| 
  • If you are citizen of an European Union member nation, you may not use this service unless you are at least 16 years old.

  • You already know Dokkio is an AI-powered assistant to organize & manage your digital files & messages. Very soon, Dokkio will support Outlook as well as One Drive. Check it out today!

View
 

Private Banking in Miami

Page history last edited by Brian D Butler 13 years, 7 months ago

 

 

 

 

Table of Contents:


 

Private Banking in Miami

 

Florida International Bankers Association

 

International banking: with more than 40 international banking agencies, only New York can vie with Miami as a center for Latin America banking—in trade finance, Private Banking or investment services

 

To get an idea of just how vibrant Miami's international banking community is--and how important its links to Latin America--one need only to have walked among the exhibits of August's banking technology conference.

 

More than 70 companies from nations as diverse as India and Switzerland came to downtown Miami's Inter-Continental Hotel for the conference, which was organized by the Latin American Banking Federation and the Florida International Bankers Association (FIBA). There they touted their services in English, Spanish and Portuguese to bankers from Peru, Colombia, Argentina, Brazil and other Latin American nations: software to help manage cash accounts, payments, leasing, etc.

 

"Miami is the ideal place for such an exhibition in the sense that you have a great number of technology providers here in the US, and a great number (of banks) in Latin America that aspire to be leaders," says Pat Roth, executive director of FIBA. "There were 1,400 room nights taken (at local hotels) for this event, despite the economic situation. Miami is just the ideal place for everybody to come together."

 

Indeed, Miami is home to more international financial institutions than any US city outside of New York. And while the names come from around the world, from nations as diverse as UK, Germany, Israel and South Africa, all are here because of the Miami's connection to Latin America.

 

In total, there are some 64 international banking offices in the State of Florida, virtually all of them located in Greater Miami--mostly in the heart of Miami's Brickell Avenue financial district. Those 64 offices are made up of agency offices (37), representative and administrative offices (16), Edge Act corporations (10) and one (1) foreign branch. More than two dozen nations are represented in that mix. Altogether, they hold some US$26 billion in assets. Greater Miami also has more than a dozen foreign-owned domestic banks, such as Venezuelan-owned Commercebank, with nearly US$2 billion in assets.

 

Much of the international banking activity in Miami revolves around the financing of trade through the state of Florida, which last year reached US$71 billion--$54 billion of it through the Miami customs district alone.

 

"Our share of trade finance with Latin America makes us either one or two in the country," says David Konfino, president of Union Planters International Bank, and last year's president of FIBA. "We have the finest trade finance capability for Latin America in the country We cover every single market--all the countries in South America, Central America and the Caribbean--and we have the broadest range of products, from Exim Bank to private insurance programs, to traditional trade finance programs like letters of credit."

 

While large syndicated transactions in the US$200 million to US$400 million range are more typically handled by New York's merchant banks, says Konfino, US$100 million trade finance deals are not uncommon for Miami. "We have a tremendous depth of knowledge of trade finance, north-south," says FIBA's Roth. "No one can hold a candle to it."

 

Miami's banking prowess is also apparent in the world of Private Banking, now referred to as wealth management. Institutions such as Spain's Banco Bilbao Vizcaya Argentaria, Florida's SunTrust, Switzerland's UBS AG, and Citibank International, along with a dozen others, have established their Latin American private banking operations in Miami.

 

"I clearly think Miami is the gateway," says Fred Assari, regional vice president for Neuberger Bermen's private asset management in Miami. "It's a matter of practicality. I think people tend to bank in place where they travel. Latin Americans tend to travel here, they have homes here, and this is the place that's the first stop."

 

The banking links with Latin America are also derived not just from trade and private wealth, but also from active business investments in the US. "In addition to the difficulties going on in some of the countries in South America, many entrepreneurs are looking to invest here, and are looking at running businesses here," says Scott Wyeman, senior vice president for SunTrust's international private banking group. "I'm not the head of chamber of commerce but I think you can see there is tremendous interest in making investments here and certainly we've seen that with our clientele."

 

Many international bankers, especially those from Latin American banks, report the same observations. "In the last few months at least three Chilean multinationals have settled here, primarily to handle their trade with the US and Europe," says Fernando Capablanca, CEO of the Miami agency of Chile's Banco de Credito e Inversiones. "You know, the largest single foreign investment in Miami is from LanChile, their US$65 million cargo facility at the airport. Eventually, what happens is that you have a lot of banks following these companies, because these are the banks' customers. When you get a few of them, you get a synergy."

 

As for the future--and despite the addition of three new Spanish banking agencies this year--predictions are that the industry will continue to consolidate. Nonetheless, "high-level decision-making about Latin America will continue to take place in Miami," says Bowman Brown, whose law firm Shutts & Bowen represents many of the European banks here to serve a Latin client base.

 

"We think that Miami is going to become increasingly important for Latin America and we are growing our business out of Miami not only in private banking but also in investment banking and commercial banking," says Eduardo Barco, head of private banking in Miami for Deutsche Bank "We are beginning to move people who are out in the field, historically to Miami because of the regulatory and safety concerns that have been coming up in different countries."

