Buying Up the Rich—and Their Advisors

Gaining access to high-net-worth clients is priority No. 1 for many brokerage firms these days, but it takes years of hard work to grow an organization of qualified wealth managers. So firms—such as Wachovia (Tanager), Schwab (U.S. Trust), Lehman Bros. (Neuberger Berman)—are buying them instead.

Gaining access to high-net-worth clients is priority No. 1 for many brokerage firms these days, but it takes years of hard work to grow an organization of qualified wealth managers. So firms—such as Wachovia (Tanager), Schwab (U.S. Trust), Lehman Bros. (Neuberger Berman)—are buying them instead.

The latest firm to do so is UBS. The Swiss giant yesterday signed an agreement to acquire the North American wealth management arm of Julius Baer, one of Switzerland’s oldest family-controlled private banks. Headquartered in New York with offices in Los Angeles, Palm Beach and Montreal, its North American operations employs 55 staff members and manages more than $4 billion in client assets, including custodial assets. UBS is the world’s largest asset manager, with more than $1 trillion in total assets, but its U.S. presence in the wealth management arena is relatively new, dating back to its purchase of U.S. broker/dealer Paine Webber in 2000.

The acquisition of Julius Baer is part of the ongoing race in the financial services industry to better meet the needs of the wealthiest investors. Last December, for example, Wachovia purchased Tanager Financial Advisors, a multifamily office with $2 billion in client assets, and folded it into Wachovia’s Calibre multifamily office group, which already had $10 billion in client assets.

“These purchases bring a lot of infrastructure to the boutiques in exchange for client relationships and quality [high-net-worth] management,” says Matt Schott, an analyst with TowerGroup, a Boston-based research firm. Without such acquisitions, “It would take years for firms to grow [high-net-worth clients] organically.” Schott expects acquisitions of firms like Tanager and Julius Baer to continue as firms seek to leverage their high-net-worth services.

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