Michael P. Rose defines the “emerging affluent” as highly paid professionals who want help with financial planning but are not quite rich enough to interest traditional private banks.
So he helped set up a bank meant largely for them.
Metropolitan Capital Bank, staffed almost entirely by financial planners, opened in January. It targets lawyers, accountants, consultants, doctors, and other professionals with annual incomes of $75,000 to $350,000 and assets of $250,000 to $3.5 million.
Of course, Chicago is already home to banks that specialize in private banking, including the $48.6 billion-asset Northern Trust Corp. and the $2.6 billion-asset PrivateBancorp Inc.
But Mr. Rose, a former consultant who is Metropolitan’s chief executive officer, said it is prowling for those whom traditional private banks pass by. There are about 40,000 such emerging-affluent households in the Chicago area, he estimated.
“We’re focused on clients that are traditionally with a mass retail bank,” he said.
Metropolitan’s financial planners would help customers create a comprehensive plan to meet financial goals, Mr. Rose said.
Spectrem Group research confirms the interest of the “emerging affluent” in investment advice. Last year the consulting firm, which focuses on the wealthy, found in a survey of 465 people with assets of $500,000 or more that 40% used advisers to help them invest.
Metropolitan is using the connections of its founders and management to attract customers. (Mr. Rose was once the acting director of the Illinois Housing Development Authority.) It is also looking to forge relationships with law firms and accounting firms, and it plans to hold receptions for customers and their friends and to sponsor events at upscale condominium complexes in Chicago.
Geri R. Forehand, the director of strategic services at Brintech Inc., a consulting firm in New Smyrna Beach, Fla., said successful private banks need highly qualified employees, so their overhead can be high.
“The people working at the bank, top to bottom, not just the CEO or the senior lender … have to be top-notch,” he said. “Sometimes that translates into a high salary structure, which lengthens the break-even point.”
Another problem is the limited size of the emerging-affluent population, Mr. Forehand said. Metropolitan risks hitting a plateau quickly, he said.
Mr. Rose said that Metropolitan controls costs by having just one branch and a small staff. Its customers will be reimbursed for fees charged for using other banks’ automated teller machines, so Metropolitan does not need an ATM network, he said.
Also, an arrangement with Fifth Third Bancorp of Cincinnati allows Metropolitan customers to make deposits at Fifth Third branches.
