Northern Trust Corp.'s unit for ultrawealthy investors has increased its assets under custody by 40.4% in the past year and plans to add advisers to maintain the momentum.
Steven Appell, a senior vice president of marketing and sales in the Chicago company's wealth management group, said its assets under custody have grown at a 21% annual rate for the past 10 years.
The group was formed in 1982 to sell clients with at least $100 million of assets services such as global custody, investment consulting, fiduciary help, asset management, technology solutions, risk management, and private banking. On Thursday it promoted two advisers, Ann Zeiller and Michael J. Delaney, who worked for the parent company to oversee regional operations.
Ms. Zeiller, who has worked at Northern Trust since 1982, is to manage the Northeast, including an expansion planned in the New York and Boston areas. Mr. Delaney, who has worked for the company since 1986, is to head up the California operation and expansions in Los Angeles and San Diego.
Mr. Appell said in an interview last week that the company will not add advisers this year but could next year "depending on growth in each market."
Northern Trust has advisers for ultrawealthy investors in each of its markets — the West, Midwest, Southeast, and Northeast. Mr. Appell said ultrawealthy customers are drawn to the company by its work for institutional clients.
"Our primary business is securities, custody, and accounting for large corporations," he said. "We do a lot of work for large pension funds, and we can use that same platform for these ultrawealthy individuals on the personal side. These individuals with $500 million in net worth are really small corporations, and we are able to provide the same level of service to them that we provide a multibillion pension fund."
Northern Trust works with 381 ultrawealthy families and individuals. Mr. Appell said each client has a dedicated relationship manager who manages their wealth and educates subsequent generations to try to ensure that the company remains in charge of their wealth after its transfer.
Analysts said clients with more than $100 million of assets can be very difficult to work with because they expect unusual, individualized service, including concierge services that range from the luxurious (golf outings and helicopter reservations) to the everyday (such as home health care and nursing for elderly relatives).
Rus Prince, a high-net-worth analyst at Prince & Associates in Shelton, Conn., said concierge services and other forms of attention let private banks differentiate themselves. Northern Trust gets an occasional request for concierge services but does not provide them, Mr. Appell said.
"We have recommended firms that we will turn our customers toward, but we won't do full concierge services; that is really what a family office is for," he said. "It is just too broad and too difficult to build out from. Our role is to know who the providers are, and we'll refer people, but we won't endorse anyone."
Mr. Appell said the group sponsors a three-day conference every 12 to 18 months for its ultrawealthy clients to network with one another. He said 225 of the unit's 381 clients attended the last conference in February.
"Half of what we can really offer to make ourselves stand out is the opportunity to network with other large clients," Mr. Appell said. "The conference really gives them an opportunity to network and trade notes."
He said industry consolidation in the past 18 months, such as Bank of America Corp.'s acquisition of U.S. Trust and the merger of Bank of New York Co. Inc. with Mellon Financial Corp., will also continue to push ultrawealthy people to Northern Trust.
"The truth is, clients don't like it when their provider is acquired because, when the ownership changes, the culture changes," he said.
Clients are typically willing to give a new company a month or two, he said, and "then they decide that 'this isn't the firm that I hired 10 years ago and it is time for a review.' And generally, when an ultrawealthy customer is reviewing his options, we get a call, because, well, we are the largest in this space. … All of this turmoil means opportunity for us."
"Bank of America bought U.S. Trust, and it is just a totally different culture," Mr. Appell said. "Wealthy customers will consider the cost savings, but when they find out their relationship manager is moving, they tend to follow. Technology is all great, but wealthy individuals are loyal to their relationship managers."
John Yiannacopoulos, a Bank of America spokesman, said U.S. Trust, Bank of America Private Wealth Management, the unit the Charlotte company created in July when it completed its $3.3 billion purchase of U.S. Trust from Charles Schwab Corp., has continued to attract top talent.
The unit, which manages $265 billion of assets, has attracted more than 200 client-facing professionals in the past few months, Mr. Yiannacopoulos said.
Robert P. Kelly, Bank of New York Mellon Corp.'s chief executive officer, said during the company's second-quarter earnings conference call that it is not expecting much client attrition in the wake of its megamerger, which closed on July 1. Standard, industry-accepted attrition is probably about 2% to 3%, he said, and "we don't expect to fall outside of that range in any material way."
