Over the past couple of years, small- and mid-size banks have happily positioned their wealth management businesses as alternatives to those of big, wounded banks and brokerage houses.

But that opportunity is quickly disappearing as Bank of America Corp. and others regain their footing and refocus on wealth management. That’s the view of several wealth management executives who discussed their expectations for the year ahead. 

“The big banks are getting their acts together,” said Dana Abraham, president of investment and wealth management at UMB Financial Corp., of Kansas City, Mo.

Scott Kavanaugh, chief executive of First Foundation Bank, in Irvine, Calif., agreed. “Maybe a couple of years ago, some of the bigger banks were facing their challenges and maybe were not as focused on new accounts and growing their business,” he said. “But I feel like more and more, that’s starting to happen.”

The newly level landscape is one of several factors trends on bank wealth management execs’ radar for 2011. The executives expect to grow their businesses through hiring, and in some cases potentially through acquisition.

They also expect investment clients to slowly regain their appetite for risk. But at the same time, say the executives, clients will expect financial professionals to provide more value than they have in the past.

Some wealth management executives expect 2011 to be a year of mergers and acquisitions. M&A activity actually started to appear in 2010. UMB, for instance, bought Prairie Capital Management LLC, a Kansas City-based asset management and wealth management firm, along with Reams Asset Management Co. of Columbus, Ind.

Union Bank of California is among those that are interested in growing through acquisition in the year ahead. The bank has a stated goal of becoming one of the top 10 in the country, and acquisitions of community banks—which could have wealth management businesses—are a possibility, said Mary Curran, executive vice president of the bank’s wealth management group.

But the bank is also “very interested” in buying or lifting out standalone wealth management businesses, she said.

Hiring also appears to be on the upswing for 2011. BancWest Corp., for instance, wants to add 11 private bankers, for a total of 34, according to Carolyn Paul, regional manager for the bank’s investment management, trust and private banking divisions.

Yet banks may find the recruiting environment to be tougher than is has been for the past few years, opined First Foundation’s Kavanaugh. A big reason is that turnover rates at big banks and wirehouses have stabilized, he said. 

“It’s going to be more challenging going forward to find good, talented people in the industry,” he said.

Meanwhile, wealth management executives say they have begun to see more boldness among investors, and expect it to continue into 2011.

“You’re going to see equities become more popular again,” predicted James Nesci, chief wealth management officer of Provident Bank, in Jersey City, N.J.

Nesci has seen clients begin to move into blue-chip domestic equities. Union Bank executives, on the other hand, says the bank’s wealth management clients are interested in diversifying into international stocks.

The increasing comfort with risk has extended to fixed income as well, with clients investing in longer-term securities, added Paul.

“Although folks really don’t like where interest rates are, they are starting to feel comfortable with putting their toe back in the water,” she said.

As they do, however, clients have begun to expect their wealth advisers to do more to serve them. UBOC’s Curran says that guiding investors through the implications of the recent tax cut extension is one way her bank is striving to do that.

UMB’s Abraham says her organization has been “trying to get in the head of the high-net-worth client.”

Such clients remain skeptical and somewhat distrustful in the wake of the market crash, she said. What they need now—and did not need two years ago—are advisers with emotional intelligence and soft skills.

Those soft skills might include persuading a client to follow their advice: Clients who failed to do so a couple of years ago may now regret that, she said.

“Historically, in a good market, the client seeks advice with good products and service,” she said. “Now the client wants someone who can recognize their specific needs and who can motivate them to take action.”


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