 

Top Ten Internatinal Bank Agencies in Miami, 2002

 

(By Assets, In Thousands of US$)

Institution Assets

 

1. Barclays Bank PLC 5,188,742

2. Dresdner Bank Lateinamerika, A.G. 1,560,526

3. Banco Bilbao Vizcaya Argentaria 1,004,638

4. Royal Bank of Canada 869,435

5. Banque Sudameris 672,411

6. Lloyds TSB Bank PLC 633,912

7. ABN-AMRO Bank, N.V. 616,514

8. Banco de Sabadell 536,033

9. Banco Atlantico, S.A. 513,487

10. UBS AG 403,834

 

Source: Florida Dept. of Banking and Finance

RELATED ARTICLE: SNAPSHOT

 

Billions of US dollars in international bank assets, Miami, 2002: $26b

 

Trade financed through Miami, 2002: $54 billion

 

Members of the Florida International Banking Associations, 2002: 70

 

International banking offices, Miami, 2002: 64

 

Bank Members of the Florida International Bankers Association, 2002

 

ABN AMRO North America, N.V.

 

American Express Bank International

 

AmTrade International Bank

 

Atlantic Security Bank

 

BAC Florida Bank

 

Banca Sella S.P.A.

 

Bancafe International

 

Bancaja - Miami Agency

 

Banco Atlantico

 

Banco Bilbao Vizcaya Argentaria, S.A.

 

Banco Colpatria, Miami Agency

 

Banco Comercial Portugues, Miami Agency

 

Banco Credito Inversiones, Miami Branch

 

Banco de Bogota Miami Agency

 

Banco de Chile

 

Banco de la Nacion Argentina

 

Banco del Pichincha CA.

 

Miami Agency

 

Banco do Brasil

 

Banco Industrial de Venezuela, C.A.

 

Banco Internacional de Costa Rica, S.A.

 

Banco Mercantil, S.A.C.A.

 

Banco Santander

 

Central Hispano - International

 

Banco Santander

 

Central Hispano - Miami Agency

 

Bank Hapoalim, B.M.

 

Bank Julius Baer

 

Bank Leumi Le Israel, B.M.

 

Bank of America

 

Bank United

 

BankAtlantic

 

BankBoston,a FleetBoston

 

Financial Company

 

Banque Sudameris

 

Barcalys Bank PLC

 

BNP- Paribas

 

BPD International Bank

 

CBG - Compagnie Bancaire Geneve

 

Citibank International

 

Colonial Bank

 

COMMERCEBANK, N.A.

 

Coutts (USA) International

 

Credit Lyonnais

 

Credit Suisse Private Banking

 

Deutsche Bank

 

Dresdner Bank Lateinamerika, A.G.

 

Eastern National Bank

 

Espirito Santo Bank

 

Hemisphere National Bank

 

HSBC Republic International

 

Bank (Miami)

 

IDB Bank

 

INTERCREDIT BANK, N.A.

 

International Finance Bank

 

Lloyds TSB

 

Merrill Lynch Bank & Trust Co.

 

(Cayman) Ltd.

 

Northern Trust Bank of Florida, N.A.

 

Ocean Bank

 

Pacific National Bank

 

PINEBANK

 

Plus International Bank

 

Riggs International Banking Corporation

 

Royal Bank of Canada

 

Schroder Trust Bank

 

SunTrust Bank, Miami

 

The International Bank of Miami, N.A.

 

Totalbank

 

UBS AG

 

UNIBANCO Miami International

 

Administrative Office

 

Union Planters Bank of Florida

 

Venezolano de Credito, S.A., Banco

 

Universal

 

Wachovia

 

Source: FIBA

 

 

Miami - more

 

No. 5 international banking: with more than 40 international banking agencies, only New York can vie with Miami as a center for Latin America banking—in trade finance, private wealth management or investment services - FTAA

 

To understand how vibrant Miami's international banking community is--and how important its links to Latin America are--one need only look to the upcoming Feleban meeting this November. More than 1,000 bankers from 40 countries (mostly Latin American and Caribbean) will attend a three-day event on the private banking sector. Among the key speakers for Feleban--an umbrella organization for more than 600 banks in Central and South America--will be Henrique Meirelles, president of the Central Bank of Brazil.

 

ILLUSTRATION OMITTED

 

"Miami is the ideal place for such a meeting," says Pat Roth, executive director of the Florida International Bankers Association. "This is where everybody can come together."

 

Indeed, Miami is home to more international financial institutions than any US city outside of New York. And while many of the names come from nations as diverse as Germany, Israel and South Africa, all are here because of Miami's connections to Latin America.

 

There are dozens of international banking offices in the State of Florida, almost all located in Greater Miami--mostly in Miami's Brickell Avenue financial district and in Coral Gables. Those offices consist of agency offices (30), representative and administrative offices (6) and Edge Act corporations (6). More than two dozen nations are represented in that mix. Altogether, they hold US$14.5 billion in assets. Additionally, there are 27 domestic banks with large international divisions; they add billions more to the asset base. Greater Miami also has more than a dozen foreign-owned domestic banks, such as Venezuelan-owned Commercebank, with more than US$3 billion in assets.

 

Much of the international banking activity in Miami revolves around financing trade through the state of Florida, which last year reached US$71 billion--US$52 billion of it through the Miami Customs District alone.

 

Miami's banking prowess is more apparent in the world of private banking, now referred to as wealth management. Institutions such as Spain's Banco Bilbao Vizcaya Argentaria, Florida's SunTrust, Switzerland's UBS AG, and Citibank International, along with a dozen others, have established their Latin American private banking operations in Miami.

