The struggles of U.S. banking companies are providing Harris Private Bank of Chicago with an opportunity to expand its wealth management operations.
The president and chief executive officer of the Bank of Montreal unit, which announced its second acquisition of the year Monday, said more buyouts could follow.
"Over the course of the last 12 to 18 months in rather unstable markets, we have looked to take advantage of the fact that we are owned by a Canadian parent and participate in the strong, stable Canadian banking system," the CEO, Terry Jenkins, said in an interview. "With that and the upset in the industry, we have seen an opportunity to build our business in rather adverse market conditions."
The acquisition announced Monday landed Stoker Ostler Wealth Advisors, a fee-only financial planning and investment advisory firm based in Phoenix with an office in Salt Lake City.
Stoker Ostler, founded in 1997, was the largest independent registered investment advisory firm in Phoenix, Jenkins noted. He said the acquisition (the price was not disclosed) significantly increases Harris' profile in Arizona.
Seven months ago Harris acquired Pierce, Givens and Associates LLC, a boutique accounting firm in Chicago. Harris wants to enhance its planning services, including financial, retirement, estate and cash-flow planning and will consider acquisitions and hiring to accomplish that goal, Jenkins said.
"We are not just an investment management firm," he said. "Over the last three to four years, we have been moving our business to offer more overall financial planning capabilities. We have added a material number of professionals that are financial planners, tax planners, estate planers, etc. Clients want more of a holistic experience. Our value is how we properly weave all of these things together."
Harris Private Bank, which caters to high-net-worth individuals, now has 18 offices — seven in Chicago, five in Arizona, three in Florida and one each in McLean, Va., Seattle and Salt Lake City. Its unit for ultrawealthy individuals and families with more than $100 million of assets, Harris myCFO, has eight additional offices — Seattle, Menlo Park, Calif., San Francisco, Los Angeles, Scottsdale, Ariz., Fort Lee, N.J., Atlanta and Chicago.
Harris has "carefully and selectively" added teams of wealth management professionals to both units in the past year and plans to continue to do so this year and next, Jenkins said.
This year it has hired investment management teams in West Palm Beach, Fla., Seattle and Chicago. "We will consider other markets, but it would need to be the right people," Jenkins said. "Obviously there are wealth markets in the United States that are interesting to us — like Denver, Boston, or Houston. But our first priority is to continue to grow the markets that we are in."
Harris' expansion in Phoenix is a good example. The company has had offices in Arizona for 30 years, where it offers a range of wealth management services.
Harris also announced Monday it hired two executives in Arizona: Matt Miller, as a senior wealth strategist, and Michael Montgomery, who will run Harris' new myCFO office in Scottsdale.
It also hired Mary Jo Herseth, as a senior vice president and head of banking. Her task is to expand the banking line of business across the high-net-worth and ultra-high-net-worth segments.
Herseth was market executive for U.S. Trust Bank of America in Illinois and Michigan. Before that she was an executive vice president and head of wealth management for LaSalle Bank Corp. in Chicago, which Bank of America bought from ABN Amro in 2007.
Harris, which had $25 billion of assets under management at midyear, will do further acquisitions and hiring to increase its asset base, Jenkins said.
"We want to make this business as large as we can," Jenkins said. "The U.S. is an important market for [Bank of Montreal] and we want to build it as vibrant and as large as we can. That is why we are doing what we are doing. … The stability of Canadian banking is very desirable for our customers and for financial professional. We are a desirable platform and that is why we are attracting both."
Bank of Montreal is not alone. Other large Canadian banking companies, including TD Bank Financial Group, have expanded their wealth management capabilities organically and through acquisitions in the United States in the past two years.
"Canadian banks are on paper doing well and from that standpoint they are looking to take advantage of some of the weaknesses in the U.S. market," said Geoffrey Bobroff of Bobroff Consulting in East Greenwich, R.I.
Canadian and U.S. banking companies are expanding operations in the Southeast and the Southwest "because investors and clients are migrating to the South" and because "there are opportunities to acquire struggling registered investment advisory firms in those regions right now," Bobroff said.
Jenkins said: "We want to be continue to be opportunistic and strategic. … We expect to outperform from a market share standpoint and grow our share proportionally from there. We expect organic growth and, if they fit, acquisitions to help us expand, as well."