A Private Bank by Any Other Name . . .

Family office services…plus loans to wealthy clients who need quick cash to meet a capital call or buy a villa…plus investment selection and supervision.

The functions of a private bank? Yes. but in this case the tasks are performed by the team Lyon Polk has assembled at Morgan Stanley. They manage over $15 billion.

Banks, trust companies, wirehouses and advisory firms all seek to offer comprehensive services to the wealthy. And it's getting hard to tell them apart.

Quiet Old Firm Launches Marketing Blitz

Brown Brothers Harriman, an old-time Wall Street partnership, shed its securities underwriting and sales units when Glass-Steagall came along. As a private bank it has gone about its business quietly – until last month. To my surprise, this ad greeted me on the last page of The New York Times news section. The following Sunday, BBH ran a two-page spread in the Times magazine. Banner ads popped up online, directing viewers to the BBH web site.

The web site, content rich, offers briefings on services, staff bios and  generous helpings of articles from three publications – for investors, business owners and women – arranged by issue and sorted by subject. Under "Wealth Management and Trusts" is this exemplary article on spousal access trusts. (The design of these trusts undoubtedly guards against the risks associated with spouses who plan to become ex-spouses. Even so, spousal access trusts must be grist for at least one financial thriller.)

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From 2010 to 2015, according to Spectrem data reported in Penta, the number of households with investable assets of $20 million to $100 million grew by more than 105,000. That's a 64% increase. Over a million households now have investable assets of $5 million or more. Among those with $5 million but less than $10 million, many should cross the $10 million threshold as their business and real estate wealth gets transformed (bring on the Gatorade barrel!) by liquidity events.

As wealth managers gear up for the growing market now emerging in the top financial tiers of the nations's 124.6 million households, they may find BBH's marketing blitz worth studying. 

$10 Million is the New $5 Million

If $5 million is the new million, other measures of wealthiness also need adjusting.

Sure enough, this year JP Morgan raised the threshold for obtaining its Private Bank services from $5 million to $10 million. Bessemer Trust and others already have a $10-million minimum.

Most private banking clients at Morgan won't be effected. They have over $10 million. Half have $100 million or more.

Although most of us would happily settle for $10 million, it ranks low on today's wealthiness scale. The average S&P 500 CEO makes more than that every year. Certainly someone who used to have $100 million and lost all but $10 million doesn't feel rich.

Mobile Video, Live-Banker Mortgages, Gunless Hunting

Fifty years is only yesterday or ancient history, depending on which ads from 1964 you look at.

Video on the run. In the 1950's Texas Instruments and an Indiana company developed a popular novelty: a little transistor radio. Sony took the idea and ran with it. Now Sony was taking the next step, a portable TV. (You thought mobile viewers didn't start falling off curbs until iPhones came along?)

Live-Banker Mortgages. Five decades ago, private banking aspired to meet the requirements of elite borrowers who didn't always fit the standard mold. Their needs would be evaluated and perhaps met by actual bankers wearing suits. Those days must seem long, long ago to Ben Bernanke, who couldn't talk a computer into refinancing his mortgage.

Gunless hunting. Men with guns were a staple of Chase Manhattan's nest egg ads. But times were changing. Wildlife needed conserving, some said. Chase responded by offering this new age hunter.

Private Banking Reinvented

In the wake of the Great Recession, obtaining loans from one's banker has become more and more difficult and time-consuming. The wealthy set is turning to a quicker, easier alternative, Paul Sullivan reports: high-end pawnbrokers.

Hock shops for asset-rich but liquidity-restrained borrowers are springing up both online and in bricks and mortar. Suttons & Robertsons, an English firm founded in 1770 and catering to the "blue chip, wealthy crowd," opens a New York store this month.

Objects pawned aren't limited to Rolexes, jewelry and the family silver. One borrower parted with

one of his two Bentley GTs. (Your humble blogger probably will never realize his dream of a Bentley convertible. But if he does, he promises not to pawn it. Never!)

Marketers of investment services learn to follow the money. High-end pawn shops could offer promising opportunities. If a need for funds arises from divorce, for instance, one man's liquidity problem should lead to one woman's liquidity event.

