Wells Fargo's folksy wooden stagecoach is about to go after the carriage trade, as the bank launches a newly reorganized wealth management business in Minneapolis aimed at families with $50 million or more to invest.
The new unit made its debut Tuesday under the name Abbot Downing, after the early 19th-century builder of upscale custom stagecoaches. It features a full range of services to cater to the super rich, complete with psychologists and staff to build family genealogies.
Abbot Downing combines two of Wells Fargo's wealth management businesses: Lowry Hill in Minneapolis and Wells Fargo Family Wealth in San Francisco. It targets the estimated 10,000 U.S. households with $50 million or more to invest -- a pool of about $1 trillion, Wells Fargo said -- with a particular focus on baby boomers with family businesses to sell.
The reorganization comes as the race to coddle the ultra-wealthy heats up. Banks have been chasing rich people for centuries, of course. But as they struggle to increase profits in the current wobbly economy, bankers are finding the ultra-rich more alluring than ever.
Also driving the trend are the tide of aging baby boomers, various acquisitions banks have made and the costs of regulatory compliance, said Steven Crosby, a senior managing director for PricewaterhouseCoopers.
"Clearly it's a profitable area, and good businesses are always looking to leverage profitable segments," Crosby said.
Wells Fargo rival U.S. Bancorp announced last spring that it was creating a new boutique unit focused exclusively on investors with assets of $25 million or more. Its new Ascent Private Capital Management unit is set to open in December in Minneapolis.
Jim Steiner will lead the new unit. He said he's particularly interested in the rise in mergers-and-acquisitions deals as aging baby boomers face selling the family business and then handling thorny issues related to passing on the money.
"I think over the next five to 10 years, there's going to be more and more of those kinds of liquidity transactions," Steiner said.
The business will have a "very boutiquey" feel, he said. In addition to such traditional services as estate planning, it will offer a slew of more personal services, such as help with family dynamics, leadership transition and building family genealogies. About 90 of Abbot Downing's 300 employees will be in the Minneapolis office. It will have $28 billion in assets under management and offices in Chicago, Philadelphia, Los Angeles, San Francisco and about a half-dozen other cities.
Unchanged will be Wells Fargo Private Bank, another part of Wells Fargo focusing on people with $1 million to $50 million to invest.