Mellon Financial Corp.'s private wealth management group plans to increase its sales force, its marketing, and its geographic reach, in order to double its assets under management in the next five years.
"This is a pretty aggressive plan and one that will entail specific investments from the parent company," said Craig Sutherland, who was recently promoted to vice chairman for a newly created unit to increase sales and marketing in the Pittsburgh banking company's private wealth group. "I think we are well positioned to execute this. We are focused on getting things done."
The private wealth group, which has $80 billion of assets, will increase its 55-person sales force to 75 by yearend and to more than 100 by the end of next year, Mr. Sutherland said in an interview Tuesday.
Currently, Mellon has 60 private wealth offices nationwide, many of them along the East Coast and in the West. It is looking to extend that network into several new markets, he said.
"There are some logical extensions where we could add satellite offices," Mr. Sutherland said. "We are looking in Naples" and other places in Florida. "Whether we do something de novo or make an acquisition is still to be determined. … We also have gaps in Chicago and Texas, and we want to be opportunistic as we look at markets to enter."
The private wealth group will continue to seek to acquire boutique firms, he said. It is in talks in several markets, and he expects to make at least one acquisition public in the next couple of months.
This year the group plans to nearly double its marketing budget, Mr. Sutherland said. He would not say specifically how much was earmarked for marketing, but he said the budget would be split equally between "lead generation marketing" and regional advertising.
"We have really done very little advertising thus far," he said. "We want to develop something that is more regionally focused, rather than doing a national campaign."
Analysts in Florida said there are plenty of opportunities to buy there, but there are also plenty of potential bidders.
Richard X. Bove, an analyst with Punk, Ziegel & Co., who covers Mellon from his office in Pinellas Park, Fla., said that even though many firms are competing for market share in Florida, the market could be a fruitful one for a new entrant.
"Attempting to build a wealth management presence in Florida is not the worst idea in the world. In fact, it makes a lot of sense, but it isn't easy," he said. "There is a constant inflow of funds to Florida, but there are also a lot of new banks and financial services firms that start up in this state specifically because of that opportunity."
Mellon has a good chance of acquiring a small money manager in Florida and building its private wealth management operations in the state, because "the pie here keeps growing," Mr. Bove said.
The parent company has been taking steps toward forming a national private banking network since 2001, when it sold its retail banking operations, including all its branches, to Royal Bank of Scotland Group PLC's Citizens Financial Group Inc. of Providence, R.I. Mellon retained only the business related to high-net-worth customers.
It has spent the past five years divesting what it considers low-profit operations, including lower-end retail lines and human resources services, and it has devoted the bulk of its resources to building asset management, securities processing, and other fee-based businesses. Its private wealth business has made seven acquisitions since 2000.
Mr. Sutherland said Mellon acquired some cash it could use to expand its private wealth business when it sold its human resources outsourcing operation in May to Affiliated Computer Services Inc. of Dallas for $405 million.
In an interview in December, Mr. Sutherland, who had been Mellon's national director for private wealth management before being promoted Tuesday, said his company had set aside some assets from the sale in an "organic growth pool" for selected businesses, and a "disproportionate" amount was allocated for expanding the private wealth unit.
On Tuesday, he said Robert Kelly, who became Mellon's chairman and chief executive last month, has "echoed that directional priority" since his arrival from Wachovia Corp.
"Private wealth management has contributed as much or more profits as any division of the parent organization in the past five years," Mr. Sutherland said. "This is the obvious place for reinvestment in the future."
