Around the time it sold its own registered advisory firm four years ago, Silicon Valley Bank of Santa Clara, Calif., struck up a relationship with another RIA, GW & Wade LLC.
Now the SVB Financial Group unit is expanding that relationship, offering wealth and tax planning services to its private clients through GW & Wade.
Silicon Valley Bank focuses on providing loans to its customers. It caters to companies in four niche industries — technology, life science, venture capital and premium wine — and to their executives.
GW & Wade is based in the two metropolitan areas — San Francisco and Boston — where most of Silicon Valley Bank's customers are located, and the bank has worked with GW & Wade on an "informal basis" for four years, said Silvia Fernandez, Silicon Valley Bank's head of private client services.
"We were really looking for a partner that offered outstanding solutions on the wealth management side," she said. "That is what you traditionally look for when it comes to private client services, but we don't have those."
GW & Wade's main offices are in Wellesley, Mass., and Palo Alto, Calif. Targeting a similar clientele as the $10 billion-asset SVB Financial, it offers tax planning, investment management, retirement and estate planning to the executive management teams of public and private companies, particularly in technology, private equity and venture capital.
"We wanted to find an independent RIA that wasn't managing its own money but had at least $1 billion in assets and had offices in both of our major markets," Fernandez said. "When we looked at the top 100 RIAs, there was really only one firm with all of those qualifications."
The RIA that Silicon Valley Bank sold in 2005, Woodside Asset Management, had $200 million of assets under management. Silicon Valley Bank had bought Woodside in 2002.
"Ultimately it just wasn't a fit," Fernandez said in an interview last week. "It is really hard to make something like that work. A lot of things have to come together."
Neil Goldberg, a principal for GW & Wade, said his company and Silicon Valley signed a nonexclusive agreement allowing the bank to use other providers and allowing GW & Wade to partner with other banks.
He said that there has already been interest from other banking companies but that he would not consider working with other banks if that would conflict with his firm's relationship with Silicon Valley Bank.
"The intent is not to spread ourselves too thin," Goldberg said.
GW & Wade, which is owned by Focus Financial Partners, an independent wealth manager based in New York, had $2.3 billion of assets under management as of March 31. GW & Wade would like to increase its assets, "but in this environment it is difficult," Goldberg said.
"Like most smaller RIAs, we are healthy and secure," he said. "We have maintained terrific retention rates and have a loyal clientele. We are considering how and where to grow from here."
Silicon Valley Bank is one of many community banks partnering with third-party providers to offer wealth management services to high-net-worth individuals to avoid the cost of launching their own platforms. Such banks have divested ancillary wealth management businesses and turned to third-party providers to focus on their core banking businesses.
William W. Reid Jr., the president and chief executive officer of ICBA Financial Services, the investment management arm of the Independent Community Bankers of America, said most community banks are expanding their wealth management units, not unloading them.
"Maybe things are different with regional and midsized banks," Reid said. "Divesting makes sense for them, but I think that the market turmoil over the past 18 months has provided more opportunities for smaller banks."
"These banks have developed closer customer relationships," Reid continued, "and that has meant additional business for their trust and brokerage units. They are gaining business because they offer a greater degree of service to their customers."
In its deal with Silicon Valley Bank, GW & Wade will focus for now on cross-selling wealth management services to the bank's customers, Goldberg said.
"This is a critical relationship for us," he said. "We are going to see how things play out over the next six to 12 months. We are still gauging interest from their clients. Initially, we are looking at helping their clients in California and Boston, but there are SVB customers across the Midwest as well."
Fernandez said Silicon Valley Bank's private clients will receive "pricing preferences" if they use services from both the banking company and GW & Wade. Silicon Valley Bank plans to be "very selective" about using other RIAs, she said.
"Right now, we are happy with GW & Wade and like being able to offer wealth management services to our customers," she said. "We aren't planning another alliance right now."