Saturday, September 20, 2008

Amid Fears of Layoffs, Firms are Staffing up Global Wealth Management Groups


While fears of layoffs plague Wall Street, job seekers with experience in managing money for wealthy clients are poised to gain new opportunities. Executive search firm, A.E. Feldman, reports that banks are still recruiting in the high margin, wealth-management business, which has expanded to include service offerings such as trust advice, estate planning, and tax services. In today’s uncertain economic climate, wealthy clients are focused on maintaining and growing their wealth. Already, Bank of America is set to become the largest wealth management business in the world, overtaking Swiss bank UBS, following its takeover of Merrill Lynch, according to Dow Jones Financial News. Meanwhile, Morgan Stanley, Wachovia and Barclays are just a few of the firms staffing up their global wealth-management groups.

Bank of America hopes the “Merrill purchase will allow the bank to make its money management operations more competitive, appealing to what Bank of America’s Chief Executive, Kenneth D. Lewis, calls the ‘mass affluent’ - customers with more than $100,000 in investable assets who are looking for products like mortgages and college savings and retirement plans,” reports The Boston Globe.

Kenneth D. Lewis, Bank of America’s CEO, speaking on a recent conference call with analysts acknowledged the bank could have gotten a better deal by waiting until Merrill’s shares fell further, reports the Boston Globe. He went on to add, however that the strategic fit justified the bid. According to the Boston Globe, until now, Bank of America has lacked a powerful brokerage arm to draw in upper-income customers (unlike its rivals JPMorgan Chase and Citigroup.)

The report quotes Lewis as saying, “We will finally have enough financial advisers to take advantage of that opportunity.” The bank, he added, will hang on to the Merrill Lynch name “and keep their organization intact.” Combined, the Bank of America-Merrill money management operation will have $2.5 trillion in total assets under management, and give Bank of America access to Merrill’s investment channels in overseas emerging markets.

Right now, Morgan Stanley’s (MS) global wealth-management group is actively recruiting brokers, reports Dow Jones. The report states that Morgan Stanley is up several hundred financial advisors year-to-date, citing a source familiar with the firm.

Morgan Stanley is also staffing up its global operations. The firm recently announced a new appointment to further expand in the Latin American market. Juan Dibildox has joined its Private Wealth Management office in Miami as an Investment Representative. Reporting to Jon Mallon, Executive Director and Manager of the Private Wealth office in Miami, he will cater to high net worth clients in Mexico. Morgan Stanley Private Wealth Management also announced that it has hired a team of four senior investment professionals to serve high net worth clients in the Latin American market. “Morgan Stanley has a significant footprint in this region and this team is a valued addition that brings a breadth of knowledge that will further support our efforts in this market,” commented Ernesto A. de la Fe, Managing Director and Head of Latin America. Additionally, Morgan Stanley is tapping India’s domestic wealth, with plans to hire 100 private bankers in a bid to manage $1 billion in assets by the end of 2010.

Meanwhile, Wachovia Wealth Management, a unit of Wachovia Corp. (WB), is also recruiting for nearly 100 jobs, 75% of which are producing positions, citing a company spokeswoman, reports Dow Jones.

Barclays’ president Bob Diamond has revealed his ambition to acquire a slice of the U.S. wealth management market, according to Global Investor Magazine as reported on emii.com. Diamond contends the current market turmoil in the U.S. presents an unprecedented opportunity to buy a U.S. wealth management company and so to launch its growth plans in the country.

The U.S. market is an attractive proposition. According to the report it counts 400 billionaires and three million others with more than $1 million in liquid assets. Still, the task ahead for Barclay’s is challenging. The report quotes Stuart Rutherford, Datamonitor Senior Financial Services Analyst, as saying, “While private banking may not be exposed to the risks and wild fluctuations of the investment banking and asset management businesses, it is not an easy area in which to make money.”

Rutherford adds that success may boil down to clear plans for mitigating the effects of the negative market cycle. Firms must understand that wealth management is a service business, and that they need to excel at the basics, like retaining staff and communicating with clients. Communication, he stresses, is particularly crucial in times of market volatility.

Barclays Wealth is also beefing up staff around the globe. The firm recently announced a series of high-profile appointments with the aim of further strengthening its senior leadership. The changes incorporate the appointments of Gerard Aquilina, into a business critical new role, and Emmanuel Fievet, as the new Head of its Europe, Middle East and Africa (EMEA) International Private Banking operation. “Our efforts to redefine the wealth management landscape and to service our clients must be led by the best talent in our industry…we have added both strength and depth to our leadership team at a time when we see great opportunities to expand our footprint across the globe,” says Thomas L. Kalaris, Chief Executive at Barclays Wealth.

Barclays Wealth also announced a strategic hire in response to wealth growth in Asia. The firm says it has appointed Pheabe Chau as Singapore Head of Investment Specialists effective today, in a move that demonstrates its commitment to further strengthening its client servicing and advisory capabilities.

Most recently, however, the firm announced the addition of Chokkalingam Gangatharan as Head of Equity Research as a part of its continued Indian expansion. In this newly created role, Chokkalingam G. will be responsible for Barclays Wealth’s team of equity research analysts in India and will work closely with the fund managers and relationship managers in India.

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