Executives at Wachovia Corp.'s wealth management division say its new legal specialty group could generate significant revenue as the group works to cross-sell financial services, investments, and insurance products to lawyers and their customers.
"We estimate that the revenue potential is $400 million within lawyers and law firms. That is the scope of the opportunity," said Deborah Shore, the director of market segmentation for Wachovia Wealth Management. "This is a deep opportunity for growth as we look into specific segments of the marketplace."
The legal specialty group, which was launched Wednesday, consists of 50 of the Charlotte company's relationship managers who have established books of business with lawyers. It will operate in Wachovia's existing markets in the Southeast and the Middle Atlantic.
Wachovia Wealth Management is also adding teams in Alabama and Texas to focus on lawyers and law firms, she said.
The division has relationships with 500 law firms and nearly 3,000 lawyers, and it expects those numbers to grow substantially over the next 18 months, Ms. Shore said.
Lawyers could be a source of referrals to both their colleagues and their customers, she said.
Once Wachovia establishes a relationship with a lawyer, it hopes to cross-sell the that lawyer additional products and services, she said. "We conducted focus groups with lawyers in several cities and found that lawyers want one financial services provider for their personal financial needs as well as their firm's needs."
The new group will provide law firms with financial expertise in corporate and investment banking; corporate trust; class action, bankruptcy, and litigation services; cash management; international banking; employee benefits; group health insurance; property/casualty insurance; and asset management, Ms. Shore said.
For lawyers, the group will offer wealth management services, including customized lending, banking, brokerage, and asset management services; financial, estate, and tax planning; trust services; and life, disability, long-term care, and property/casualty insurance.
Forming the group is one way Wachovia Wealth Management is implementing its segmentation strategy. Ms. Shore, who manages the strategy, said that back when her company was known as First Union Corp., it had groups of relationship managers who targeted doctors and medical practices; lawyers and legal firms; corporate executives; entrepreneurs and business owners; and individuals with inherited or established wealth.
That segmentation strategy was put on the back burner when First Union bought the old Wachovia. But according to Ms. Shore, at the end of last year, Stan Kelly, the president of Wachovia Wealth Management, approached her about reestablishing the strategy.
Wachovia plans to develop additional groups to focus on professionals, business owners, corporate executives, emerging markets, and people with inherited wealth, Ms. Shore said. It expects to launch a group to target corporate executives by the beginning of next year.
Analysts said financial services companies, including banks, have to get better at targeting specific groups of professionals if they want to attract wealthy customers.
"The financial services industry stinks at target marketing," said Charles "Chip" Roame, the managing principal at Tiburon Strategic Advisors, a California analytical firm.
"A lot of firms want to go after rich people. That's real insightful. A lot of firms target retiring people. That's real insightful," he said, with sarcasm. "Firms that focus on target markets have the best chance to succeed."
Wachovia is doing a good job of segmenting its customers by repackaging its products for specific customer interests and developing specialized brochures and Web sites, Mr. Roame said.
"It isn't a matter of launching new things. Most of the products [that need to be offered] firms already have." However, "they don't present these products in a cohesive way for consumers," he said. "Firms have to consider the individual in each segment and what they need and want, not what you want to sell them."
Other banking companies are also looking closely at segmentation. For example, Citigroup Private Bank already has a group that targets law firms. Wachovia has hired Peter Haugh, who had been the Citi group's director for the Middle Atlantic and the Southeast. He is now a senior vice president and a managing director for Wachovia's legal specialty group in the Middle Atlantic. Mr. Haugh, who is based in Washington, will help Wachovia develop a strategy for serving the legal community.
Ms. Shore said creating this group is essential for Wachovia to garner additional wallet share.
"If you think about this business, what distinguishes one wealth adviser from another is their ability to give meaningful advice to clients," she said. "Clients want us understand them and the challenges they are facing. … There is a fair amount of research that suggests that you need to have this level of detail to be effective in this business."