 

The banking links with Latin America are derived not just from trade and private wealth, but also from active business investments in the US. "In the last year at least three Chilean multinationals have settled here, primarily to handle their trade with the US and Europe," says Fernando Capablanca, CEO of the Miami agency of Chile's Banco de Credito e Inversiones. "You know, the largest single foreign investment in Miami is from LanChile, their US$70 million cargo and executive facility at the airport. Eventually, what happens is that you have a lot of banks following these companies, because these are the banks' customers. When you get a few of them, you get a synergy."

 

Says Bowman Brown, whose law firm Shutts & Bowen represents many of the European banks here to serve a Latin client base: "High-level decision-making about Latin America will continue to take place in Miami."

 

Top Ten International Bank Agencies in Miami, 6/30/03 (By Assets, In

Thousands of US)

 

 

Institution Assets

 

1. Banco Bilbao Vizcaya Argentaria $996,855

2. Royal Bank of Canada 858,522

3. Banco de Sabadell 671,039

4. ABN-AMRO Bank, N.V. 666,051

5. Lloyds TSB Bank PLC 657,682

6. Banque Sudameris 560,437

7. Banco Atlantico, S.A. 506,934

8. Banco do Brasil, S.A. 377,451

9. Dresdner Bank Lateinamerika, A.G. 375,779

10. Bank Hapoalim, B.M. 270,793

 

Source: Flonda Department of Financial Services

 

Note: Barclays Bank PLC would have been No. 1 but left Miami 9/16/03.

RELATED ARTICLE: SNAPSHOT

 

Billions of US dollars in international bank assets, Miami, 2003: $14.5

 

Trade financed through Miami, 2002: $52 billion Members of the Florida International Banking Association, 2003: 117

 

International banking offices, Miami, 10/03: 42

 

Miami - more

 

Private banking - Personal Finance

 

Mike Seemuth

From Miami to Sao Paulo, the world of private banking has always been based on silk-purse service, safe returns and alliances that go back generations. Now global banks are reaching out to a broader clientele with new services.

 

A commercial rose grower recently traveled from his home in Ecuador to meet with his private banker in Miami--not in the bank's handsome high-rise office overlooking Biscayne Bay, but in a gritty warehouse district near Miami International Airport. "He was looking to buy a warehouse here for the distribution of his product," explains Juan Carlos Mayol, a Miamibased private banker with Citibank, the financial-services giant headquartered in New York. A second Citibank officer specializing in commercial real estate was summoned to fly from New York to Miami just to advise the client--free of charge--on the particular warehouse he was considering. "He didn't buy It was not suitable for his type of business," Mayol says. "So we're still looking."

 

Among the wide army of services that private bankers provide their clients, warehouse shopping advice is certainly not typical. But going to unique lengths to serve the needs of wealthy clients is common practice for Latin America's competitive private banking industry "I often refer to our bank as a supermarket of financial services," says Natica von Althann, a New York-based Citibank executive who oversees private banking in the Latin America region. "But to our clients, we must look like a boutique."

 

Luxurious offices with marble flooring, wood paneling and spectacular views are common in the world of private banking. Northern Trust's private banking offices on Brickell Avenue, the Miami financial district where many global institutions maintain private banking facilities for Latin America, are emblematic. There, the bank maintains richly decorated private meeting rooms named after the capitals of Latin nations; on the top floor, the private dining room is renowned for its lobster bisque.

 

But foreign private banking clients don't pay just for trappings. Indeed, many Latin Americans with private accounts in Miami never travel to Florida's largest city, preferring to do business in their home countries.

 

"Our private banking relationship managers travel quite a lot to Latin America. I would say anywhere from one to two weeks a month," says Ulrich Lehmann, who heads the Miami office of Credit Suisse. The bank's representative office markets exclusively to private banking clients and arranges transactions on their behalf at full-service Credit Suisse offices around the world. "It's like a post office," Lehmann says, delivering requests for client services to the global Credit Suisse network. "The clients cannot do any transactions here."

 

While Miami, and to a lesser extent New York and Houston, have served for generations as centers of private banking for Latin America, the principal capitals in the region are now emerging as private banking centers in their own right -- albiet for customers with smaller net assets.

 

The skyline at the center of Sao Paulo's banking district, Avenida Paulista, is one indicator of the wide range of options available to banking customers in Latin America. Virtually all of the world's top banks, and all of Brazil's regional banks, have opened branch offices here. Until recently, private banking has been fairly underdeveloped in Brazil. But as more wealth is created in the national economy the demand for private banking has increased substantially.

 

"With the opening of Brazil's economy many companies have been sold and significant resources have been injected into Brazil's economy," says Eduardo Santa Lucia, manager of private banking for Banque Sudameris. "These services are necessary for a growing number of people." Unlike Miami, where a minimum of US$1 million in bankable assets is required for private banking services, the minimum deposit for a private account at Banque Sudameris is US$300,000.

 

In Mexico, Santander Investments' Mexican operations are the most important for the institution's private banking division after Spain (client deposits: US$5 billion). In Mexico, special services are offered to clients with accounts of US$200,000 or more. Wealthier clients with deposits in excess of US$5 million - often owners of large companies -- tend to evenly split their assets between the US and Mexico, says Francisco Vizcaya, executive director of private banking at Santander's Mexico office. Clients in the next tier down, with deposits between US$1 million and US$5 million, often have a higher percentage of assets invested in Mexican holdings.

 

Banco Itau, Brazil's second-largest private financial institution, is another bank that wants to capitalize on the growing number of high-end customers who need personalized attention. Itau has private banking offices in Sao Paulo, Rio de Janeiro and Curitiba. With US$250,000, clients have access to a line of premium funds offered by the bank and receive personal attention from a team of advisers, as well as regular market analysis from the bank's asset managers.

