Wachovia Wealth Management plans makeover

NEW YORK — Brokers at A.G. Edwards Inc. won’t have to worry about losing their wealthy clients, according to Stan Kelly, president of Wachovia Wealth Management.
The Edwards brokers are anxious about their future role, given the announcement last month that Wachovia Corp. is acquiring the St. Louis-based regional broker-dealer.
Wachovia will be a “product provider” for brokerage clients, giving A.G. Edwards’ affluent clients access to the bank’s trust services and lending capabilities, Mr. Kelly said, but the wealth management group won’t handle the wealthy clients.
He does, however, want to establish Winston-Salem, N.C.-based Wachovia Wealth Management as a national power.
“It is an aspiration for us,” Mr. Kelly said. “I’d like to build this into as dominant a national business as we possibly can.”
Wachovia Corp., the Charlotte, N.C.-based parent company, is “quite supportive” of his goal, Mr. Kelly added.
In fact, the cornerstones of an ambitious wealth management overhaul Wachovia announced earlier this month are an aggressive geographic expansion and plans to hire approximately 300 new relationship managers over three years for a newly formed private-banking group, which will include clients with investible assets of between $250,000 and $5 million.

Hiring people in the new offices in the booming Northern and Southern California wealth markets will be the top priority of Wachovia’s private-banking group this year, said Morrison Creech, the group’s managing executive (see wealth management market reports under Special Reports at investmentnews.com).
Wachovia also will expand private banking aggressively in Texas and the Northeast, particularly in New York and Long Island, he said.
Attracting and retaining qualified wealth management talent to fill those jobs in a market characterized by high demand and relatively low supply will be a major challenge, Mr. Kelly acknowledged, calling human resources his “No. 1 priority.”
The intensity of the “war for talent” is “as hyped up as I’ve ever seen it,” he said, but he cautioned there is “no silver bullet” to resolve the problem.
Wachovia’s brand and investment platform are recruiting advantages, Mr. Kelly said, as well as the bank’s ability to introduce wealth managers “to many clients through a very formalized referral program” from both the retail bank and Wachovia’s corporate investment bankers.
Compensation will be both reviewed and raised, he said. Compensation reviews “are a constant for us,” Mr. Kelly added, “and very dynamic.”
As Wachovia moves to capture a broader wealth management market segment, spending on marketing will increase in 2008, he said.
In addition to targeting publications catering to affluent readers, he wants to ratchet up Wachovia Wealth Management’s traditional focus on event marketing, such as sponsoring a ball to raise money for cancer research in ultra-affluent Palm Beach, Fla., next year.
The pending acquisition of New York-based U.S. Trust Corp. by Charlotte crosstown rival Bank of America Corp. didn’t influence Wachovia’s decision to revamp its wealth management business, Mr. Kelly asserted.
The fact that BofA “felt the strategic need” to purchase the venerable wealth management firm from San Francisco-based Charles Schwab Corp. “bodes wealth for our industry,” he said.
Mr. Kelly added, however, that BofA faces a “number of challenges,” which he declined to specify.
Although Wachovia believes that organic growth is the best way to achieve its national wealth management ambitions, he said, it also will consider strategic acquisitions.
In January, the threshold for Wachovia’s new wealth management clients moves up to $5 million in investible assets, from $2 million, and the minimum for ultrahigh-net-worth clients in Calibre, the bank’s multigenerational wealth management unit, moves to $50 million or more in investible assets, from $25 million.