Banking On Success

February 4, 2008

Frances Aldrich Sevilla-Sacasa is the president of U.S. Trust, Bank of America Private Wealth Management. The company had approximately $225.3 billion in client assets under management at September 30. Private Wealth Managing Editor Dorothy Hinchcliff interviewed Sevilla-Sacasa recently about how the firm is changing and positioning itself in the private wealth management business.

Hinchcliff: A major reorganization at U.S. Trust has been under way since the announcement in November 2006 that Bank of America would be acquiring it from the Charles Schwab Corporation. Last April, Bank of America announced that Peter Scaturro, U.S. Trust's CEO at the time, would not be coming on board. Since the deal closed in early July, many others have left and many people have been hired into new positions. How would you describe the structural changes at U.S. Trust, Bank of America Private Wealth Management, and how do you think they will position you to compete strategically in the private wealth management business?

Sevilla-Sacasa: I think we should take a look at what we have today on a combined basis because the opportunity in front of us is about creating the pre-eminent wealth management firm in the country. It wasn't about just adopting the Bank of America private banking organization model or the U.S. Trust organization model, but about creating a distinctive, enhanced new organization that brings the best attributes, the best features, of both and the best skill set to form a new company. We can do more for our clients today than any one of the legacy companies could do before.

Hinchcliff: As part of the various transitions, on July 23 Bank of America announced key national appointments to lead four teams that would serve clients: investments, specialized client solutions, wealth structuring and credit and banking delivery. How do these teams differ from what you had in place before and what do you see as their goals?

Sevilla-Sacasa: Both legacy firms delivered a comprehensive set of solutions to their clients prior to coming together. What we now have is the ability to integrate all of our solutions within the private wealth management organization. ... We have those solutions groups embedded into our divisional teams, where the experts and the specialists are based locally with private client advisors in our over 144 locations around the country. We had those kinds of solutions organizations embedded within U.S. Trust. Bank of America, as I mentioned, offered all of these capabilities. We wanted to make sure that we had very high standards on how we would actually offer these solutions, how to deliver them, and to make sure that there was some uniformity across the country so our clients, regardless of where they are located, were able to leverage the broad capabilities of both organizations coming together. For example, if you take one of those solutions organizations, let's say wealth structuring, that organization in particular has all of the solutions that have to do with trust and estate planning, estate settlement, financial planning, tax planning, special asset management, philanthropic management ... those types of services is what is encompassed with wealth structuring.

You probably know that we are one of the largest corporate trustees for individuals, families and special assets, like oil and gas properties, like ranches, timberland and so on. With our firms coming together, we now, for example, just on the trust side, have a lot deeper expertise within the company. So we wanted to make sure that all of that thought leadership, the professional talent that we have in the organization, was accessible to all of our clients. We want to make sure that we had a national approach towards offering our best thinking and our best capabilities and solutions to our clients. We have the ability to do that in more locations than any other firm out there, and that is compelling to our clients because they can have access to that deep intellectual capital, the expertise and broad solutions on a local level with their local teams.

Hinchcliff: How many people in the combined organization do you have, and how many are deployed in areas where they are in contact with clients, client-facing positions?

Sevilla-Sacasa: The combined organization has over 4,600 associates, most of whom are client-facing, and that number does not include people in many of our support areas. For example, the finance organization is providing support to U.S. Trust, and the human resource organization and the marketing organization. Those are additional resources that actually support U.S. Trust.

Hinchcliff: How does that number compare with competitors?

Sevilla-Sacasa: We are the leading private bank today in terms of the number of offices we have throughout the country, assets under management and total client assets and in the number of associates.

Hinchcliff: When you look at the firm's private wealth accounts that belong to individuals, how has that changed?

Sevilla-Sacasa: When you compare apples to apples in combining both legacy organizations, we have actually seen an increase in our assets under management for two reasons: One is because we have had net new inflows of assets under management from existing clients and from new clients, and also because of positive market action.

Hinchcliff: I have a question involving strategy concerning services and products. Bank of America, as of course we all know, is a banking behemoth that certainly was serving private wealth clients before its merger with U.S. Trust. But most of its business, and what it has been most known for, has been serving the mass market with its 5,700 retail banking offices in the United States and 56 million relationships in the U.S. alone. Some observers predict it will be difficult for it to provide enough focus on highly customized, and often high-cost, services that the ultrarich want. U.S. Trust has been known for serving the ultrarich, particularly those with $50 million or more in assets.

On the other hand, the profile of rich people is changing-many have built substantial wealth through their own businesses and many more are women. In recognition of these changes, Bank of America kicked off a $25 million "New Face of Wealth" ad campaign in October for U.S. Trust in 50 markets across the country. How is the firm redefining its customer base and how do you think this will affect its competitive position going forward?

Sevilla-Sacasa: I think one of the beauties of the two firms coming together is that both have a very long tradition of individuals and families, and you correctly note that Bank of America has a great deal of strength in serving individual clients, from the retail client to the mass affluent to the highest-net-worth markets. The legacy private bank of Bank of America had a very large and terrific clientele.

Obviously, U.S. Trust also had a very long tradition and history, dating back to over 150 years of also serving individuals and families. The difference is that the U.S. Trust history and legacy has been primarily on the high-net-worth side whereas Bank of America, in general, has served many different types of clients. But within their private bank they were serving a customer base that was very similar to the U.S. Trust client base. Now you have seen our new ad campaign, right?

When you compare apples to apples in combining both legacy organizations, we have actually seen an increase in our assets under management.

Hinchcliff: Yes.

