Boston Private Financial Holdings Inc. announced Tuesday that Clayton G. Deutsch will succeed Timothy L. Vaill as chief executive officer and president on July 31.

The succession plan to replace Vaill was announced last year. Deutsch is a senior partner at McKinsey & Co.

The company’s board will elect a new non-executive chairman from its independent directors to assume that role on July 31.  Walter Pressey, Boston Private’s vice chairman and president, will continue to serve as vice chairman and remain on its board of directors.

Deutsch, 55, began his career in banking in the 1970s and has worked at McKinsey since 1980.  He worked in its private banking, wealth advisory, and wealth management sectors. 

Deutsch has been the global leader of McKinsey’s merger management practice since 2006.  He managed the Midwest complex of McKinsey offices including Chicago, Pittsburgh, Minneapolis, Cleveland and Detroit from 1993 to 2005.  Before that, Deutsch founded and led McKinsey’s Great Lakes financial services practice from 1986 to 1995. 

Deutsch has served as Chairman of McKinsey's principal review committee, a member of its director review committee, a long-time member of the shareholders council and chair of its professional standards committee. 

“Despite the challenges faced by all financial institutions the past several years, Boston Private has maintained and built upon a strong reputation for distinctive client service,” Deutsch said in a press release. “There is a terrific opportunity to grow this business in selected markets as the needs of the wealth sector in this country continue to expand and evolve, and the need for high personal service levels and high integrity advice becomes paramount.”

Vaill said Deutsch “touched his toe into banking” early in his career, but most of his career has been spent at McKinsey fouchsed on financial services and wealth management.

“This job really requires a strategist,” Vaill said. “This is not an operating job. We are not making loans or picking stocks. We are trying to build a strategy. Clay has built dozens of strategies at McKinsey. He is a terrific communicator.”

Vaill, who has been president and CEO of the Boston-based company since joined January 1993 and was named chairman in 2001, helped the company expand and then retrench following the economist turmoil of 2008.

Vaill, 68, said in an interview Tuesday that he will remain at Boston Private through the end of July to help with the transition and will continue to serve on its board of directors. He said that he plans to return to school and has enrolled at Harvard’s Kenendy School of Government.

Boston Private spent much of last year's second half selling businesses to generate cash. In September it sold Gibraltar Private Bank and Trust Co. in Coral Gables, Fla., to private investors for $93 million in cash, and Rinet Co. LLC, an advisory firm in Boston for ultra-wealthy investors, to its management team for $6 million. By December, Boston Private sold Westfield Capital Management Co. to the company's management team to generate $59 million.

These initiatives added $100 million of cash to the company's balance sheet and enabled it to increase its Tier 1 capital ratio and begin repaying Troubled Asset Relief Program funds borrowed from the government. Boston Private has repaid $50 million of the $154 million that it owed the Treasury.

This conservative approach is a marked change. As recently as two years ago, Boston Private's strategy was to establish hubs nationally by buying regional wealth managers and private banks. It averaged a deal every 18 months and had its eye on expanding into 12 to 15 other regions.

Vaill defends Boston Private’s decision to expand.

“Our growth didn’t happen too fast,” he said. “We built a successful company that increased its value for 15 years. The turnaround happened very abruptly. I am sure that we wish we could have anticipated it better, but who doesn’t wish that? Had we been better fortuneteller we could’ve reached faster to the downturn, but that rising tide sunk a lot of boats.”

During the company’s first quarter earnings conference call, Vaill said it will take a long-term approach to growing in those markets. "Vigilance will remain our watchword," he said.

Boston Private has 40 private banking and wealth management offices in five states, with total balance sheet assets of $6 billion and $19 billion in assets under management.

Vaill said the company is still focused on organic growth, but he “wouldn’t be surprised” if it looked to acquire again.

“I think we have had the good fortune of building strong a wealth management company,” Vaill said. “We started from zero and built a firm with 40 offices. … I am proud of that. … We built a good firm. It wasn’t without its high and lows, but we built a company and hopefully we have set Clay up to devise the next chapter.”