September 17, 2010 / 5:23 PM / 9 years ago

ANALYSIS-Private banks battling for advisers to super-rich

* Private banks hiring advisers from brokerages, boutiques

* Advisers need to have wealthy clients, charge fees

* Banks offer smaller recruitment deals than brokerages

By Helen Kearney

NEW YORK, Sept 17 (Reuters) - Recruiting wars in the genteel world of private banking are heating up, with bankers to the super-rich increasingly looking to retail brokerages and wealth management boutiques for new blood.

A year after thousands of retail brokers left the largest brokerages to join rivals and independents, the job-hopping frenzy has shifted to private bankers catering to individuals with more than $10 million of investable wealth.

Citigroup Inc (C.N) has been leading the charge since spinning off its Smith Barney retail brokerage last year to a venture controlled by Morgan Stanley (MS.N). The embattled bank has recruited dozens of bankers and other executives this year, many from Bank of America Corp’s (BAC.N) U.S. Trust.

U.S. Trust embarked on its own hiring spree, adding nearly 40 advisers since July. Bank of New York Mellon (BK.N), Wells Fargo & Co (WFC.N) and other banks have also been actively recruiting.

While the majority of recruits still come from private banks — businesses that offer credit, investments, trust and estate planning services — banks are increasingly targeting financial advisers from Wall Street.

“If you have someone who has been successful as a wirehouse broker, they can bring their book here and expose it to other disciplines like credit, insurance and planning,” Wells Fargo Private Bank senior managing director John Duchala said.

Wells, he said, is looking outside the private banking world in its bid to add 150 new recruits. Citi has looked to Goldman Sachs Private Wealth Management (GS.N) as well as Barclays Wealth, a Barclays (BARC.L) unit built from a business acquired from Lehman Brothers.

Citi has said it aims to double its private banker ranks to about 260 within three years.

Private banks and top-end brokerages perform many of the same jobs and target the same kinds of customers, but because of differences in compensation and culture, there has been little crossover between the two groups.

But that is changing, say recruiters, with Wall Street financial advisers showing increased interest in the private banking, said Patrick Kelly, a recruiter at Los Angeles-based Willis Consulting.

“They hear that all the money is over there and it’s easier to get referrals on that side,” Kelly said.

Private bankers are paid a salary and bonus determined by the bank, while financial advisers receive a percentage of the fees and commissions they generate. Advisers usually earn more than private bankers managing comparable assets.

With shaky markets and clients sticking to conservative, less profitable investments, some advisers are increasingly drawn to private banks, where they can benefit from investment bank referrals and a guaranteed salary.

Financial advisers William Goettert and John Entenberg jumped to Citi Private Bank last month after spending a decade at Merrill Lynch, a unit of Bank of America.

Goettert said they were attracted by the private bank’s focus on wealthy clients and its access to sophisticated products and research from Citi’s investment bank.

“Half of our clients are based outside the U.S. and Citi really has a global footprint,” added Entenberg.

Still, not all advisers can make the transition to private banker. Advisers need to have a stable of wealthy clients, a track record of generating fees and, most importantly, be willing to share clients with investment managers, estate planners, tax and trust experts.

Moreover, private banks do not offer the huge recruiting deals of the large brokerage firms — sometimes triple an adviser’s fees and commission over the previous year.

Recruiters said private bankers receive one to two times their previous year’s salary and bonus to move.

Still Christopher Maillie, who oversees Wells Fargo Private Bank offices in central Pennsylvania, said he sees greater interest in private banks from brokerage advisers.

“At the private bank, it’s about how do we serve clientele with sophisticated needs with trust services, lending and financial planning,” said Maillie, who spent four years as a complex manager at Morgan Stanley Smith Barney before joining Wells Fargo in July.

“People come here for the right reasons,” he said, “as opposed to bribing them with a check.”

(Reporting by Helen Kearney; Editing by Steve Orlofsky)

((helen.kearney@thomsonreuters; +1 646 223-6124; Reuters Messaging: Keywords: PRIVATEBANKS/RECRUITING

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