 

However, says one Itau private banking adviser, clients at this level have to "choose their products and contact the bank when they need advice." With US$550,000 in deposits, however, the bank will design an individual investment portfolio managed daily by a private banking asset manager.

 

High net worth clients can also choose from a full range of products that includes Itau funds, investment packages offered by other financial institutions and specialized products, including market derivatives. In this case, according to the same private banking adviser, "the manager is proactive and has the obligation to meet with clients on a regular basis and maintain constant contact."

 

The Security Issue

 

Regardless of minimum deposit requirements, the services which clients request remain fairly consistent. Clients are looking for three things, says Banque Sudameris' Santa Lucia: "Privacy, protection of their estate and income from their investments."

 

Unlike many foreign banks that offer private services in just a few select Brazilian cities, Banque Sudameris has both managers and meeting rooms available in every Brazilian state. Still, 90 percent of the time, financial advisers meet with customers at their offices or homes. "Most clients lack time to come to us, so we go to them," Santa Lucia says. To maintain secrecy, all documentation is delivered by courier, rather than by fax.

 

Security is, in fact, one of the key issues in private banking. Because trust is still the basis of client relationships, private bankers do business in a culture of confidentiality, which has given rise to privacy protocols that can border on the extreme. For example, "when you have a customer from one country in your office, you try not to have them run into another customer from the same country," says Charles Alzati, senior vice president of Bank of America, who co-manages the Miami private banking operation for Latin American clients. "It's just another level of privacy."

 

Even public places can become venues for breaches of confidentiality private bankers say. "For example, if you're in the airport waiting for a plane, there may be different clients of yours there, so you don't greet them unless they offer to greet you," says Mayol, the private banker from Citibank. "Most of the time, we visit them in their house, in their office. It's very low-key, especially with the situation in the region with security People are becoming more and more low-key"

 

One alternative with a high degree of security is online banking, which is especially popular in Brazil. Banco Itau has been at the vanguard of online banking, and aside from the bank's impressive conventional online services, its private banking Web page is the most developed personalized site of its kind available in Latin America. Online portfolio management, which includes online transactions, grants wealthy customers a high level of anonymity.

 

At Santander Investments in Mexico, Internet-based services are currently focused on client information, such as account statements, balances and commercial Internet banking. "Some very sophisticated clients are working through the Internet with US investment bankers, but it is still not a high percentage of clients," says Vizcaya. While Santander is working to offer online trading in Mexico, and some Mexican intermediaries are already accepting purchases through the Internet, full online trading will not be authorized by regulators until later this year.

 

Even when online banking becomes readily available across the region, no one predicts that face-to-face meetings will suddenly become obsolete. "Many more clients are using the Internet," says Standard Financial's Ramirez. "But personal contact will never go away for this market segment."

 

Clearly, one reason clients use private banking services is so professional advisers will handle their investments. Some busy Latin American clients forsake self-directed personal finance altogether, preferring to let private bankers handle their investments from strategy to execution.

 

"Let's assume you are a wealthy individual with US$5 million or US$10 million in bankable assets," says Credit Suisse's Lehmann. "At the same time, you are a very successful CEO with a workload of anywhere between 80 and 100 hours per week. Then, of course, you have your family, which is also demanding a cut from your time, and the weekly golf game that you want to play How much self-directing do you think you are willing to do?"

 

Wealthy Latin Americans are, in fact, expecting an ever- widening range of financial products from their private bankers--not just certificates of deposit, but individually managed securities portfolios, mutual funds, insurance and offshore trusts. Many private banking clients, for example, have developed a fondness for trust accounts domiciled in offshore tax havens such as Antigua and the Cayman Islands.

 

"My office's primary function is to market the services of our trust company in Antigua. It's a no-tax jurisdiction, neither income taxes nor estate taxes," says Nelson Ramirez, executive director of the Miami office of Stanford Financial, whose clients are primarily from Venezuela, Mexico and Colombia.

 

Bank Boston's private bank, active in several Latin American financial centers, is aggressively trying to broaden its client base by offering a wider range of services. Account managers keep clients updated on the best opportunities in the financial markets. Even if clients are away on business or vacation, private bank account managers give daily attention to complex financial asset allocations, trying to find the best mix of risk and return with the lowest possible tax burden. And services are not limited to fixed-income investments or stocks. In addition to a full range of amenities such as credit or debit cards, lines of credit and bill payment options, account managers will even keep clients informed about private equity investments.

 

Although Santander provides offshore services from Miami, Switzerland and Guernsey its Mexican operation specializes in onshore investing, with most of the operations in mutual funds. Direct stock purchases, money-market transactions and derivative-based instruments are other common options, though to a lesser degree.

 

"Notwithstanding our largest investors, who will always prefer direct stock purchases, we expect investors in the future to opt for more diversified portfolios," says Vizcaya, of Santander's Mexico office, a move that is part of a trend toward more longterm investments in Mexico. "Given the volatility of Mexican markets, our Mexican clients are used to very shortterm transactions," he says. "However, with NAFTA, some of the Southern Cone trade agreements and the EU European Union trade agreements, we are seeing an economic convergence that is likely to cause clients to think more long-term."

 

The most significant long-term trend may simply be that as new wealth is being created in Latin America, the newly wealthy are increasingly seeking the shelter and growth that comes from sophisticated private banking services. Banco Sudameris' Santa Lucia has watched the private banking business grow 20 percent annually "Although the general perception is that there are few people with the resources to open these accounts, the number of people who needs these services is significant and keeps growing."

