As the wealth management space grows more competitive, private bank and trust companies are also wanting their piece of the action. This is especially true this year, when wealth management units at the major banks have reportedly been doing better than the banks’ other segments overall amid stock market declines.

To that end, private bank and trust companies are looking at inorganic growth strategies such as M&A and advisor recruitment to achieve scale in the space, according to a new report by Cerulli Associates, the Boston-based consulting firm.

Cerulli says that 68% of private bank and trust executives are looking at M&A to grow their businesses, while 62% are considering acquiring and integrating a smaller firm in their channel, according to the report, “M&A and Advisor Recruitment Are Top-Of-Mind for Private Banks.”

Bank trust executives are trying to boost their number of advisors, Cerulli said. “Fifty-three percent indicate they are actively recruiting advisors and teams from other firms,” said the report. “Historically, the bank channel has not been a significant beneficiary of advisor migration. More than two-thirds (68%) of advisors in the bank and trust company channel have only ever worked within that channel—only 17% previously worked at a wirehouse while just 7% have experience as a hybrid or independent registered investment advisor (RIA).”

Chayce Horton, the author of the report, said in an interview with Financial Advisor that his firm looked at private banks like Goldman Sachs, J.P. Morgan Private Bank, and Bank of America Private Bank when examining M&A strategy and integration of business across the larger parent organizations. Cerulli also looked at firms such as Key Private Bank, M&T Bank, Fifth-Third Private Bank and PNC Private Bank to see how these firms have tried to integrate and implement M&A and inorganic growth methods that would allow them to compete better in wealth management against wirehouses, RIAs, broker-dealers and even family offices.

“Over the last five years we’ve seen banks really push to expand their wealth management offering … in what has been a lower interest rate environment,” he said. “It’s much more profitable to manage those assets. It’s also more stable than having a brokerage.”

Assets in the financial advisory, wealth management and financial planning side of the business are historically much stickier than brokerage assets, which have become more commoditized, he added.

The bank relationship is usually the first one most people have with a financial services company, since a bank is the first place they deposit their money. Maybe down the line they use bank credit cards or mortgages, Horton said. “But they really don’t see that firm as a partner, an advisor, throughout their entire life and that’s definitely been an image problem.” Given the shrinking opportunity in the lending business in the last five years, he said, banks naturally see themselves having a great advantage with wealth management—that they’re situated in the best place to tie together all their clients’ finances, integrate them and see a whole household.

“The reason you see a lot of advisors, a lot of clients leaning more towards RIAs is because it’s planning and financial advisory first and foremost and almost singularly, whereas banks are banks. Wealth isn’t their top priority and that’s been a problem. And you see that in their execution and prioritization, and that’s why they get overlooked from the demand side. From the supply side, these executives and leaders [put] banking first and [say] if we can add something else on the side that’s great.” But in the private banking side, he said, where advisory is more of a focus than it is for branch banks, the firms have been more successful.

According to the Cerulli report, private bank and trust executives seek out mergers and acquisitions for these five reasons: to achieve greater economies of scale (named by 75% of those surveyed); to enter new geographic markets (named by 69%); to increase fee-based revenues (named by 63%); to add services for high-net-worth investors (cited by 31%); and to acquire intellectual capital or technology (named by 25%).