Published inFUNDfire – An Information Service of Money-Media, a Financial Times Company
By Tom Stabile
Wells Fargo has finished a major step of its private banking business integration with the former Wachovia Wealth Management by appointing the last of about 30 regional heads on the East Coast who will oversee a range of services for high-net-worth investors with $5 million to $50 million. The restructuring caps one of the biggest outstanding tasks following Wells Fargo’s acquisition of Wachovia last year, bringing together private banking arms that were similar in size but had different organizational models.
A notable aspect of this integration for asset managers is that bank-based financial advisors in the newly reformatted organization will have access not only to the standard brokerage product platforms but also to the broader lineup of strategies available to Wells private bankers.
The newly integrated units had been geographic mirror images, with Wells mostly on the West Coast and Wachovia largely covering states east of the Mississippi River. The combined group now has 34 regional heads in the West region, and 29 in the East. Those managers report up to 12 regional managing directors overseeing larger zones. The 12 are split evenly between six in the Eastern half of the country, reporting to Stan Gregor, and six in the Western half reporting to Chuck Daggs.
Gregor and Daggs in turn report to Jay Welker, executive v.p. of the wealth management group. Also reporting to Welker are several senior executives overseeing sales, technology, and wealth advisory and private banking services and products.
Gregor says the end result of the integration incorporates elements of both business models, though on the Eastern U.S. side, it resulted in more appointments recently to regional manager positions. “We truly have looked at the way both companies were running the businesses and picked out the best of both, with the clients’ needs at dead center,” Gregor says.
The legacy Wells side, whose previous model resembled the current one, only saw a few new private banking regional managers named, but new appointments have been taking place throughout the year in the former Wachovia territory. The six eastern regional directors were named in the spring, and many of the 29 eastern regional managers have been named in recent months, with about 15 announced over the last week.
The regional managers oversee all wealth management functions for their markets, including private banking, credit, investment management, trust and estate planning, financial planning, insurance and bank-based brokerage services. They won’t oversee the financial advisors who are part of the stand-alone branches of Wells Fargo Advisors, which was formerly the Wachovia Securities brokerage.
The new private bank set-up is different from the legacy Wachovia structure in several ways, particularly in including the bank-based brokerage business line under the wealth management reporting chain. “That regional manager is held accountable for results, growth, and development of all the businesses within their geography,” Gregor says.
While the 3,000 bank-based brokerage advisors will remain licensed through the main WellsFargo Advisors brokerage, they will have a much different operating environment by reporting into the wealth management unit. They have broader access to the entire private banking division’s specialty consultants for matters such as trust and estate planning and banking tools, Gregor says. And most significantly, these bank-based advisors now have access to the entire private bank investment platform, an open architecture lineup that includes institutional-style managers and alternative investments.
“This creates a really compelling platform for our [bank-based] financial advisors,” Gregor says.
The wealth management division expects “enormous synergies” from tying in all of the different business lines under one leadership structure, Gregor says. He says the structure also “eliminates the silos that existed” and creates a team-based environment with specialists housed in the same offices as client-facing relationship managers.
“Our relationship managers are engaging with the same people day in and day out,” he adds.“They’re not just ‘renting’ a specialist that visits the market.”
The restructuring has also allowed a certain amount of consolidation through office closings, though Gregor declines to provide details.
The integration effort and adoption of the regional manager model for wealth management is attractive in theory, says Andrew Klausner, principal of AK Advisory Partners in Boston. He says the home office leaders of business units such as insurance and investment management don’t often coordinate, so it makes sense to centralize and combine those efforts at the regional, client-facing level.
Klausner says one of the keys to making such a set-up work is to ensure propercommunication between the specialists at a local level. But perhaps the most important facet is ensuring that compensation incentives reward individual relationship managers, advisors, and specialists for referring business to each other and sharing clients. “If the insurance guy has no incentive to build the entire business, it won’t work,” he says. “If you do it correctly from a compensation point of view, it can be a very good model.”
Gregor declines to describe the compensation set-up in the private bank unit.
In addition to previously reported appointments from recent weeksthe bank announced another 11 regional managers this week, most of whom shifted from similar roles at Wells or Wachovia:
• Jennifer Lee is senior regional manager for New York, coming from a post as managing director and regional manager for the Northeast region at Neuberger Berman.
• Joseph Giglia has been appointed regional manager for suburban New York in charge of the Westchester County and Long Island markets. He reports to Lee.
• John Garone is regional manager for Northern New Jersey and is based in Summit, N.J.
• Brian LaGrua is regional manager for Southern New Jersey, and in based in Red Bank, N.J.
• James Creamer Jr. is regional manager for the Mid-South Region covering Alabama, Mississippi, and Tennessee. He works from Birmingham, Ala.
• David Edmiston is regional manager for Greater Atlanta.
• Dagan Sharpe is regional manager for Greater Georgia, which cover the markets outside of Atlanta, and works from Augusta, Ga.
• Ken Solis is regional manager for the Tampa Bay region, working from Tampa, Fla. He also covers Hillsborough and Pinellas counties.
• Jason Williams is regional manager for the Miami and Ft. Lauderdale regions, and is based in Miami.
• Bradford Deflin is regional manager for the Gold Coast North Region in Florida, and is based in Palm Beach. He also covers Palm Beach Gardens, Stuart and Vero Beach.
• William Bourbeau is senior regional manager for Palm Beach County, and also is based in Palm Beach, Fla.
The Wells wealth management division also houses the newly renamed Wells Fargo Family Wealth Group that focuses on clients with more than $50 million. That unit combines the former Calibre multi-family office of Wachovia and a similar, smaller unit from Wells.
