Financial Advisors in Demand as Need for Wealth Management Soars
Citigroup has announced that it is reorganizing its U.S. wealth management unit in order to focus on serving clients based on their net worth, according to Investment News. The report states that under the reorganization, the bank will split the unit (which includes its Smith Barney retail brokerage and private bank) into four segments. The new units will serve ultra-high-net-worth individuals with $25 million in assets, high net worth clients with between $500,000 and $25 million in assets and “emerging affluent” clients with under $500,000 in assets as well as institutional services. Investment News cites the WSJ in quoting Sallie Krawcheck, the Division’s Chief Executive, as saying, “This reorganization will allow us to sharpen our focus around our client orientation in a manner that is meaningfully better than our competitors.”
Citigroup is just one bank focusing on its wealth management unit. BNY Mellon’s wealth management division is also planning to increase its sales force significantly as it aggressively expands in the fast-growing $100 trillion industry, according to Reuters. The report quotes David Lamere, Chief Executive Officer at BNY Mellon Wealth Management, as saying, “We are adding on the sales side right now and I would imagine we will increase the numbers by 50% to 100% over the next few years.” Lamere also says the firm wants to flex its muscle internationally, and projects the hiring of staff overseas as well.
Exceptionally rich families around the world are creating increased demand for wealth management services, according to the FT. Although investors remain cautious in their outlook on the U.S. economy, a recent survey of ultra-wealthy investors conducted by PNC Wealth Management finds that respondents express increasing optimism about their investment portfolios in 2008. Executive search firm, A.E. Feldman, reports that the trend is creating opportunities for financial advisors. Firms are staffing up as they expand retail banking and wealth management operations.
The ultra-wealthy are likely to think longer term about their investment, according to a recent survey conducted by PNC Wealth Management. Thomas Melcher, Managing Director and Chief Investment Officer of Hawthorn, the division of PNC Wealth Management that serves clients with $20 million or more in investable assets, says, “With a greater capital base, the ultra-wealthy are often in a better position to withstand market volatility. Markets rise and fall over time. But the act of investing is long-term by definition and we advise people to diversify in order to smooth out the bumps.”
Meanwhile, banks are working to provide more sophisticated wealth management services, according to the FT. The report states that UBS Wealth Management pegs this to the increase in wealthy families with complex arrangements. Demand is also increasing for consolidated reporting of international assets and investments. Lastly, the FT reports that philanthropy is another area where wealthy families are taking more advice. The FT quotes Darren Allaway, Managing Director of its UK family office group, as saying, “The two trends we’re seeing are volume - there are many more families of substantial wealth - and sophistication.”
