Wells Fargo sets its sights on the New York market

The New York market will be a primary goal for the newly integrated Wells Fargo wealth management group.

“New York is a very important growth market,” said Jay Welker, president of the group, which has approximately $148 billion in assets under management. “Given the shock and awe that has taken place there, it’s a market that is ripe for opportunity for a company like Wells Fargo. And we certainly don’t need to hire a headhunter.”

That may well be, but the firm’s chances of success in New York, and in other critical areas for that matter, has become the subject of intense industry debate since Wells Fargo & Co. of San Francisco acquired Wachovia Corp. of Charlotte, N.C., in January.

“It’s not going to be easy for them in New York. It takes time to build credibility. The competition is really entrenched, and it’s really tough to take market share,” said a New York-based wealth manager for a large bank, who asked not to be identified.

“Wealth management is a tough sell, especially at the upper end of the market,” said Craig Madsen, senior vice president for wealth management at Union Bank of California in Los Angeles. “Relationships are built over years, not because you come into town and put an ad in the paper.”

But other industry observers disagree, citing the well-publicized problems of large bank competitors such as New York-based Citigroup Inc. and Bank of America Corp. of Charlotte, N.C.

Many also cite Wachovia’s ability to recruit a number of well-known New York wealth managers over the past year, including John Dowd, a veteran senior executive at Bank of New York Mellon Corp. who is now a Wells Fargo wealth management director for the Northeast region.

“I think Wells is extraordinarily well-positioned to grow in the New York wealth management market,” said Allan Starkie, a partner at New York-based executive search and market research firm Knightsbridge Advisors Inc., who has done placements for Wells Fargo and other New York banks.

“They offer stability, credibility and an ability to offer a full array of banking products in an environment where that has become a very scarce commodity. They’re taking advantage of an awkward time in wealth management history,” Mr. Starkie said.

Mr. Welker also faces the challenge of having to integrate the Wells Fargo and Wachovia wealth management teams, and what to do about Calibre, Wachovia’s ultra-high-net-worth unit.

Mr. Welker said he hasn’t yet made up his mind whether to keep the Calibre brand, which is highly respected within the industry, as a separate unit or to combine it with Wells Fargo Family Wealth.

“It’s a microcosm of the whole merger opportunity,” Mr. Welker said. “There are nominal differences in capabilities [between the two units]. There is also a commitment to keep the best of everything, regardless of which organization it comes from. And both Calibre and Family Wealth have a very strong commitment to planning.”

Deep-sixing Calibre, which has about $20 billion in assets under advisement, could be a problem for Wells Fargo, some industry observers said.

“It’s an excellent brand that can be used both as a resource and a family office,” Mr. Starkie said.

“If they integrate Calibre, it could be a cultural problem for Wells,” said Alois Pirker, a senior analyst for Boston-based Aite Group LLC. “It gives Wells a boutique presence, and clients are very loyal to it.”

Mr. Welker said that he plans to announce the names of the Eastern regional managing directors within the next few weeks.

The move is expected to be the finishing touch on the wealth management group’s restructuring.

“It’s going to be a thoughtful side-by-side process,” Mr. Welker said.

“We want to eliminate organizational boundaries and barriers that get in the way of trying to service clients,” he said. “The goal is to have a team-based delivery model.”

Nearly everyone agrees that Mr. Welker will have an excess of talent on hand for a group that will include 250 private-client advisers and 650 private bankers.

“He has to figure out who’s going to do what, and there may be redundancies, but he can certainly choose from lots of really smart people,” said Scott Welch, senior managing director of investment research and strategy for Fortigent, a Rockville, Md.-based platform provider.

“These are two very large pools of talent, and Wells will have the pick of the cream of the crop,” Mr. Madsen said. “There’s no doubt they’re going to put a talented team out in the field.”

How the two cultures will mesh is another question.

Mr. Welker said that the two organizations “already are very similar and have been working well together during the merger process.”

But some industry observers describe at least some discontent in the Wachovia ranks, noting that Mr. Welker, a veteran Wells Fargo executive, was selected to head the integrated wealth management group over two Wachovia stars, Stan Kelly, former president of Wachovia’s wealth management group, and Stan Gregor, former head of the group’s wealth markets division.

Mr. Kelly is now a regional president for North Carolina and South Carolina for Wells Fargo Bank, and Mr. Gregor is now a senior vice president, wealth management, for the Eastern region.

Mr. Welker reports to David Carroll, a former Wachovia executive who was named executive vice president, heading Wells Fargo’s new wealth, brokerage and retirement services group.

“The fact that their two geographical footprints don’t overlap is a great opportunity. The locations of the two banks turned out to be a very good fit,” Mr. Pirker said.

Full integration of the two banks’ “business models and team members” should be completed this year, and operational and systems integration should be finalized by the end of 2010, Mr. Welker said.

E-mail Charles Paikert at [email protected].