 

 

 

 

 

More Miami

 

Wealth management roundtable: there are more wealthy South Floridians than ever, and international private banking from the region is booming. How is a new generation of money affecting private banking and wealth management in the region? Excerpts from SouthFloridaCEO's exclusive roundtable with some of the industry's top local executives

 

SouthFloridaCEO: Has the competitive landscape in the South Florida private banking market changed in the last several years, specifically since the Sept. 11, 2001 terrorist attacks?

 

Teresa V-F Weintraub: I'm not sure 9/11 changed it. There's been a lot of institutions getting into the business. Just to go around the table; we have a new trust company that has formed. I'm sure many of our institutions have opened new offices. We opened an office in Fort Lauderdale recently.

 

ILLUSTRATION OMITTED

 

Peggy M. Hollander: There are individuals in the professional marketplace who are also, for example, certified public accountants, who are not able to take commissions and revenues, so they have entered the marketplace in a different fashion.

 

ILLUSTRATION OMITTED

 

Weintraub: Law firms and accounting firms are opening actual subsidiaries providing investment services.

 

Gonzalo A. Acevedo: I don't know that 9/11 changed anything. I think we've seen a lot more focus on the wealth segment and there is a lot more competition because of the tremendous amount of wealth creation in the United States and the growth in Miami. It used to be $5 million to $10 million, then to $20 million, and now the sweet spots are sort of $25 million to $50 million.

 

Frederick H. Sandstrom: Also the market has grown in the sense that there is a lot of younger wealth and people are much more articulate about their needs. Their focus is not just on the products that we traditionally have sold but also on the advice, the insight, the understanding, the dealing with the issues of wealth for children.

 

ILLUSTRATION OMITTED

 

SFCEO: Why has the sweet spot crawled up? Is it because the amount of wealth in the nation has risen during the past several years or because institutions are focusing on higher net worth?

 

Weintraub: The cost of doing business has really risen after 9/11. We have so many new requirements with the Patriot Act and all the other acts that require you to do a lot more research before you open an account. You also have our client wanting a higher level of service, more diverse products. The days of balanced accounts and 50 percent equity in all large-cap growth and 50 percent bonds are really ending for the very wealthy.

 

ILLUSTRATION OMITTED

 

Acevedo: There's more competition and our clients are demanding more from us, so as we broaden that platform, we have to raise the level of the assets that we require or the types of clients that can utilize that platform.

 

Dean C. Klevan Jr.: For us, this has really created an opportunity because the larger banks have gone up the food chain seeking the larger client. The affluent client, the $5 million client, is somewhat left behind. And so it permits an independent like ourselves to come in and offer an alternative with a service model that is locally managed.

 

SFCEO: It sounds as if the competition is sort of feeding itself. The larger institutions are going up the tree and finding it more difficult to service smaller accounts, and other companies are coming in to fill in the gap.

 

Richard Ganter: While yes, some of this is moving up through the big banks, the smaller organizations that are focusing on that middle market are coming to the big banks for some sort of partnership for the product distribution for the clients.

 

ILLUSTRATION OMITTED

 

Weintraub: However, in some of the smaller firms, what they're going towards is partnering with XYZ bank and saying, "You're going to provide for us the growth strategy. You're going to provide for us the balance strategy." The individuals may be getting good service but they're not getting individualized portfolio management for them. So I agree with you, Richard, that it's all moving together because it's going to be very difficult for a small institution to really do a diversified portfolio on a $500,000 account.

 

Klevan: That's what we do. So I think one of the advantages a small institution has is that technology is available that allows you to do the screens and allows you to select the best managers and put them into portfolios. We don't look at any banks for product. We have an investment management committee.

 

SFCEO: Technology is available to an institution regardless of size. So how has it changed the way you all do business?

 

Ganter: I think technology has been a critical change for the client and the institutions.

 

Hollander: People can access information about investments globally, and that's what becomes very important to a client as they're looking to expand and think about what they want in their portfolio.

 

Ganter: Ten years ago, did all of our clients have access to their accounts? The answer is probably no. So they can really look at what we're doing everyday.

 

Felipe Bulcao L. Britto: We're talking about changes and talking about the trends in the industry. Not only technology but also larger institutions going to the ultra-high-net-worth individuals or small institutions working with the smaller sizes. I think in the end everything leads to one point: segmentation. What is important, especially for the large institutions, is to really segment and treat differently the different client segments.

 

ILLUSTRATION OMITTED

 

Ganter: As your business changes, you have to deliver your platforms differently. So while the organizations, or the industry, is tending to push up toward that $25 million to $50 million, you're not leaving behind the clients that have been with you for a long time that have $2 million, $5 million, $10 million.

 

George Wilcox: I heard a lot of folks say that they're segmenting the client base. You absolutely need to do that if you want to survive because the $2 million or $3 million client, you can't staff that with a six-person team and pay a lawyer's salary and an accountant's salary and relationship managers. You'll lose money on that client. We simply will not take on accounts below $10 million, and we've even considered raising that now. Last year, the average relationship that was brought in was $40 million. Why is that? Because we made a decision internally that we were going to provide one level of service to every client.

 

SFCEO: With your clients giving you more scrutiny, does that mean that their demands and expectations are higher?

 

Everyone: Clearly. Absolutely.

