By Svea Herbst-Bayliss
BOSTON (Reuters) - As the battle over managing assets of the rich heats up, experts see room for both boutique bankers who offer personalized service like arranging home repairs and big private banks that make million-dollar loans and offer access to exclusive hedge funds.
"Size does not dictate profitability," said Bruce Holley, a partner at Boston Consulting Group, a specialist in the wealth management industry.
"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.
A strong stock market and growth in personal savings have helped mint a new crop of millionaires, and with assets nearing $100 trillion, the wealth management industry is expected to remain robust for years.
"No one is bumping against a market share problem," David Lamere, chief executive of Bank of New York Mellon Corp's (BK.N: Quote, Profile, Research, Stock Buzz) wealth management unit, told the Reuters Summit. The unit invests $164 billion in private client assets and ranks among the top 10 U.S. players.
Al Piscopo, president and chief executive of Glenmede Trust Co, with $20 billion under management, agreed. "I used to characterize this industry as highly competitive, then intensely competitive, and now I would call it insanely competitive," he told Reuters.
LEAKY ROOF
Big players woo clients with global reach and promises of getting access to exclusive hedge funds and seven-figure loans in a hurry to clients traveling abroad.
"Wealthy people want to know what the largest financial institution in the world is thinking, and by being in 106 countries, we have something to say," said Richard Ditizio, who runs the High Net Worth unit for Citigroup Inc's (C.N: Quote, Profile, Research, Stock Buzz) Citi Private Bank in North America.
In a bid to keep generations of clients, many smaller players say they offer more personalized service like finding someone to repair a leaky roof or a broken furnace, or feed the family dog, executives attending the summit said.
But the big players are betting their size help them beat rivals and retain high profit margins -- in the 30 percent range for firms with fee-based services.
"There will always be some of everything, but we will win market share against all of them," Brian Moynihan, president of Bank of America Corp's (BAC.N: Quote, Profile, Research, Stock Buzz) Global Wealth and Investment Management unit told Reuters. The bank bought U.S. Trust this summer to better serve ultrawealthy clients.
While going after the super-rich, Bank of America is also aggressively courting the larger demographic of those with $100,000 to $3 million to invest and is hiring more bankers to serve them.
Takeovers may also be in BNY Mellon's future. Lamere said he is talking to several possible prospects. And Citi's Ditizio said he would not rule out making a takeover, either.
"Right now, there are a lot of players who are broadening their models to include more products, and the lines are more blurred between asset management, trust banks and private banks," Boston Consulting's Holley said. Continued...
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