Comerica Calling Trust Office in New York a Success

One month after setting up shop in Manhattan, trust officers from Michigan's Comerica Inc. are declaring their move to New York a success.

Under an agreement with PaineWebber Inc., Comerica's trust officers meet with the brokerage firm's wealthier clients to oversee their trusts and estates. Forged in late 1995, the alliance has been up and running in Michigan, Florida, Texas, California, Ohio, and as of Jan. 7, New York.

In New York, Comerica executives say they have already opened up seven- figure trust accounts for PaineWebber clients. The bank, which has more than $13.1 billion in personal trust assets under management, charges the PaineWebber customers an unbundled minimum trust fee of $2,750.

PaineWebber's "investment executives have waited for this capability for a long time. Their clients are interested in preserving wealth and want to do it through PaineWebber," said John W. Emery, PaineWebber's manager for personal trust services. "These situations already exist, and our clients are being referred to Comerica."

The national brokerage also worked out a similar agreement in October with Bank of Boston Corp. in New England.

What makes these alliances unusual is that banks have historically preferred to take on the triplicate role of trustee, custodian, and investment adviser.

"You recognize that to get access to clients you wouldn't normally have, maybe you need to unbundle those three services," said Rodney P. Wood, first vice president, Comerica private banking. "It's a new way of looking at the trust business."

"I don't look at it as giving up business, but getting something we would not have normally got," he added.

The brokers do not get paid fees from the bank for making referrals, according to Mr. Wood, but they do ensure the clients' assets do not leave the PaineWebber fold.

"From a strategic perspective, it makes sense. More and more companies are breaking up what they do into components," said Charles B. Wendel, president of Financial Institutions Consulting, New York.

He added that the alliance may provide Comerica with trust administration income in the short term, but the bank will have to get a piece of investment management profits to make the project sustainable for the long term.

Comerica's plan is to form ties with affluent PaineWebber clients before they go with an established local trustee.

Sometimes that can be easier than it sounds. Comerica just opened an account for a PaineWebber brokerage client in New York who transferred her trust from a bank that did not work with the brokerage.

"Being a known New York entity does not matter that much. Comerica can show their record to overcome the unfamiliarity pretty quickly," Mr. Wendel said.

Comerica is represented in New York by vice president James A. Sutton, a trust officer recruited by Comerica away from Bank of New York Co.

The bank plans on backing him up with additional hires, but for now Mr. Sutton is a one-man show, trumpeting the alliance to the 600 PaineWebber brokers in New York and 300 in New Jersey. He said convincing them to work together is not too hard.

"We're here to do what you don't want to," Mr. Sutton tells them. "Then I hold up the estate power and law book."

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER