"Capital is moving away from the product-driven side of the industry," Webb says.

HSBC offers its families both its own funds and those managed by outside firms, says Mary Duke, head of global family wealth in New York.

"They are not compelled to choose us," she says.

HSBC Private Bank, which manages funds for some family- office clients, will no longer maintain overseas accounts for U.S. residents, the bank announced in July. The move comes amid a crackdown by the U.S. Internal Revenue Service and Justice Department on U.S. residents who use offshore accounts to avoid taxes.

Letters to Clients

Before it announced the global change of policy, HSBC had begun sending letters to U.S.-domiciled clients with accounts in India, saying they would need to close their offshore accounts. In April, a New Jersey businessman named Vaibhav Dahake pleaded guilty to conspiring with bankers at HSBC to hide money in India from the IRS.

Asked about the Dahake case, HSBC spokeswoman Juanita Gutierrez said, "HSBC does not condone tax evasion, and we have no further comment."

Independent registered investment advisers such as Constellation controlled 11.5 percent of the $13.4 trillion U.S. wealth-management market in 2010, up from 9.5 percent in 2007, according to data from research firm Aite Group LLC in Boston. Brokers from the largest banks manage 38 percent, down from 41 percent in 2007, Aite says.

By any measure, catering to the wealthy is a growth business. The number of individuals worldwide with $30 million of liquid assets to invest rose 10.2 percent to 103,000 in 2010, according to a June report by Cap Gemini SA and Merrill Lynch Global Wealth Management, a unit of Bank of America Corp. That $30 million club controls $15 trillion of capital in total.

Fee Squeeze

Getting clients with big money doesn't mean you're going to make big money, says Elizabeth Nesvold, managing partner at Silver Lane Advisors LLC, a New York-based investment bank that specializes in mergers and acquisitions of wealth-management companies.

The heavy increase in competition means many new family offices are willing to cut rates, she says. Most charge annual fees equal to a percentage of a family's liquid assets; 0.35 to 0.75 percent is the normal range, according to the Family Office Exchange.