Sevilla-Sacasa: During the transition process, obviously, we did a lot of extensive research on the high-net-worth market. ... What we saw through the research is a new face of wealth. The majority of our clients today have built their own wealth or have grown their own wealth. An increasing number of high-net-worth clients have earned their wealth through their careers. Many of our clients today are also entrepreneurs and they continue to be very actively involved in their careers and in their businesses. And if you look at our ad campaign, we have incorporated that new face of the client today. Those clients want to make sure that their values are preserved. Many of these very successful and very wealthy clients today actually had normal middle-class upbringings. And they have very, very strong values, and they are committed to making sure that they preserve what they have. When we help them with their philanthropy they want to make sure that those values are passed on as well.

Hinchcliff: It sounds like a more multidimensional type of client that you might be serving, but could you tell us what the old face of clients would have been so we would have a clear contrast of what we are talking about?

Sevilla-Sacasa: When we sit down with clients today we are, in many instances, dealing with many different family members who are involved in a variety of different businesses. And we are better positioned today to be able to look at all of the family members' needs and to look at both sides of the balance sheet. Bank of America has a very important capability that emanates from having one of the strongest balance sheets in the industry, so we can serve a client's credit needs and banking needs better than any other firm out there, whether it's for their businesses, whether it's for buying aircraft or lending against their art collection. We can manage their assets, their investment portfolios, their trust and estate plans for future generations: We can help them with their philanthropic management. We help them with non-traditional types of assets-like ranches they might have or timberland properties or oil and gas leases. We can serve today's kind of clients much better than ever before as a result of both firms coming together.

Hinchcliff: Would you say that in the past in the private wealth management business, clients typically had wealth that was inherited or that was within the family for many years? I am sure you still serve those clients as well, but were clients a more homogeneous group previously?

Sevilla-Sacasa: We are still serving many clients whose families have been clients of the firms for generations, but what we are finding is ... they are still very actively involved in growing that wealth. They continue to be very active in business or as professionals, and so they have used their wealth to grow their wealth to ensure that they continue that kind of legacy for the successive generations. The families we serve are typically multigenerational, and we are serving different family members who might be in different industries, might be in different parts of the country and different parts of the world. As a result, they have different needs. So even though we are serving one family, we are still really serving many different unique clients within that family with unique needs.

Hinchcliff: Speaking of capabilities and services, when the merger was announced, Bank of America said it was integrating the investment management business of U.S. Trust with Columbia Management, Bank of America's asset management organization. Also, the alternative investments groups of both companies were combined. In October, the company announced it launched a unified managed account program for wealthy and ultra-wealthy clients wanting comprehensive yet tailored solutions to investments. What do you feel these changes offer your client base? Are other major changes in products and services for the wealthy planned?

Sevilla-Sacasa: For many years and decades throughout our history, U.S. Trust had special expertise in managing investment portfolios for our clients, and obviously Bank of America has a very strong expertise through Columbia Management. So putting those two platforms together gives us a competitive advantage that few other private wealth management firms have. In addition, we also combined both of our alternative investment platforms. At U.S. Trust we are committed to open architecture for our clients. We do it well with the firm's proprietary asset management capabilities, but we also draw upon third-party managers. We have access to much deeper research through Columbia Management that firms who don't have proprietary asset management can't access internally. We also have the ability to select external managers as we see fit to deploy our investment strategy on behalf of our clients.

Hinchcliff: The merger does definitely seem to be helping U.S. Trust have a greater reach in many markets. U.S. Trust, as of course you know, will now have a major presence in Chicago as a result of Bank of America's offices there and Bank of America's acquisition of LaSalle Bank. Chicago and Illinois have been the major base for one of your competitors, Northern Trust. How do you feel this expansion positions you to serve private wealth clients and, in general, how do you think Bank of America's footprint will help U.S. Trust reach more ultra-wealthy clients?

Sevilla-Sacasa: We are very excited about incorporating our LaSalle teammates into U.S. Trust, Bank of America Private Wealth Management. We couldn't be more excited about the opportunity that we have in Chicago, one of the major wealth centers in the United States. Think about it. Bank of America had a very strong location-a very strong office there, a very strong position in Chicago. Now we have LaSalle Bank, with its wonderful reputation and tradition and history in that marketplace. Both are coming together under U.S. Trust in Chicago. That is one of the more promising opportunities I think we have today. We are already very strong in so many key markets. In California, in the Southeast and Texas. I believe we will become the preeminent wealth management firm in Chicago over the next few years, given that combination.

Hinchcliff: I'm pretty much near the end of my questions. I just want to note that you bring a lot to the table as president of U.S. Trust. You have many years of experience in serving the private wealth market, especially global wealth management, and you speak four languages. I would like to wrap up our interview with you telling me how you think your personal strengths will help guide the firm in the future.

Sevilla-Sacasa: I do have extensive experience of about 25 years in private wealth management. During that time I have been very close to clients, so I think bringing the client's voice and my experience into U.S. Trust-I have led successful private banking organizations in the past as well-gives me the kind of experience that I need. What's even more important is my ability to really bring together a group of leaders, bring together people with different skill sets, different backgrounds. At U.S. Trust I do feel we have a top-tier leadership team in place. ... So I think that really it's not only what I bring to the table but also what we have together to really succeed.

Hinchcliff: Is there anything else that you want to touch on before we end our interview?

Sevilla-Sacasa: We spoke about the ad campaign and I don't know if you saw this, but we have just spent a considerable amount of resources and money on really launching our brand through this campaign, and that is an amount that neither Bank of America nor U.S. Trust had ever committed before to the private banking business. That should give you an idea of Bank of America's commitment to the business, not only through their acquisition of U.S. Trust but also having spent $25 million through 2007 on the marketing campaign, which is the most expensive campaign that either legacy firm had ever undertaken. So this really underscores the bank's commitment ... to being the preeminent firm and the leader in the industry.

Hinchcliff: I wish you good luck with that goal and I really appreciate you taking the time to talk to me today. Thanks again.