Wealth management can get lost in the "supermarket" of services offered by large banks, says the recently retired chairman and chief executive of U.S. Trust Corp.
"The larger the bank, the more confusing the image and the more difficult it is to convince people that it is the right place to have them manage your wealth," said Jeffrey S. Maurer, who retired in January from the New York-based wealth management unit of Charles Schwab Corp.
Mr. Maurer, whose book, "Rich in America: Secrets to Creating and Preserving Wealth," was published last week, said in an interview that large banks are handcuffed by the array of services and products they must offer.
"The multinational banks and superregional banks are selling a number of services, and it is just confusing to the public," Mr. Maurer said.
For a bank to succeed in private wealth management, Mr. Maurer said, it must offer an open architecture product array that includes proprietary and nonproprietary funds, and it must develop a strong staff of professionals with a competitive incentive program.
"It is hard to be No. 1 at everything you do," he said. "It is not credible to say to clients that our product is always the best. You have to allow products to stand on their own and array them against competing products."
Executives at both FleetBoston Financial Corp. and Bank of America Corp. responded, however, that large banks are well-positioned to serve wealthy customers.
"The whole key to success in the wealth industry is delivering personal service but with access to world-class capabilities," said Ann M. Limberg, a managing director in Fleet's private-client group and its manager for the New York region. "It is hard for a small institution to do this effectively."
Ms. Limberg said that Fleet's private-client group, which has $55 billion of assets under management, has a competitive advantage because it can deliver a full range of investment and banking services from one site.
"As long as you focus on the client and their needs and you don't let functional silos deter you, large banks can provide the best possible service for a client," she said.
Alan Rappaport, the president of Bank of America's private bank, said the Charlotte company has established a service model that lets the private bank leverage the parent bank's capabilities so that size can be "an asset, not a liability, to clients."
Bank of America has divided customers into three tiers: consumer banking; premier banking, for customers with more than $250,000 of investable assets; and private banking, for customers with more than $5 million of investable assets. A point person is assigned to each large customer in order to deliver integrated services.
Mr. Rappaport said small banks have trouble delivering the depth of services a large bank can offer.
"A large organization can make things work because of a team approach," he said. "It is more than referrals and touch points. A large bank can succeed with private banking because it can offer more resources to clients."
Mr. Maurer conceded that some large banking companies, like Bank of America, that grew through a series of mergers have a competitive advantage in their large base of private banking clients. "Their advantage is their size and mass distribution," he said. "But most institutions have to decide where they are going to compete."
Private wealth management has evolved considerably, Mr. Maurer said, since he began at U.S. Trust in the summer of 1970 as a 23-year-old assistant trust officer in a field he admits he then knew nothing about. He was walking on Wall Street that year as a peace demonstrator, he recalled, and soon after "I marched up and down Wall Street looking for a job."
"I liked the people, the job sounded interesting, and 33 years later, I left," he said.
Mr. Maurer said New York wealth managers in the 1970s could depend on managing trust assets for some of the world's wealthiest families, like the Vanderbilts. For the company to grow, however, it had to evolve, he said.
"We were dealing with inherited wealth; U.S. Trust was representative of the typical major league trust department," he said. "We surveyed our trust clients [in the 1970s], and almost 70% of our clients were females, which meant that the wealth had been left to them."
In the mid-1970s, Mr. Maurer said, tax-law changes made trusts less desirable for preserving and creating wealth.
"Suddenly, we had to convince the public that trust departments weren't some place to go when you wanted your money to die," he said. "We had to convince the public that this was a dynamic business and we could achieve good investment results and coordinate planning services."
He said U.S. Trust knew it had to take the skills it had developed while handling inherited wealth to create relationships with the newly affluent.
"That was the biggest transition, moving from trust to new relationships for first-generation affluent" people, he said. "Counseling them and investing for them as they were developing their wealth."
Mr. Maurer said that in the past 20 years U.S. Trust shed its corporate banking and institutional custody businesses in order to focus on personal financial services, private banking, and investment management. The company now manages $90 billion of assets.
In 2001, the San Francisco brokerage house Schwab bought the company, and Mr. Maurer was promoted to chairman and chief executive officer.
For banks to succeed in working with wealthy people, he said, they must take a holistic approach to wealth management, not just push products. "Selling products is OK. That is what everyone is in business for, but I think you have to be transparent for your clients," he said.
"Customers want a blueprint to efficiently reach their goals and objectives," Mr. Maurer added, "and firms that just stick to pushing investment products are unlikely to allow that to happen."
Mr. Maurer, who is 56, said he would be willing to return to an executive role if he found the right wealth management firm to work with.
"Now that I wrote the book and the summer is over, I think I will become a little restless," he said. "So I will want to find something to keep me busy."
