Bank of America Corp. is looking to further segment its high-net-worth customers by creating an ultra-wealth group within its private bank; the group plans to open offices in seven markets this year.
Alan Rappaport, who has been promoted to head the family wealth advisors group, said it would open offices in New York, Boston, San Francisco, Los Angeles, Chicago, Dallas, and in southern Florida to serve customers with at least $50 million of assets. The bank plans to open its first ultra-high-net-worth office in New York.
Mr. Rappaport, who was promoted last fall from president of the private bank to chairman, and head of the planned unit, said the bank wants to begin by developing a presence in the largest U.S. wealth markets. It will add offices from there, he said.
"This market is large, growing, and fragmented," Mr. Rappaport said. "This is a big business opportunity for us and a chance to deliver better continuity as private clients develop more assets."
In the wake of the FleetBoston Financial Corp. deal, which was announced in October 2003, Mr. Rappaport said, starting the ultra-high-net-worth group became a necessity to accommodate the ultra-wealthy clients who had been customers of Fleet's private-client services. Mr. Rappaport said these customers, along with Bank of America's, motivated the thinking about creating the unit.
"Adding the legacy Fleet footprint," he said, "really added the scale and the rationale to create this group."
Already, Bank of America's private bank, which has $170 billion of assets under management, has specific units for affluent investors and high-net-worth customers. Mr. Rappaport said the further segmentation of its customers gives the private bank a chance to develop better wealth advisory relationships and gain wallet share.
"The concept is, we want to lead with advice for ultra-high-net-worth customers in an effort to gather more assets," he said.
Mr. Rappaport said the bank would try to develop products and services tailored to the ultra-wealthy. He said Bank of America already has a strong set of customized credit products for these customers.
Analysts said developing new products and services might not be enough. Burton Greenwald, a Philadelphia analyst, said most large banks have been specifically targeting the ultra-wealthy for years.
"The competition is stiff," he said. "Even a bank like Bank of America has to bring something more to the table than just their presence."
Mr. Rappaport agreed that there is a lot of competition for ultra-wealthy customers. The competition varies, he said, however, in every market and in every product, and this gives Bank of America an advantage.
"The market is full of tough competitors with strong franchises, but the competition is different based on geography and product," he said. "We can pull a lot of product areas together, and that gives us an advantage. We can do all of this from a national platform."
Mr. Rappaport said he plans to expand the family wealth unit organically.
"The size and scale of the bank gives us wonderful access and powerful financial services," he said. "We want to increase the number of teams we have focused on the segment and add throughout the country."
