Northern Trust Corp. is refocusing its approach to California's coveted and fast-growing high-net-worth market.
The Chicago-based company, which established a beachhead in the Golden State in 1988, recently divided its operations there into four regions: the San Francisco Bay area, San Diego, Santa Barbara, and the Los Angeles area, where it keeps its California headquarters. The goal is to distribute authority among newly appointed local presidents and to personalize the services of a $30.2 billion-asset banking company located halfway across the country.
"Because our business is so personal, our challenge is to bring all of the resources that flow from our organization down to the local level," said John N. Iwanicki, president for the San Francisco region. "We are trying to produce something local in character and northern in culture."
Mr. Iwanicki, who was tapped for his regional post last month, said the San Francisco area is brimming with opportunity. The targeted high-net-worth client generally has $1 million of investable assets and at least $250,000 of annual income, Mr. Iwanicki said. At least 50,000 people in his region fit this description, he said.
Nationwide, Northern Trust is looking to establish branches close to concentrations of millionaires. To that end, it recently opened a branch in Mill Valley, just north of San Francisco, bringing its California branch total to 11 (out of 71 nationwide). Judging from the amount of wealth in California, there is room for more locations. An article in June's Worth magazine said 13 of the 20 richest towns in the nation, based on median home price, are in California. Seven are in or near the Bay Area.
"Our strategic goal is to be within a 20-minute drive of 40% of the millionaires in the United States; so far, we're somewhere around 20% of them," said Mr. Iwanicki, a 17-year Northern Trust veteran who formerly was a Chicago-based manager in the company's corporate and institutional services division.
"Our only constraint out here is having a measured pace of expansion, and making sure we have enough appropriate people to staff things," he added.
As much as the bank wants to increase its profile in the Bay Area, this will not occur through any kind of media advertising. Northern has tended to take a low-profile approach to getting new business, relying heavily on event-based advertising -- seminars, philanthropic gatherings, or other meetings where clients and prospective clients can mingle, Mr. Iwanicki said.
He said Northern Trust holds roughly 1,500 marketing events nationwide each year.
"Fifty-five percent of our new business is the direct result of referrals from other clients," he said. "Our clients can be our best salespeople.''
This method of hunting for new business sits well with the kinds of clients Northern Trust is looking for -- people who value discretion and personal service.
"Their very low-key approach appeals to the kind of people who believe your name should only appear in the paper twice when you're married and when you die," said Nancy A. Bush, an analyst with Ryan, Beck & Co. in Livingston, N.J.
The bank's methods have been "stunningly successful" in Florida and are expected work just as effectively in California, Ms. Bush said. The Northern Trust name carries a cachet likely to attract the hordes of young professionals who have built their wealth working in the technology industry, she added.
"Silicon Valley has a lot of money, but not a lot of class," Ms. Bush said.