 

Carlos J. Arrizurieta: With that access to information, I think the other thing that's happened over the years is that once you start a dialogue with the client, you're starting at a deeper level. They have so much more information and knowledge that it really helps the discussions and you get to where you want to go quicker. The other thing with technology is that we're much more mobile and we have to be much more accessible. I get e-mails on weekends; phone calls.

 

Acevedo: Carlos, to follow that point, wouldn't you say that the banker has to also raise his level of knowledge and his level of technology and how he comes back to the client?

 

Arrizurieta: Absolutely.

 

Acevedo: Another thing: In the segment, as the wealth has increased, probably the age has decreased, and so for us, client-facing, we have to be a lot more knowledgeable and a lot more aware of what they know and what their needs are.

 

Hollander: There are two things that I see often in the marketplace: There's the importance of technology and the importance of the professional. When they're married together, a lot of times the client's demands are increased so that you have to not only provide professional advice and good products, but model-building and help the family make decisions with the flow of their assets from one generation to the other.

 

Ganter: It comes back to something I've heard quite a bit, which is the client wants to be able to touch us whenever they want to touch us, in whatever mood they want to touch us.

 

Weintraub: If any of our institutions provide wealth management services by providing an 800 number, let me tell you, you're going to lose that customer immediately.

 

Sandstrom: A lot of people that we are interested in doing business with do not have portfolios of a significant size. They're entrepreneurs that are building their wealth themselves and they require significant banking services, so what we do is we look at the total relationship. We're looking at the source of income from our banking side as well as from our wealth management side. So most of our accounts at Gibraltar are below a $10 million level, but our relationships are extremely profitable because they combine the banking with the wealth management.

 

Arrizurieta: I think clients are expecting you to be able to deliver through all facets of their business or their personal needs. If you can do that, and you can do that in a fashion where it's basically seamless to them, I think those are the client relationships that are deepening.

 

Sandstrom: The trust of your client is so important in success, and the only way you can really gain that trust is to really serve their needs in a growing fashion and stick with it.

 

ILLUSTRATION OMITTED

 

Weintraub: We work with the younger generation. We will do a lot of seminars for them, we do one-on-ones, taking them through an account.

 

SFCEO: Has generational servicing, for lack of a better phrase, changed? It used to be that a family stuck with a particular institution. Has that changed at all?

 

Hollander: There might be the liquidity event when somebody dies, and the next generation makes decisions based on what kind of service has been provided previously, what's going to be provided now, and they will look very long and hard at cost. Cost is an issue. Services are important but they will look at cost.

 

Weintraub: If you have really focused on the husband and not the wife or if you just focused on the parents and not the kids, all of a sudden when there's a liquidity event they're going to try to get their own person.

 

Hollander: In the ideal situation, I always try to encourage a family to educate their children and help them get to know the advisors so that there's continuity in the advisors.

 

Klevan: I agree. We encourage even small accounts for the kids of our clients. It gets them to know the institution.

 

Acevedo: HSBC has an effort, globally, to put events and symposiums in place to educate the next generation. As individual relationship managers, we're pretty much mandated to stay close to all of the beneficiaries and family members.

 

Ganter: The generational management is a critical piece for us. In many instances, the matriarch or patriarch will communicate to us how they have structured their wealth. Many times they've turned to us and we are the communicator to the beneficiaries or their children.

 

Wilcox: We've long recognized that death is our toughest competitor. Every time a matriarch or patriarch passes, the money is up for grabs. The children have had more information than the prior generation had, so it's usually a bake-off every time wealth transfers.

 

SFCEO: Has Bessemer changed the type of individual they hire to meet those needs?

 

Wilcox: The personnel side is one of the most challenging issues I think we all face around the table. Really the only restraint on our growth is our ability to hire, train and retain the best quality people. Right now in the marketplace, there is intense competition for relationship managers.

 

SFCEO: Where are you finding the people that you hire?

 

Wilcox: Business school, law schools and competitors. We do both because it's so difficult. You can't really rely on one channel for bodies. For example, we're building a Latin American team here. About a year and half ago, we went out and we didn't have the time to train people for a homegrown Latin American team, so we went out and hired people from our competitors.

 

SFCEO: Has the clientele that's coming in from Latin America changed?

 

Hollander: Here's the pattern that happens: The parents are someplace else in Latin America. They send their children to the United States to be educated. They like staying in the United States, so they may stay here or they may go back and forth to run the family business in Latin America. If they stay, children are born in the United States so there's US grandchildren. There's a different situation now going on because we have multi-national families and I think that drives the marketplace in a different and very important direction.

 

ILLUSTRATION OMITTED

 

SFCEO: How so?

 

Britto: Let me touch on this because our client base is 100 percent Latin American. Wealth has seen for the last five years a very steep positive trend of growth in countries like Brazil, Venezuela, and even Argentina is recovering little by little. But besides the wealth creation, there is market stabilization in those markets so those clients are looking for more sophisticated products, more interesting products to diversify. So when you look at HR, not only do we have to score professionals with high product knowledge, but also absorb professionals from those markets. So at ABN-AMRO, we are growing our staff, basically hiring from Latin America. Most of our hires are people that we're bringing from Brazil, Argentina, Uruguay and Venezuela to the Miami office.

 

Acevedo: In the United States, there's a focus for HSBC to grow the domestic market in the United States. They have a presence in the United States but it's mainly been international servicing international clients. We're seeing in Miami a lot of these international clients for the reasons that we've talked about here--transferring wealth into the United States, becoming residents of the United States, becoming citizens of the United States. With that has been a tremendous inflow into our domestic private bank at HSBC.

