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

Arguably, wealthy clients are most comfortable in an environment where they make a good return on investment--whether they pay commissions, fees, or both--and the improvement in the stock market this year has been good for investors and advisers alike. "Having a positive market puts a smile on more people's faces," says Brown, head of the UBS office in Aventura.

Nonetheless, for a large segment of the wealthy market, the benefits of a positive market aren't enough to offset commission-based financial services, Brown says. "I think clients in general are becoming more comfortable with a fee-based environment," he says. And that is exactly where private banking is headed: toward providing a package of services for which fees are charged.

"What we have really done is to create in several of our markets, including South Florida, a series of wealth management teams," says Dick White, who heads up the Capital Management Group for SouthTrust Bank. "The teams consist of private bankers, personal trust officers, special security reps and insurance specialists within our markets, able to work with our high-net worth individuals. One person is the team leader, who has the responsibility of coordinating the activities of the team ... I guess in some respects we try to offer in one location one stop shopping."

Some of those services also act as marketing devices for other private banking products. Wealth management units at big banks often use loans as a starting point toward selling a fuller array of services to South Florida millionaires.

In the case of Gibraltar Bank, for example, the ability to offer high-end mortgages has been an integral part of the institution's strategy. "We have a very active high-end mortgage banking operation, which we developed right out of the gate," says CEO Hayworth. "The mortgage product has been a good one for generating new business. Someone who is purchasing a $3 million or $4 million home is likely a good client for private wealth management."

To keep their offerings as comprehensive as possible, the largest banks and brokerage firms are even adding non-financial services to the menus that their wealthy clients choose from.

For example, a separately branded portion of Wachovia's wealth management program, Calibre, caters to families with wealth in excess of $20 million. Calibre's non-financial services include counseling for heirs to family fortunes and philanthropic planning advice. "When you have children born into significant wealth, the parents have to take that into account," Alexander says. "How you teach them responsibility and a sense of community is a major consideration."

In the end, the trends toward diversification, "open" architecture and a full array of services offered by a private banker-led team of specialists may, oddly enough, have brought the relationship with clients full circle, back to the days when private bankers were the confidants of their customers, taking care of a plethora of personal and financial needs.