Old Money Rap, New Money Rap

Who Says Trust Fund Babies Can't Rap? We raised the question six years ago, answering with a link to Tea Partay. That promotional video for Smirnoff, cheerfully mocking the Trust Fund Preppies of Greenwich and The Vineyard, went viral, attracting millions of hits.

Here's a rap video that's attracting hundreds of millions of hits – a dance-crazy salute to the New Money lifestyle in the land of Hyundai and Samsung.

From Korea,  Psy's Gangnam Style.

Psy, a rapper in his mid-thirties, probably thought he was over the hill. Now he's a phenomenon, a worldwide celebrity. Gangnam, the area whose style he raps about, is a modern, flourishing district south of the river in Seoul. Someone has called it Seoul's Beverly Hills.

Why has Gangnam Style attracted hundreds of millions of viewers? Hard to explain, as Scott Adams acknowledges. This blogger's teenage grandson writes: "No mere mortal could have been this clever. I suggest we find the guy who made this and put him in charge of everything."

Psy in Gangnam Style

Korea's New Money is attracting private bankers and wealth managers galore. Citi has had a presence in Korea since the early 1980's. Now it's beefing up marketing efforts directed at Koreans with $1 million and up. 

Private Banks For Name Droppers

Exclusivity. Social status. Along with quality and "overall client experience," those are the criteria Luxury Institute uses to rank the year's top private bank brands. This year's winner, determined by a survey of investors with at least $5 million: Brown Brothers Harriman, followed by Boston Private Bank. Neuberger Berman Private Asset Management and Bessemer Trust.

A year ago different names possessed the snob appeal: Atlantic Trust, Glen Mede Trust and Rockefeller Wealth Management.

(When I was very young, my father used to stop by the Rockefeller office to drop off a bookbinding job or pick up a check. The notion that a family had an office impressed me immensely. In those days the place must have been truly exclusive  – you probably had to marry into it.)

These days, the exclusivity of Rockefeller, Bessemer and other former family offices resides in the eye of the  beholder. Marketingwise, a little snob appeal probably can't hurt. Or could perceived exclusivity impede growth?

Despite their prestige, fiduciary-style wealth managers aren't exactly cornering the high-net-worth market."Morgan Stanley, Merrill Lynch and Wells Fargo are the top three primary wealth managers to the wealthy," Luxury Institute noted last year. More than one third of the multimillionaires surveyed said a full-service broker was their primary adviser.

“Private Banking” Dissected

What are the pros and cons of having a private banker? Private banking as an ex-VC guy sees it. Note the comments, including one praising GRATs.

“The World’s Local Bank”

Print advertising by major wealth management enterprises is picking up. The last two issues of The New York Times Sunday Magazine included messages from First Republic, Northern Trust, BNY Mellon and T. Rowe Price. Plus HSBC, which grabbed readers with an irresistible headline:

$1.6 billion is hidden down the back of U. S. sofas.

Can't vouch for the statistic. (In the U.K., the comparable sofa treasure is estimated to be the equivalent to $92 million or so.) Still, why quibble over a great attention-grabber?

HSBC is descended from the old Hong Kong and Shanghai Bank, founded in Hong Kong – by a Scot, naturally – in 1865. When the Chinese took over Hong Kong in 1997, HSBC had to reinvent itself. Bolstered by acquisitions including the U.K.'s Midland bank and both Marine Midland and Republic National in the U.S., HSBC now bills itself as "The World's Local Bank."

Check out HSBC's history. And take a look at HSBC Private Banking.

Update: The NY Times reports that Credit Suisse has come under heightened scrutiny of authorities in the United States and Germany over its sale of private banking services that enable tax evasion. The Justice Department has also gone after other banks, the article notes, including "HSBC, one of Britain’s largest lenders, which also offers private banking services in Switzerland and elsewhere."

The Higher the Fees, the Better the Investment Manager?

Much to the dismay of Warren Buffet, in the years before the Great Recession the wealthy seemed eager to spend bigger and bigger bucks to obtain sexy, trendy investment managers or products.

Paying several percentage points per year for investment services is no big deal as long as the annual fees and charges are subtracted from double-digit returns. But lately, writes Warren Giles for Bloomberg, fees are a big deal indeed. Consumers of high-end investment services have become cost conscious. In London, they can even hire a firm that will give their investment managers a good talking to and negotiate lower fees. (Of course, the firm itself charges a respectable fee.)