up its financial planning services for clients with between $5
million and $50 million in investable assets, even as it also
begins offering white-glove services and high-level financial
planning further down the market to the mass affluent.
Charles Davis reports.
Wachovia is on a roll, interviewing private bankers from all over
the country as the bank, which has 240 private bankers, plans to
hire nearly another 300 over the next three years to ensure it
remains among the top-ranked wealth managers in the US.
Go deeper with GlobalData
Hiring will be in high-growth markets, including Florida, Texas,
California and New York. Private bankers will work with 1,300
financial advisers in the investment services group of Wachovia
Securities to serve the investment needs of affluent
customers.
In early June, shortly after announcing it was buying the St Louis
brokerage firm A.G. Edwards to beef up its brokerage arm, Wachovia
– which is headquartered in Charlotte, North Carolina and is the
fourth-largest US bank – said its wealth markets group would focus
on clients with net worth of $10 million or with $5 million to $50
million of investable assets.
It also reorganised its wealth management business, as Wachovia
Wealth Management and the Private Advisory Group, formerly in the
general bank, joined forces on 1 June to form a single business
unit that serves the affluent, high net worth and ultra high net
worth markets. The Private Advisory Group was renamed Private
Banking as a division within Wachovia Wealth Management.
Wachovia is adding to its wealth management business from both ends
of the market. Buying A.G. Edwards gives Wachovia Securities more
than 3,300 brokerage offices nationally, more than $1.1 trillion of
client assets and nearly 15,000 advisers.
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By GlobalDataTalent base
The bank is building quite a wealth management talent base. Stan
Gregor, head of the wealth markets division of Wachovia Wealth
Management, once headed the wealth management arm of New
Jersey-based Commerce Bancorp. Morrison Creech was recently tabbed
as managing executive of private banking. C Winston Wilkinson, a
senior executive from Fifth Third Bank, was recruited back to
Wachovia, where he once served as an executive in the mortgage
operation, now taking up the post of Wealth Management Private
Banking director for the western region.
Wilkinson heads the private banking group that serves the lower
stratum of affluent clients. Deborah Shore, a Wachovia veteran,
heads the wealth management group that handles customers with
higher net worth. The private banking group is part of a new unit
launched this summer for customers with between $250,000 and $5
million in assets.
New markets
Wachovia Wealth Management has $140 billion of assets under
administration and $80 billion in assets under management. It
established itself through the parent’s traditional markets along
the East Coast and started to move into the south-west – Texas and
Arizona – over the past three years. It is now beginning to look
westward on the heels of its deal last year for thrift company
Golden West Financial of Oakland, California.
The idea is to follow the parent’s commercial bankers into new
markets and use referrals through the Wachovia Client Partnership,
which encourages referrals among the business lines of Wachovia.
The bank unveiled this strategy to establish its wealth management
operations in Manhattan in 2002, and now the unit has 100 employees
in the market. Three years ago it used the strategy in Texas, and
now it has 100 employees and wealth centres in Dallas, Houston and
San Antonio.
The private bank’s parent company entered California in October
2006 by acquiring Golden West Financial. Golden West did not have a
wealth management platform, so its customers were ripe for
cross-selling and the deal gave Wachovia Wealth Management a
platform to build from, Wilkinson said.
“We are just getting started in California, but we already have a
lot of brand recognition on the West Coast, and so we are not
starting from zero recognition,” Wilkinson said. “If you fly into
LAX [Los Angeles airport] right now, you’ll see Wachovia ads on
hundreds of flat-screen TVs all over the airport. If you go to the
main subway station in Los Angeles, Wachovia is plastered all over
the place. We can ride that brand drive on the wealth side.”
Wilkinson said that he is attracting bankers excited about the
entrepreneurial spirit of the bank’s West Coast adventure. “We’re
seeing a lot of applicants eager to align themselves with a
national company just starting out on the West Coast,” he
said.
Wachovia Wealth Management wants to add people as it grows client
assets in Texas and Manhattan. In Texas, the bank plans to continue
to focus on Dallas, Houston and San Antonio in the near term.
Wachovia has slowly been moving westward for years, Wilkinson said.
Its securities unit has an established national operation, and the
parent’s automobile financing business has been doing business
coast-to-coast for years.
“Demographically, as people age, they tend to migrate to warmer,
coastal areas along this horseshoe-shaped market,” he said. “We
think we have targeted geographies that make a lot of sense.”
Wachovia’s emphasis on financial planning reflects its strength in
the marketplace, Wilkinson said. The bank’s wealth markets group
has 120 financial planners around the country, a number that could
more than double by the end of next year.
While Wachovia makes money from its financial planning, the service
is built “less around profitability and more around offering
clients the right solution and expertise”, he said.
In its westward expansion, Wachovia is targeting high-growth states
that are gaining new residents and jobs. In a recent report on
California’s economy, the bank’s economists noted the state is
suffering more than others during a national housing malaise, but
it still has strong defence, entertainment and high-tech
sectors.
Since this summer, Wilkinson has started offices in San Diego, Los
Angeles, Orange County and Phoenix. He is now hiring for northern
California, where he has nabbed a former Wells Fargo banker to lead
that location.
Tough competition
As it builds out its West Coast presence, Wachovia will face tough
competition from West Coast mainstays such as Wells Fargo and Bank
of America. The size comparison is stark: Wachovia has just a few
dozen business and private bankers in California while Wells, for
example, has more than 1,300 employees serving business customers
and more than 2,300 in wealth management.
Never underestimate Wachovia, though: it’s a bank many tend to
overlook, even as its growth has never slowed, and its footprint
expanded from the East Coast to California. Wall Street remains
unconvinced that Wachovia’s $24 billion purchase of Golden West was
a good deal, but Wachovia sticks by its guns – and what was once
Golden West’s deposit base has grown 26 percent to $75.3 billion
since the deal was announced.
In the midst of the subprime mortgage meltdown, it’s a good thing
that Golden West was known for its rigorous underwriting standards,
which isn’t surprising to anyone who followed the careers of former
co-CEOs Marion and Herb Sandler, who were among the lone voices
railing against the excesses that led to the savings and loans
crisis in the 1980s.
More clients
Since 2004, Wachovia’s private advisory group has added 30,000
clients and reported double-digit annual growth in loans, deposits
and investment revenue. Wilkinson said that bringing in new clients
will remain a primary focus of his group and that private bankers
will work closely with Wachovia bankers and brokers to generate
cross-selling opportunities.
In January, the threshold for Wachovia’s new wealth management
clients moved up to $5 million in investable assets, from $2
million, and the minimum for ultra high net worth clients in
Calibre, the bank’s multigenerational wealth management unit, moved
to $50 million or more in investable assets, from $25
million.
Even as it moves to capture greater market share among the wealthy,
Wachovia is filling the void between the very rich and those who
aspire to such wealth. Its acquisition of A.G. Edwards combines two
key mutual fund distributors and creates the US’s second-largest
retail brokerage firm by financial advisers, with nearly 15,000
advisers, and $1.1 trillion of client assets.
By reaching each segment of the investment market, Wachovia can
grow wealth as well as manage it. The number of US households with
$250,000 to $5 million of investable assets is projected to grow 30
percent, to 18 million by 2010 from 14 million in 2005, according
to data from consultancy Financial Research.
Wachovia’s strategy is to work that inverted horseshoe, build
wealth through its retail, mass affluent and private banking
channels, and dare the competition to match its reach.
