Union Bank of California hopes that a reorganization and a new team-based approach will allow it to double its wealth management profits by the end of 2012.
"We are really in expansion mode for our wealth business," said Mary Curran, executive vice president of the wealth management group at the UnionBanCal Corp. unit (both are mostly owned by Mitsubishi UFJ Financial Group Inc.).
The San Francisco bank laid the foundation for the effort in March when it moved its wealth management business into the global markets group, which includes its asset management and brokerage businesses.
Since then two pilot teams with representatives from those businesses have been formed.
Representatives from the three businesses, and often from elsewhere in the bank, will evaluate the needs of a client or prospect, Ms. Curran said.
One advantage of the team structure is that members update one another about the range of services they can provide, she said. That can create opportunities to deepen client relationships and to keep clients from looking outside the bank for services and products that can be had in-house, she said.
"In the past, the effort wasn't as seamless as it could have been when we were facing a client," said Ms. Curran, who oversees 270 employees in private banking, personal trust, and private wealth planning.
The changes should double the profits in what she calls the "wealth business" in four and a half years. That does not include retail or institutional business, she said.
Ms. Curran would not reveal current wealth management profits. UnionBanCal reported 2007 trust and investment management fees of $157.7 million.
Union Bank is one of a group of large banks tackling the so-called silo problem, in which different lines of business fail to communicate and share their customers. Others include Comerica Inc., Wachovia Corp., and Wells Fargo & Co.
Forming teams led by relationship managers, as Union Bank is doing, is not easy, said Kenneth Kehrer, the director of Kehrer-Limra, a research and consulting firm in Princeton, N.J.
One issue is that in many organizations, brokerages charge commissions, while other businesses charge fees, he said.
Likewise, asset managers, brokers, trust officers, and others tend to have different pay structures.
A trend in which wealth management and retail brokerage units are adopting similar, fee-based managed accounts is helping to mitigate such problems, Mr. Kehrer said. There are other hurdles to de-siloing, he said. For instance, team members from different business lines tend to be partial to the products and services in which they specialize.
"The underlying problem is that the people on the team come at the business totally differently," Mr. Kehrer said.
And despite banks' efforts to create incentives for referring customers to colleagues in different departments, compensation concerns remain, he said.
"The way the world works, there is no way they can pay you as much to refer a client as you could make yourself by holding on to that client," Mr. Kehrer said.
Ms. Curran said one reason referrals do not get made is that an employee simply does not know that another department has a solution available.
"A private banker, for instance, might not have known whether a client's needs fell into the asset management team," she said. "That option was not visible to them."
Union Bank's team approach should change that, she said. To help ensure it does, the bank is developing a compensation program that rewards the success of combined businesses.
"We haven't gotten it completely figured out yet," Ms. Curran said. "But we want to make sure that when the team is successful, that is reflected in the compensation."
Union Bank plans to expand its teams across the organization starting in about a month.
"We want to be really careful, get the bugs out, and do it right," Ms. Curran said. "We're not in a huge rush."
Most of the teams will have a private banker, a trust officer, a portfolio manager, a senior wealth adviser, and a broker, she said. In some cases they will include a commercial banker, a branch banker, or even a specialist in an area like equity derivatives or foreign exchange.
Each wealth management client — individuals with at least $1 million in investable assets — will have his or her own team, which will meet regularly. The leader of each team will be "chosen between the client and the bank," Ms. Curran said. In general, the team's relationship manager will be the member with the "broadest perspective for the client," she said.
