A Better Mousetrap

April 4, 2008

Emigrant Savings Bank was opened in 1850 to service the growing Irish population in New York. Two decades ago the bank became part of the Milstein family's sizable holdings, and just four years ago, Howard P. Milstein's family took sole ownership of Emigrant in a cash buyout from his cousins.

Milstein's plan was to use the existing infrastructure and charter as a springboard to create a private bank for the wealthy tri-state population. After his election as chairman, Milstein recruited private banking and family office veteran William Fuhs to be president and CEO of the newly established New York Private Bank & Trust. Hannah Shaw Grove, executive editor of Private Wealth, speaks with Bill at the bank's mid-town offices.

Grove: You received your Federal trust powers in 2006, a relatively recent time frame for the old-world business of private banking. What was Howard Milstein hoping to accomplish?

Fuhs: Howard gave me two mandates when I joined the bank in early 2004. The first was to deliver the high-touch, extremely attentive and customized service that most private banks have long since abandoned. The second was to avoid conflicts of interests with our clients.

In the past, it has not always been clear if a private bank's advice or services to their clients is conflicted. Frequently banks, acting as trustee, have also been the money manager. The conflict arises when they manage the money poorly for extended periods of time. If it was outside a trust they would be fired. As a trustee they have a fiduciary responsibility to act only in the best interest of their clients. Should they fire themselves as the money manager? Have you ever heard of a private bank doing that?

To fulfill Howard's mandate to not have our interests conflict with those of our clients, we have chosen not to manage equities. Instead, we select investment managers for our clients, and if or when appropriate, we replace them.

Grove: Are those mandates still important operating tenets of the bank?

Fuhs: Absolutely. We do all the things you'd expect a private bank to do-give advice, act as a trustee or executor, negotiate lower investment minimums for our clients-but we pride ourselves on knowing what the ultra-wealthy client wants and giving our clients access to services and investment opportunities that will fit their needs and lifestyles. For instance, we have the ability to facilitate the acquisition of fine art, or advise families on property, casualty and health insurance needs. This insurance advisory service is a client need frequently overlooked by most institutions.

We recently launched Private Philanthropy Advisors, a division that I expect we will spin off as an affiliated company, whose mission is to assist clients in turning their passions into legacies.

Grove: What types of investments are available to clients of NYPB&T?

Fuhs: Our clients want special investment opportunities and we are fortunate to be able to leverage the Milstein family's, the bank's and other client's access to some very unique and high-quality co-direct investments. We have been able to deliver most of these investments
to our clients on the same terms as the other co-investors, without any additional fees, as an added value.

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