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May 1, 2008updated 04 Apr 2017 3:58pm

Getting into top gear

Wachovia is moving aggressively to ramp 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.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

By PBI Editorial

Wachovia is moving aggressively to ramp 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.

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.

Talent 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.

 

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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.

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