Magazine article American Banker

Mass. Firm Soars as Bank Clients Seek Alternative

Magazine article American Banker

Mass. Firm Soars as Bank Clients Seek Alternative

Article excerpt

Byline: Steve Garmhausen

Banks that are successful in cross-selling wealth management products are widely admired by their peers.

But the head of a nonbank wealth management boutique said wealthy families are increasingly repelled by the practice and seeking alternatives in firms like his.

"Many of our clients are coming from larger money-center banks," said Stephen Prostano, the president and operations chief of Silver Bridge Advisors in Boston.

Last year the firm added five clients with more than $20 million of assets, and three of them moved their relationships to it from banks, according to Silver Bridge. Of seven new clients with $10 million to $20 million of assets, five came from banks. And of Silver Bridge's 90 new relationships in 2009 under $10 million of assets, 80% came from banks.

This year, Silver Bridge has so far netted a single relationship exceeding $20 million, and it came from a bank. It has also won three clients with $10 million to $20 million, all from banks. And of Silver Bridge's 45 new clients with less than $10 million each, 75% came from banks.

The lengthy process of courting these clients, especially the wealthiest of them, has shown that they are far more discriminating in selecting new wealth managers than they were before the era of Bernard Madoff and the financial crisis, Prostano said. "The due diligence that families and individuals are going through before making their final decision about a financial adviser is significantly different than in the past," he said.

Potential clients' tougher criteria include assurance that product recommendations are fully objective and not, for instance, part of a bankwide, cross-sell strategy.

"You want an adviser there to understand your needs, not what puts more money in their pockets," Prostano said. …

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