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

Another source of local growth is the imported population of wealthy individuals. Geographic diversity remains a paramount investment priority for clients who live in Latin America or elsewhere abroad, and who wish to keep at least some of their wealth in a US account.

"There has been a migration of money to Florida from Latin America," says Eduardo Barco, Deutsche Bank's global market head of private wealth management for the Caribbean, Central America and the Andean region of South America. Citing such overseas risks to capital as hyper-inflation and currency devaluation, Barco has watched wealthy people in his territory--which includes politically unsettled nations like Colombia and Venezuela--uproot and relocate to South Florida.

That dynamic has been the driving force behind institutions like Coral Gables-based Commercebank, a US commercial bank that sells private banking services to a mix of clients, including a heavy concentration of Venezuelan citizens. "International customers make up the bulk of our business," says Guillermo Villar, chairman and president of Commercebank. The bank sells trust and estate services, among others, to its wealthiest clients. "They are becoming more aggressive investors as the market rebounds," he says.

"In the past, when a Latin American country had a problem, a lot of funds would come this way," says BankUnited's Usategui. "There is capital flight when a country is in really bad shape." Conversely, South Florida is also the recipient of private wealth from Latin America when things are going well. "You'll get money if they are making money. In some countries, you have a negative political situation, but at times wealth is being created."

In many cases, it is not just the money being transferred to South Florida, but entire families. "More than aging boomers, we are seeing an influx of very wealthy Latin American families who, through their children, are putting down permanent roots here," says Claven. "They are becoming US citizens and taxpayers and starting businesses here. Previously they kept money offshore in tax havens."

That shift to a more permanent presence in South Florida has led a number of off-shore banks to convert their agencies here into branches that can accept local deposits. "Bank agencies in Miami are upgrading to branches because their wealthy Latin American clients are moving to Miami and becoming residents," says prominent Miami banking attorney Bowman Brown, a senior partner at Shutts & Bowen LLP and a member of the Executive Committee of the Florida International Bankers Association (FIBA). "The trend has major implications for Florida because it reflects the tremendous flow of capital out of Latin America into the Sunshine State."

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Coming Full Circle

Private bankers also report a migration pattern of another kind--client money moving from brokerage accounts to bank accounts, another consequence of the open platform models which allow private bankers to offer brokerage products. "There is a flow going from securities broker-dealers to banks," Barco says. "People are coming back to banks for less commission-based activity and more of a long-term relationship."