Frances Aldrich Sevilla-Sacasa, who heads Bank of America Corp.'s new private wealth management organization with the $3.3 billion acquisition of U.S. Trust closing today, said that though the unit will face some natural attrition of advisers and customers, those defections will be offset by hiring and expansion plans that will continue growth in what is now the nation's largest private wealth management business.
The New York unit combines U.S. Trust with B of A's private bank and is the product of eight months of alignment work. Named U.S. Trust, Bank of America Private Wealth Management, it manages $265 billion of assets for 134,000 clients. It has offices in 32 states, and serves clients with more than $3 million of assets.
"Our success will come not only from being the largest, but by doing a better job than our competitors, simply because we are better equipped now to serve our clients," Ms. Sevilla-Sacasa, who was named the unit's president and CEO in May, said Thursday.
U.S. Trust has had the "normal" attrition of advisers and associates that a large company experiences after a major deal is completed, and that will mean some client attrition as well, she said. However, her unit has also been able to attract advisers — B of A has added 150 client-facing advisers since announcing the deal in November, she said.
"U.S. Trust will continue to hire," Ms. Sevilla-Sacasa said. "Both organizations are in the process of aggressively hiring, and we will continue that after the integration is completed. … Our presence is going to be that much more significant when the combination is completed, and we are going to be able to attract advisers at an even quicker pace."
The unit plans to add advisers in markets such as California, the Southeast, New York, Texas, and Chicago, she said. "I think we are going to look to expand in some markets where our presence is not that significant, but more importantly, we are going to look at key markets across the country to add to our depth and breadth," she said. "There are some pockets that are growing rapidly, and we want to grow there further."
Analysts said a buyer can expect to lose about 15% of deposits and 10% to 11% of customers in a typical bank acquisition. Charles "Chip" Roame, the managing principal of Tiburon Strategic Advisors, a research and consulting firm near San Francisco, said that a wealth management firm can expect postmerger client attrition of about 12% over three years.
Since announcing that it was buying U.S. Trust from Charles Schwab Corp., B of A has taken steps to minimize attrition, analysts said. However, in April Peter Scaturro stepped down as U.S. Trust's CEO, one month after B of A said he'd run the merged unit. His departure came amid rumors that the Charlotte company planned to change how U.S. Trust operates.
Ms. Sevilla-Sacasa, who worked with Mr. Scaturro for seven years, said the companies spent eight months combining best practices.
"There was a lot of avid discussion, and ultimately a lot of good things came out of all of this," she said. "Executives at both B of A and U.S. Trust were very passionate about servicing clients and making sure everything we did was in the clients' best interest," she said. "We worked to make thoughtful organization and leadership decisions to get the best from both firms."
In May, B of A announced that Ms. Sevilla-Sacasa would lead a more centralized executive team to run the wealth management business. Five regional directors would report to her, including three from B of A. U.S. Trust and B of A had historically taken a regional approach, with B of A overseeing eight regions and U.S. Trust seven.
She said in May the companies decided to reduce the number of regions they'd serve, because "a more centralized regional leadership" would make it easier to provide market-level management.
In June, Bank of America announced it'd name the unit U.S. Trust, Bank of America Private Wealth Management, but U.S. Trust was kept front and center because it is a stronger brand among the very wealthy.
"We wanted to continue to use the U.S. Trust brand, because the brand is well recognized in the high-net-worth and ultra-high-net-worth market," Ms. Sevilla-Sacasa told American Banker in mid-June. "Bank of America has served those markets for 200 years, and they have a solid private banking business, but the brand is a corporate brand and wasn't distinctive to the private wealth management space."
The branding decision followed extensive research and analysis of feedback from clients and associates that showed that U.S. Trust is a stronger brand among the very wealthy, Ms. Sevilla-Sacasa said. B of A will begin an advertising campaign in the fourth quarter.
As Mr. Roame put it: "This is a brand deal, plain and simple. B of A bought themselves the U.S. Trust brand."
Mr. Bove said the acquisition has potential but the transition will not be easy. "U.S. Trust wasn't a strong, vibrant, effective institution. That is why they were sold twice in the past seven or eight years," including to Schwab in 2000. "There may be an opportunity to provide additional services. There may be an opportunity because Schwab couldn't do with U.S. Trust what B of A can."
Ms. Sevilla-Sacasa said her unit will look for opportunities to cross-sell, but it is crucial from the outset to maintain the status quo for existing clients. "Not much is going to change. Clients are still going to have access to the same team of advisers and they will still be served by the same professionals," she said. "Obviously, over time we will look to offer a broader set of capabilities."
Ms. Sevilla-Sacasa said ultrawealthy customers are focused on estate and wealth-transfer matters and philanthropy. "Clients are interested in more than just managing wealth and determining asset allocations," she said. "By combining with Bank of America, we can give U.S. Trust customers access to more loan products, credit, and banking products. We have an opportunity to touch more of the issues that wealthy families are facing today."
