Firms Jumping on Wealth Market Bandwagon

Brokerages are targeting wealthy clients by setting up separate departments whose mission is to attract and service high-net-worth individuals.Bear Stearns is the latest entrant to add a "wealth department" business unit. In September, the firm launched a new division, Strategic Investment Services (STRATIS), for its high-net-worth clientele. The program has a $250, 000 investment minimum and is designed

Brokerages are targeting wealthy clients by setting up separate departments whose mission is to attract and service high-net-worth individuals.

Bear Stearns is the latest entrant to add a "wealth department" business unit. In September, the firm launched a new division, Strategic Investment Services (STRATIS), for its high-net-worth clientele. The program has a $250, 000 investment minimum and is designed to provide investors with asset allocation and private asset management services. Bear Stearns hired KPMG Peat Marwick to act as a consultant to the portfolio managers offered in the program. KPMG will screen and monitor managers for each account.

Charles Schwab & Co., through its Schwab Institutional division, is also aiming an investment program at the wealth market. "We call them wealth managers," says Gerald Graves, senior vice president at Schwab Institutional. These portfolio managers, he says, combine traditional securities trading with estate planning, insurance and trust services. The program, which has no formal name, is part of the firm's adviser service.

James Waller, vice president at CheckFree Investment Services in Jersey City, N.J., which provides technology to brokerages that serve the high-net-worth marketplace, says he has seen an increase in the number of financial services firms creating in-house wealth departments. "There is a new trend emerging and a surge of interest in the area," Waller says. "All of the major brokerage firms have set up units to service this need." He says the mass of wealth created and inherited by the baby boom generation is sparking firms to establish trust, estate, and private asset management services for the high end.

"We are updating our technology to service this trend, which we see as a great one," Graves says. He says the wealth market complements Schwab's 5, 000 registered investment advisers who operate through Schwab Institutional.

Salomon Smith Barney, PaineWebber and Merrill Lynch, as well as most of the regional firms have set up wealth-oriented areas, too--and they are growing. According to a survey of regional and wirehouse brokerages released in September, money management services for individuals with accounts of $100, 000 or more have grown significantly in the first half of the year. The survey, conducted by the Money Management Institute in Washington, D.C., says assets under management in these programs are up 41% in 1998 compared with 1997.

Salomon Smith Barney's high-net-worth group is being developed by combining the services of its money management Consulting Group ($100,000 minimums) with its Private Trust Services Group, Estate Planning Analysis and Services Group, and Fixed Income High Net Worth Group.

"We are growing in that area because the offers are so comprehensive and can be sold throughout the firm," an SSB executive says.

At Merrill Lynch, the high-net-worth department is called Private Advisory Services, according to a firm spokesperson. That unit offers many of the same services found at Salomon Smith Barney and most full-service brokerages. Growth in the Private Advisory Services unit has been strong, according to an executive at the firm, who declined to provide specific numbers.

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