By Dan Wilchins
BOSTON (Reuters) - Major banks may be hiring private bankers like mad, but could pull back when they recognize other businesses offer higher margins, the head of a small wealth advisor said.
Speaking at the Reuters Wealth Management Summit, Al Piscopo, chairman of Glenmede Trust Co. in Philadelphia, said late Wednesday wealth management is incredibly competitive, and often does not offer the same kind of profit margins as areas like merger advisory.
"Everyone is aiming for the same prospects, everybody wants a part of the market, and for some it's not going to make a great deal of sense," Piscopo said. "There are some firms for whom this will be the lowest return business they are in."
Banks are ramping up their private banking and wealth management efforts. Citigroup's (C.N: Quote, Profile, Research, Stock Buzz) private banking arm plans to hire as many as 100 in the United States in the next 18 months, Richard Ditizio, head of Citi's high net worth unit in North America, said at the summit.
BNY Mellon Wealth Management, a unit of Bank of New York Mellon Corp (BK.N: Quote, Profile, Research, Stock Buzz), is planning to as much as double its sales force in the next few years.
But competition for customers is intense, Glenmede's Piscopo said.
"I used to characterize this industry as highly competitive, then intensely competitive, and now I would call it insanely competitive," said.
Bruce Holley, a partner at Boston Consulting Group, a specialist in the wealth management industry, agreed that being large is not necessarily an advantage.
"There will always be the all-singing and all-dancing large players, but there is room for smaller players too, as long as they have a well-defined model," he told the Reuters Wealth Management Summit in Boston this week.
Some large players have shown that they don't have the appetite for wealth management after all. Charles Schwab Corp. sold its U.S. Trust wealth management unit to Bank of America Corp. in July for $3.3 billion.
(For summit blog: summitnotebook.reuters.com/)
(Reporting by Dan Wilchins, additional reporting by Svea Herbst)
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