Sometimes mere seven-figure millionaire status is not enough to get a banker's attention.
Tolleson Private Bank, which is to open in Dallas sometime in March, will cater to what it calls "ultra-affluent" clients in Texas.
What qualifies as ultra-affluent?
"That's the one thing we don't like to define," said John C. Tolleson, the chairman and CEO of Tolleson Wealth Management.
But the former First USA chairman/CEO did say that his clients' liquid net worth averages about $30 million and that these sort of people are the target audience for Tolleson Private Bank, which has been awarded a charter by the Texas Department of Banking and has raised $19 million in capital. (Tolleson Wealth Management will be the holding company.)
Mr. Tolleson said his new venture plans to go up against other private banking companies in investments, tax planning, estate planning and other traditional areas but provide additional services such as advice in managing family planes and paying domestic staff.
He started his business in 1997 after Bank One Corp. bought First USA, the credit card giant. It was originally set up to manage his own family's wealth, then expanded as other families sought Mr. Tolleson's services (it changed to its current name from Tolleson Group LP last summer).
Tolleson Private Bank is a natural extension of his company's services, Mr. Tolleson said. It will provide better service at better prices than other private banks, make money on the margin between the interest it collects on loans and what it pays out on deposits, and will not charge service fees, he said.
He said that will be made possible by the clients' low credit risk and the company's private ownership. Since it will not have to answer to shareholders, it will have more earnings flexibility, he said.
John K. Fletcher, the leader of the wealth management services unit at PriceWaterhouseCoopers LLP in New York, said including services beyond managing money and investments is more prevalent in Europe than in the United States. It can work, Mr. Fletcher said, but "it's also a model that can be very expensive."
The reason is that the kind of service these clients insist on can be labor-intensive. And bankers often end up trying to provide them services outside of their realm of expertise.
"The challenge of a family office is that they can be very demanding and sticky on paying," Mr. Fletcher said.
Mr. Fletcher said U.S. private banks have about $15 trillion of assets under management. A PriceWaterhouseCoopers survey of 29 wealth management institutions found that the average client was 57 years old with an account value between $1 million and $5 million.
Private banking has always stressed high-touch service, so it would be tough for any one private bank to stand out in that respect, Mr. Fletcher said.
But Mr. Tolleson said his new venture will distinguish itself, and win customers, on the strength of its executives' experience and features like mobile branching.
Darryl S. Kirkham will be the president of Tolleson Private Bank. He co-founded Concorde Bank Dallas, another private bank, in 1985, and at one time was the president of Frost Bank Dallas. He stayed on with Northern Trust Co. after the Chicago company bought Concorde.
Mr. Tolleson said the bank plans to court wealth management clients first and then go after other affluent Texans.
These people "don't have the bank relationships they should have, in our opinion," he said.
