even in these complex markets, yet new clients are still holding back from opening accounts with the industry."

The major issues in the bank channel are getting a bigger share of wallet from bank customers with multiple banking relationships,  of providing adequate compensation to wealth managers in the bank, and downplaying internal competition within the bank.

Chip Roame of Tiburon Strategic Advisors, which conducts much research on different channels in wealth management, published this month an “Overview of the Retail Banks Market” research report on the challenges facing retail banks, including wealth management, which along with a 2009 report on the “Competition & Advice: Predicting the Winning Markets & Distribution Channels” led him to these rather stark conclusions:

  • retail banks have been losing wealth management and trust business to brokerage firms and RIAs.
  • affluent customers are not attracted to marketing hype
  • that banks do not do a good job in hiring and then compensating competent salespeople in the wealth management.

But Do Banks Have an Edge?

Sappington of BNY Mellon Wealth Management counters, however, that with the “bigger focus on risk management”

since the 2008-2009 markets and financial crisis, “banks have a natural advantage.” Since clients and potential clients are “afraid, having been burned by the wirehouses,” they are more likely to trust banks. He said that at his firm, “we look at both sides of clients’ balance sheets.” Hoping to attract more clients, Sappington said BNY Mellon Wealth Management will also roll out a self-directed brokerage account that includes banking features.

While advancements in technology has made the provision of wealth management advice possible, Curtis pointed out, all the panelists agreed that attracting and retaining the right people to provide wealth management services was essential.

“You’ve got to find a person in the community who is committed to the business,” Sappington said, “it’s good to get advisors who are connected to both clients and centers of influence.”

Randall agreed that one of M&T Securities’ requirements for new advisors is an “expectation that they are connected with centers of influence.”


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.