Imagine having high-profile high net worth (HNW) clients who were so willing to be used in your institution’s marketing material that they appear in a video on your website expounding the bank’s virtues. Nicholas Moody speaks to Fieldpoint Private’s Bob Matthews who is in such a position.
A group of clients so willing to be involved in promoting your bank may sound like make-believe, but for Connecticut-based Fieldpoint Private, it is a reality. And it is a reality because those same high-profile HNWs, which include the founders of The Home Depot and retired CEOs of Merrill Lynch, UBS Americas, TD Ameritrade, Gillette, Time Inc. and KKR, are among the 31 founders who established Fieldpoint in 2008.
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Bob Matthews, president and CEO of Fieldpoint Private, is in the enviable position of leading this exciting new business model, which he describes, somewhat paradoxically, as a European-style private bank in the US.
"In the US, the easier way to explain that to people is to call it a multi family office with a bank attached. So we are a full-fledged bank with all the lending and deposit taking service processes that you would expect from any bank, private or otherwise. We just married that to a significant wealth management platform," he says.
So far it has been a good marriage. The bank had $3bn in assets under administration in December, a huge leap from the $153m since July 2010, when Matthews joined. It made a profit after only nine quarters, with net profit of $2.6m in 2011.
The aim of the bank is to grow its wealth management business so that eventually the bank’s asset profile matches that of its clients with "a little lending and a lot of assets", says Matthews. Its balance sheet stood at $700m in December, an increase of $400m since 2010.
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By GlobalData"The founding thought process was that the product of the bank should be advice. The products and services should really just be fulfilment pieces. The stock and trade is advice that integrates across both sides of the balance sheet," he says.
Providing unconflicted advice is a central ethos of the 31 founders who set up Fieldpoint. And as Matthews underlines, unconflicted is not the same as open architecture.
The business model, according to Matthews, is having the banking and wealth management aspects of the bank fully integrated, staffed by the senior advisors who are backed up by a top flight IT offering.
It does not custody anything on the wealth management side, underlining its open architecture approach and meaning it is free from any conflict of interest. It wants to have a single customer view across all its client’s assets that is updated real time.
"Part of the value proposition to every account relationship is that we aggregate every dollar, in every asset class, in every financial institution, every day, to capture a client’s position at the close of each day.
"So when, for instance, the BP incident happened in the Gulf, we knew instantaneously every place our clients held shares, what firms it was with, what managers were running the accounts that had that position, and where they were for sales and concentration issues," he adds.
Matthews says the IT investment to run this system has been "substantial" without revealing a precise amount, its technology system is largely cloud-based, with very little hardware.
Adviser-led expansion
Fieldpoint currently is a northeast-centred business, with two offices in New York City and Greenwich, Connecticut, although it has several hundred clients spread across 12 US states, served by 17 advisers. For the moment, Matthews firmly rules out nationwide or international expansion projects. It is instead pursing an adviser-led approach.
"We have no interest in having 50 offices around the country. If I were to guess, the first stop would be half a dozen offices in the next three to five years," he says.
Matthews also underlines how Fieldpoint’s strategy is the opposite of a build-it-and-the clients-will-follow model.
"We do it in reverse. We will determine the next locations based on where the best advisers are within the confines of cities that could support the model," he says.
The average client is a multi-deca millionaire, with $30-50m and upwards of investible assets.
What then differentiates Fieldpoint from all the other wealth managers and private banks who lend and advise on client assets?
Matthews is eloquent in his response, arguing that it is the superior human capital, backed up by cutting-edge technology, on top of the bank’s unusual founding DNA.
"Conceptually, though, the question that had to be answered when we started is this: have we moved far enough up the timeline in Wall Street that intellectual capital technology can deliver a behemoth through a boutique? Ten or twelve years ago you couldn’t do this.
"What’s happened over the last ten or fifteen years is those services have been commoditised to the point that not only can you get as good a product or service outside the circle, its entirely possible that what you can source away from the big firms is even better. Now what you’re left with as a differentiator is purely the human capital," he notes.
"The boutique can do things the behemoth would never imagine; everything is bespoke. The real enemy of excellence in the service business is size. Size is absolutely the enemy of excellence," he says.
"It may generate profitability or margins or market share, but size inhibits the client experience in a financial service.
"If you can deliver everything the big firm can, and do it with a personal touch and a customised thought process, you should take more of the high end of the marketplace." Watch this space to see this boutique take on the behemoths.
