BofA sets up advisory biz for ultrarich

NEW YORK — Bank of America Corp. is counting on a new advisory business to help retain ultrahigh-net-worth clients once its $3.3 billion deal to acquire U.S. Trust Corp. from San Francisco-based Charles Schwab Corp. closes next month. The specialized client solutions group, which will provide advisory, consulting and fiduciary services for clients with investible assets of at least $50 million, will be headed by Henry Fischel-Bock, who currently oversees New York-based U.S. Trust’s multifamily-office unit where the median account holds $150 million. Mr. Fischel-Bock will report to Frances Aldrich Sevilla-Sacasa, currently chief executive of U.S. Trust, who will head BofA’s new private-wealth-management unit, which will serve clients with more than $3 million in investible assets and which combines the private bank and family wealth advisers units of U.S. Trust and BofA. Questions surrounding the challenge of integrating the highly customized business culture of U.S. Trust into the more mass market BofA model have been heightened since U.S. Trust chief executive Peter Scaturro announced his resignation in April after clashing with executives of Bank of America, which is headquartered in Charlotte, N.C. He reportedly was unhappy with BofA’s plans to downplay U.S. Trust’s elitist brand and identity, and wealth management industry executives and observers have warned that BofA faces an erosion of clients and talent if customized services give way to more-uniform offerings. White-glove service “To succeed, [BofA] has to maintain the identity and level of service that U.S. Trust has presently and not get bogged down in a big bank bureaucracy,” said Charles Lachman, a partner in the New York-based investment bank CF Partners LLC. “The key to [the wealth management] business is providing service for high-net-worth customers, and the challenge is, how do you do that as you get bigger?” Mr. Fischel-Bock, who is a member of the transition team working to integrate U.S. Trust, acknowledged that though scalability is “key” to the BofA business model, the bank had to “play a delicate game” to get “as much efficiency and scalability as possible without compromising the uniqueness of the offering.” The new group, he said, combines BofA’s family wealth advisers unit, which focused on ultrahigh-net-worth clients, U.S. Trust’s multi-family office unit and Portland, Ore.-based CTC Consulting Inc., an independent investing consulting company owned by U.S. Trust. CTC’s median account holds $250 million. Customization of services for ultrahigh-net-worth clients was “clearly a concern,” he acknowledged. However, Mr. Fischel-Bock added, “I don’t think [BofA] would have bought U.S. Trust unless they wanted some of the firm’s best practices, including the customization of the client experience.” Although Ms. Sevilla-Sacasa has said that Bank of America doesn’t want “scale for scale’s sake” as it integrated the two companies, she also praised the “many powerful benefits” resulting from the size of the combined entity. “If we do it right, we can combine the uniqueness of U.S. Trust and the footprint and ubiquity of Bank of America,” Mr. Fischel-Bock said. Even though BofA’s business model tends to be “more top-down than bottom-up,” according to Harry O’Mealia, chief executive of Legg Mason Investment Counsel, the wealth management arm of Baltimore-based Legg Mason Inc., he said that he nonetheless believes that the Charlotte giant can successfully integrate U.S. Trust. “They’re very bright and very strategic, and know how to build an efficient business,” he said. “They’re going to provide a broader platform than U.S. Trust clients had under Schwab, and they’ll focus on breadth of product, share of wallet and efficiencies.” Even if BofA loses some ultra-affluent U.S. Trust clients along the way, it still will come out ahead, said Jeffrey Lauterbach, a Chadds Ford, Pa.-based wealth adviser and consultant who formerly was chairman and chief executive of the Wilmington- based Capital Trust Company of Delaware. “The sum total of the combined assets they keep plus the growth in revenues will produce a reasonable return on their purchase price,” he said. “It’s Investment Banking 101.” But holding on to internal talent may be more difficult, industry executives say. “Their talent pool is vulnerable,” said Elizabeth Nesvold, managing director of New York-based Cambridge International Partners Inc. “There’s a good crop of folks at U.S. Trust.” In fact, said Allan Starkie, a partner at New York-based executive search and market research firm Knightsbridge Advisors Inc., “open season for top talent at U.S. Trust has already begun.” Bank of America employees working at the soon-to-be- shuttered family wealth advisers unit also may be heading for the exits, according to one former BofA wealth manager who still has close contacts with the group. “I would expect most, if not all, of the professionals there to leave the bank,” said the executive, who asked not to be identified. Time to lead Mr. Fischel-Bock said BofA recognized that wealth management talent is “an extraordinarily scarce resource” and that it must “build an industry-leading capability.” “The bank is very adept at the transition process,” and is moving “quickly and decisively” to deal with talent retention, he said. BofA still hasn’t resolved one of the most contentious and emotional issues surrounding the acquisition — the use of the venerable U.S. Trust name. “What did [BofA] think they were buying?” Mr. Starkie asked. “I don’t think replacing the U.S. Trust name will appeal to the U.S. Trust client. You can count on one hand the names with that kind of prestige. It’s one of the saddest things I’ve ever seen in wealth management.” “We intend to retain the U.S. Trust name,” Mr. Fischel-Bock said. “We’re currently working on how best to deploy it.”