 

Weintraub: Many years ago, Latin Americans were only interested in fixed income and anything having to do with equity. Today they're just more aware of the different markets and the different products. They are now requiring lots more services than they once were, and you better know how to structure accounts for international or Latin America because God forbid you do something that would have big tax, income tax or estate tax implications.

 

Klevan: Following up on that, one of the other things that's happened is that there is now complete transparency in terms of the global financial wealth of a client. That's forcing them to select a US institution, a US trust structure, and frankly, US laws for the children that remain here. I think it really creates an opportunity for providing the domestic needs of an international client.

 

Hollander: The professionals who deal with them have to have the next level of knowledge and maybe being aware of cultural and tax issues that are in their own country as well as the ones that are here domestically.

 

SFCEO: I'm wondering if there's been a preference to go with a traditional US institution as opposed to a foreign one.

 

Weintraub: Anyone who's going to deal with a US bank needs to know that they're going to be held to potential disclosures. So if someone wants to hide something, they're not going to go to any of our banks. But I also see that there's a lot more disclosures and a lot more transparencies even in their own countries.

 

Britto: The trend is going from a secrecy environment to a confidentiality environment--there's a fundamental difference. This is changing the business model of some institutions. We see, for instance, in our institution, we're beginning to have offshore accounts being managed by relationship managers onshore in Latin America. That is only possible today because confidentiality still exists, but permits the client locally to feel comfortable with an onshore or in-country relationship manager.

 

Britto: I don't know if you have this with your institution, but we often try to use to our advantage the fact that we are in the US but we are a European brand. So we try to take the best of the two worlds.

 

Ganter: Whether it's domestic or international, I love the phrase of confidentiality versus secrecy. I think individuals, what they realize is that we're in global markets. This is no longer a US market. So I think the perception from the consumer is that they're looking for global institutions with an element of confidentiality.

 

Arrizurieta: The whole lawyer-customer-Patriot Act issues, I think what it's really done is sort of level the playing field. Everyone has to follow the same rules. It's really allowed us to get to know the client much better because they sort of expect it. Your question about 'Do clients prefer to deal with US or foreign banks?' I think it's more global. In a lot of cases, clients want to deal with Citibank because say, they're opening a business in Hong Kong, and we can help them through the private bank or the corporate bank or the retail operation. We can help them service all their needs in multiple countries.

 

ILLUSTRATION OMITTED

 

SFCEO: How much of the wealth management business in South Florida today is non-domestic?

 

Acevedo: I would say for HSBC, at the private bank level, 70 percent of our business is international, 30 percent would be domestic--and that 30 percent is what we were describing, possibly the children or the other generation of international citizens. And even the domestic clients that may have been born here and have businesses here touch Latin America because they may have a business or they may distribute to Latin America.

 

Klevan: There is a tremendous amount of domestic wealth here, so you're not leaving any marbles under the table if you focus on the domestic market. It's a huge market.

 

Sandstrom: That's the beauty of Miami, is that it has so much depth in terms of opportunities. People can be very specialized and do extremely well.

 

SFCEO: Is it growing deeper, the wealth in South Florida?

 

Sandstrom: Absolutely. The population in Florida is just taking off.

 

Ganter: I think, from Deutsche Bank's perspective, one of the things is that the international and domestic business is pretty gray. Family members who leave their native countries to come to the United States and get educated and become business owners or core young executives--those are domestic clients.

 

SFCEO: So where do you all see as your biggest growth opportunities?

 

Sandstrom: Well, getting more of this rich market. The retention side of it to me is absolutely the most critical issue to success because that means you're doing a good job.

 

ILLUSTRATION OMITTED

 

SFCEO: But do you have targets for expansion?

 

Klevan: We think that the affluent client, the $1 million to $3 million client, has been somewhat abandoned, and that if we're able to deliver open platform; access to alternative investments--funds of hedge funds--to that client base, we're probably under the radar scope of many of the other institutions that are at this table.

 

Acevedo: Study after study, when it comes to that segment of high-net-worth and ultra-high-net-worth, has shown that the market is very fragmented. There is not one single player that really has a foothold on the market. So back to the point, it is very competitive. Competition at the private banking level is coming from local banks, regional banks. It's coming from national banks, international banks, hedge funds, private equity funds. On the investment side, it's coming from CPAs, from attorneys.

 

SFCEO: We tend to talk in monolithic terms about South Florida, but it really can be very segmented between Palm Beach, Broward and Miami-Dade. Can you talk a little about that?

 

Ganter: There is an enormous amount of business obviously in Palm Beach but there is enormous amounts of business in Miami-Dade and Broward and other parts of Florida. Our biggest growth opportunity is in areas like Miami, areas like Orlando and Tampa where there is an awful lot of liquidity that is taking place.

 

SFCEO: Has philanthropy become more important or on the radar screen with a variety of clients?

 

Klevan: What we're seeing is the formation of a lot of family foundations, for tax reasons, but also for philanthropic reasons. The foundation has got a separate life to the family and being able to service the foundation, I think, is extremely important. They tend to be smaller accounts: The $5 million family may have a $500,000 foundation.

 

ILLUSTRATION OMITTED

 

Arrizurieta: As the level of wealth has risen, there's now so much more to divide, if you will. I think a lot of our clients are concerned about what happens when they're not around. One way to sort of have some control over that is controlling where that money is going to go.

