Webster Bank is pushing hard to expand its wealth management business.
It rebranded the business Webster Private Bank, hired additional advice professionals as private bankers, and recruited an executive from BNY Mellon Wealth Management to lead the group of 50 wealth advisors and support staff.
My number one objective is to grow revenues from the private bank and help to make it an even greater contributor to the growth of Webster Bank, Daniel FitzPatrick, the new head of the business, said in a telephone interview.
Wealth and investment services generated $7.2 million in non-interest income for Webster Bank in the third quarter, up 11% from the same period a year earlier, according to the banks last earnings release. Through the end of September, wealth services earned $21.7 million, or 15% of its non-interest income.
To increase the private banks contribution to Websters bottom line, FitzPatrick has turned his attention to staffing up his team. His first order of business is to hire three senior-level executives to fill new posts.
Were looking to invest significantly in our investment management and fiduciary capability, so were looking to add senior resources there, he said. Specifically, he plans to hire a chief investment strategist to lead the banks build-out of the investment management capability, an executive to head up Fiduciary Services, and a leader for the banks lending team.
With a modest $2 billion in assets under management, the private bank has plenty of room to grow. Webster can easily double its assets under management in a couple of years if it builds out the program in the right way, according to Rick Rummage, founder and CEO of the Rummage Group, a career consulting group specializing in the financial industry.
Like many banks across the nation, Webster is ramping up its wealth management and private banking services to make up for declining revenue from traditional bank lending. As all financial firms are facing a challenging next few years in their interest-bearing businesses, its important that we grow all sources of revenue, including investment management and trust, FitzPatrick said.
Websters renewed focus on private banking also has to do with the demographics of the markets it serves in Connecticut, Massachusetts, New York and Rhode Island. The regional bank operates in states that have a strong concentration of individuals the bank describes as the millionaire next door a reference to the book, The Millionaire Next Door: The Surprising Secrets of Americas Wealthy, published in 1996. The book profiles men and women who make up modern-day millionaires.
As these individualsoften doctors, lawyers and entrepreneursincrease their wealth, private banking becomes an area of growing need, FitzPatrick noted. As they have become successful and as they have more wealth and as their needs become more complicated, theres a terrific opportunity for us to then become even more relevant to them, he said.
The bank whose goal is to be New Englands local private bank is aiming its wealth advisory services at individuals and businesses with $1 million or more in investable assets with its sweet spot in the range of $1 million to $25 million in assets. Individuals and businesses in this wealth band, unlike those in higher tiers, still value having a relationship with their bank advisors, which is one of the key features of Websters brand, according to FitzPatrick.
Once clients reach the highest echelons of wealth$100 million or more in assetstheyre no longer looking for a relationship, but rather a part supplier, FitzPatrick said.
Thats not to say that Webster does not have uber-wealthy clients outside its sweet spot range. It has a lot of them, FitzPatrick said, but it is focusing its attention on the more prevalent seriously wealthy individuals who are everywhere throughout the banks four-state footprint, many of whom could be overlooked by other players, FitzPatrick said.
Im not going to spend all that time and effort trying to shoot elephants when there are lots and lots of seriously wealthy people in all our communities and neighborhoods who would like a friendly local private banker, said FitzPatrick.
Webster is betting that Greenwich, Conn., home to many hedge fundsis a location that will benefit from its private banking services. In January, it will open a new private bank office there, bringing the total number of private bank offices to eight. Webster Bank operates a total of 167 branches.
With $20 billion in assets, the bank is the perfect size to foster the personal relationships on which it has built its brand, according to FitzPatrick. We are big enough to be relevant in all these various disciplines and not so big that our clients get lost, FitzPatrick said.
The private bank has a team of some 50 relationship managers, investment managers and portfolio, fiduciary, trust and estate officers. The relationship managers are referred to as private bankers and their primary job is to develop new relationships and become an expert in the client.
In our model, a private banker is an individual who represents the totality of the capability of the private bank and theyre out there looking to develop new relationships, FitzPatrick said. Though they may have expertise in an area of wealth management, we want them to become an expert in the client and what the client needs and what the client is looking to accomplish, he explained.
The bank has hired three such private bankers since October and plans to hire additional private bankers in 2013.
Ours is a growth goal and thats not just business but also jobs because were very much at the moment in a hiring mode, FitzPatrick noted.