New models for wealth management: South Florida has long been a center for private wealth management, catering to the abundance of affluent families that own homes here. Now a new generation of wealth is being created, and a new array of managers is ready to protect and grow these fortunes—with whatever tools they need

South Florida CEO, April, 2004 by Mike Seemuth, J.P. Faber

"One trend of some institutions is open platform," says Dean Klevan, Jr., President and CEO of Coral Gables Trust Company. "That permits the use of the best managers inside or outside the organization. Those that didn't have it rose and fell on the performance of the in-house managers."

"We work with multiple money managers," says Teresa Valdes-Fauli Weintraub, president and CEO of Fiduciary Trust International of the South in Miami. "We are not a mutual fund company, so if someone wants to have a personalized portfolio [with mutual funds], we use Templeton or Franklin." Especially with more knowledgeable clients, it's important to stay open to outside advisors, "whether it means you keep everything or not," says Weintraub. "If a client is not happy you lose 100 percent, so it may be better to lose some in the management."

"We want to be a point of solutions," says Ramon Usatequi, who runs international private banking for Bank United in Miami. "We provide what we can provide and put them in touch with those things we don't." An example would be an offshore trust. "We know people who do nothing but that," says Usatequi. "If [a client] were to go to a big competitor they might provide both the investment management and the trust. In our case we would offer the investment management, and turn them to someone else, with the right fiduciary mindset, to do the right thing for his [or her] trust."

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International Challenges

Even with all the tools at his disposal, Usatequi is facing a new hurdle with his international clientele that is not a factor with domestic clients.

The most sweeping regulatory change in years on the wealth management front--the USA Patriot Act of 2001--has spawned a new set of Treasury Department regulations designed to deter money laundering via financial institution accounts. Executing a quick and convenient security clearance for new-account applicants requires a new service standard in the industry.

Charles Intriago, publisher of Miami-based newsletter Money Laundering Alert, calls the Patriot Act "the broadest federal law since the New Deal." The far-reaching law has dug new legal pitfalls for financial institutions, securities broker-dealers, and sellers of money services like check cashing, currency exchange and money transmittal. Among its compliance requirements, the Patriot Act has forced banks, broker-dealers and other sellers of financial services to do stepped-up vetting of new-account applications.

Under Section 326 of the Act, financial institutions are required to set up a program to verify the identity of new-account applicants, and to no longer simply rely on information supplied by the applicant. "The requirement to know our customers has become even greater," one Miami-area private banker says. "It has become a more detailed process." And while the regulations apply to all US banks, South Florida, with its intricate ties to Latin America, is particularly sensitive to the Patriot Act. "It's not just here, but we are sort of an outpost, so we've felt it harder here," says Dennis Nason of the banking executive search firm Nason & Nason.