 

Hollander: I'd take it a step further. Sometimes I say it's not just about the money. A patriarch in the family will want to pass on values, so they pass on the wealth and they also allow the charitable giving and the philanthropy, passing on the values. The oldest generation will make the decision that "all of our money will go into a family foundation except for a nominal amount because we want the children to understand the importance of working hard." That's not the norm, but I have seen that.

 

ILLUSTRATION OMITTED

 

Wilcox: Philanthropy is critically important to wealthy families. That's been the case with our client base for a long, long time, so much so that about five years ago we hired a bunch of people, and we built a philanthropic advisory group. Most of our clients, they've worked hard most of their life to create wealth. Now they've sold their business or withdrawn from it and they don't want to work hard to manage their wealth. They expect us to set up their foundation for them, write the mission statement, handle the grant requests, set up the meetings a couple of times a year, send out the invitations to the children. It brings the whole family together.

 

The very young children, an effective tool for training them is to carve up the pool of annual giving and tell the young children, "You're going to get to give away a certain percentage of what we have. Come to us, make a presentation to the family, convince us that it's a worthy cause." It's really impressive to see a 12-year-old come in with a PowerPoint presentation and tell the family that this is a great cause. For us, a critically important element of our client relationships is running the family foundations, and that's probably 10 percent of the money we manage.

 

Acevedo; At HSBC we have an office in Boca Raton that covers the Palm Beach market, West Palm Beach and Broward. For them, there is a large focus on philanthropy, trust services, foundations. For Miami and in the Miami-Dade County marketplace, it is a bigger challenge because it is an entrepreneurial city. They have been focusing on creating the wealth.

 

ILLUSTRATION OMITTED

 

Klevan: What we're seeing with some of the foundations is a lot more scrutiny of the investments in the foundations. It used to be that these were run for income. Now they're being run for total return.

 

SFCEO: How are entrepreneurs' thoughts and needs different?

 

Sandstrom: Entrepreneurs are very focused on what they're doing and generally have had ups and downs in their careers, so they understand the volatility of success. And as you move toward dealing with them as they mature and cash out some of that wealth, you face a very critical person in terms of their understanding of what they want.

 

A lot of times the other part of the family has been completely out of this business, so you need to bring them into the process. We take people who haven't had the experience of this legacy wealth and walk them through a process of understanding so that we better know what their goals are, but also have a collaboration between the spouses and then eventually the children.

 

Arrizurieta: One of the things that we found is that because a lot of entrepreneurs are having their liquidity events or selling their businesses at a much younger age, very few of them are ready to retire. They're looking for us to help them continue to grow their wealth. They're on their second or third careers over a span of 20 years. We really try to focus on that and guide them through the different facets of growing the next business.

 

SFCEO: Are more people starting private banking or wealth management relationships before they have to?

 

Ganter: It depends. The entrepreneur or the business owner that is going through some sort of liquidity event has done something probably in advance of that liquidity event that would have established a relationship with an institution. That could be on the investment banking side to try to find a purchaser of his business or her business. That is where I think the organizations begin to connect with the client.

 

Sandstrom: The interesting thing is how you are organized is a very big factor here, because a lot of organizations have silos: the banking part of the business is in one place and the trust part in another. These people never talk to one another, in fact they don't like each other. So organizationally you have to blend this, you have to bring it all together and recognize the opportunity very, very early on.

 

Acevedo: And I think an institution that will do well is that institution that can service that individual or group of individuals through all the segments from when they begin to create wealth to when they are high-net-worth and ultra-high-networth. We find that a lot of clients outgrow their relationships with the local or regional banks and then look for those that have more sophisticated or broader depth of services and solutions.

 

Sandstrom: One group we haven't touched is the real estate owner, which is a big market segment here. They are very difficult here because they're used to kicking the tires.

 

Ganter: And they're extremely leveraged.

 

Weintraub: On the point of setting up the organization, setting up a relationship with an organization before the liquidity event, really, there can be many different ways. You can have someone who has had an investment banking or a banking relationship with an institution. But when it becomes a liquidity event, they may be wanting to look at other institutions that do not provide the banking, that do not provide the investment banking side. But all we do is trust and investment management. So they may be looking to go to just a company that is totally focused on that. So frankly, the fact that there is a liquidity event is an opportunity for all of us, not just the bank.

 

Sandstrom: It's true. It's a threat for those that have the relationship. They can turn it into an opportunity, but as you say, it's an opportunity for you.

 

SFCEO: We're going to break now, and we want to thank all of you for coming this morning.

 

THE PLAYERS:

 

Gonzalo A. Acevedo, Senior Vice President and Managing Director, HSBC Private Bank

 

Carlos J. Arrizurieta, Director, The Citigroup Private Bank

 

Felipe Bulcao L. Britto, Senior Vice President in charge of Sales & Products for Latin America, ABN-AMRO Private Banking

 

Richard Ganter, Regional Director, Deutsche Bank Florida NA

 

Peggy M. Hollander, Managing Director, The Succession Group

 

Dean C. Klevan Jr., CEO, Coral Gables Trust Co.

 

Frederick H. Sandstrom, Senior Vice President/Division Manager of Wealth Management, Gibraltar Bank

 

Teresa V-F Weintraub, CEO, Fiduciary Trust International of the South

 

George Wilcox, Managing Director, Bessemer Trust

 

MODERATORS:

 

William Plasencia, Editor, SouthFloridaCEO

 

Rochelle Broder-Singer, Managing Editor, SouthFloridaCEO

 

 

 

 

Links

 

Financial Services Industry

 

Comments (0)

You don't have permission to comment on this page.