LOS ANGELES — City National Corp.’s acquisition of Lydian Wealth Management Co. LLC, which closed this month, marks a bold move by the financial services company to make significant inroads into the ultrahigh-net-worth market.
“We see this as one of the best markets in the country for wealth management, particularly for the ultra-affluent,” said William Freeman, senior vice president for corporate development at City National Bank, a subsidiary of Beverly Hills, Calif.-based City National Corp.
Under the leadership of chief executive Steve Lockshin, Lydian had emerged as one of the top
wealth management companies in the country.
In addition to its Rockville, Md., headquarters, it has offices in Atlanta, New York, Philadelphia, Portland, Ore., and Seattle, and manages or advises $7.3 billion in client assets. Although City National’s purchase price for Lydian hasn’t been disclosed, an analyst with Bear Stearns Cos. Inc. of New York estimates it at $225 million.
Under City National’s ownership, Lydian will become known as Convergent Wealth Advisors LLC and become an affiliate of Convergent Capital Management LLC, the Chicago-based asset management holding company that City National acquired in 2003.
Many wealth management industry observers were perplexed when informed that the well-known and respected Lydian brand name will no longer be used. But City National had no choice, because the firm’s former parent, Palm Beach Gardens, Fla.-based Lydian Trust Co., kept the rights to the name, Mr. Freeman said.
But he isn’t particularly concerned about the name change. “Most of our client business comes from referrals,” Mr. Freeman said, “and those people know who we are.”
Any re-branding efforts would probably be directed “more to industry players,” rather than a consumer-oriented marketing or advertising campaign, he said.
A Convergent Wealth Advisors office targeting clients with $25 million or more in investible assets will open by the end of the summer in Los Angeles’ Century City office complex, Mr. Freeman said.
Mr. Lockshin is expected to spend a considerable amount of time in Los Angeles getting the new office up and running, and has begun the hiring process, which has caused a stir in the wealth management community in the city.
“A lot of people have raised their hands to let us know they’re interested,” Mr. Freeman said.
Neither he nor Mr. Lockshin would say exactly how many professionals the firm will hire, but Mr. Lockshin did say that he expects the new office quickly to become the second-largest in the company, after the Rockville headquarters, which has more than 60 professionals.
Many observers and market participants think that the City National connection will be a decided advantage in the Los Angeles market.
City National Bank, they point out, is well established in the city, and particularly in the entertainment business, where City National Corp. president and chief executive Russell Goldsmith is a well-known figure.
“[Mr. Goldsmith has] been highly successful, and now he’s making a big effort to focus on wealth management,” said Todd Morgan, senior managing director of Los Angeles-based Bel Air Investment Advisors LLC, a wealth management firm that specializes in the ultrahigh-net-worth market and whose clientele includes prominent entertainers.
Other wealth managers pointed enviously to the potential pool of City National banking clients they expect to be referred to the new Convergent Wealth Advisors office.
“If I had access to those clients, I’d rock,” said one competitor, who asked not to be identified.
Some competitors, however, also questioned the objectivity of a City National referral to Convergent Wealth Advisors.
“That sounds like wishful thinking on the part of our competitors,” Mr. Freeman said.
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