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BNY Mellon adding 100 jobs catering to ultra wealthy flocking to direct investment

Don Heberle, Executive Director, International Markets and Client Segments at  BNY Mellon Wealth Management -10

Over the next two years, BNY Mellon Wealth Management is growing its sales force by 50%, and plans to add private bankers, mortgage bankers, portfolio managers and wealth strategists in key markets across North America to cater to an evolving high net worth population that seeks a more advisory, consultative and holistic approach to investing.

With $188 billion in private client assets under management as of March 31, 2013, BNY Mellon Wealth Management has thrived over the last four years, growing its footprint across North America, serving self-made individuals and those who have inherited family wealth with investable assets between $3 million and up to more than $1 billion.

The hiring spree and creation of up to 100 new positions comes after a series of major acquisitions and moves into new markets. The New York-based global investments giant in 2010 took over Toronto wealth management boutique I3 Advisors, with some $3.6 billion (in U.S. dollar terms) under advisement. A year later, one of the world’s largest custody banks acquired Talon Asset Management’s wealth management operations, adding more than $800 million in assets to build its Chicago presence.  The Chicago staff has since doubled. In addition to new offices in Dallas, Washington and the Cayman Islands, BNY Mellon has expanded into Florida retirement meccas Naples and Tampa.

Already a behemoth, BNY Mellon is poised to grow quickly as it builds its ranks in wealth management. Barron’s annual wealth manager study ranked BNY Mellon 8th in the U.S., based on assets under management in accounts of $5 million or more, as of June 30, 2012.

Don Heberle, Executive Director, International Markets and Client Segments at BNY Mellon Wealth Management, shared some insights with eFinancialCareers into this flourishing market.

eFC: Are those who have accumulated wealth more recently (current or previous generation) more or less risk averse than those who have been handed down several generations of wealth?

DH: We find that they typically are less risk averse. As first generation wealth creators, they tend to be more open to and interested in ways to continue to build/grow wealth and are interested in investing in new ideas and companies, etc.

eFC: Are the ultra-high net worth investors seeking a different approach to investing than those with just $3 million and above?

DH: Yes. Those two kinds of investors usually have different needs and concerns about their financial affairs. Investors with a $3 million portfolio may be more concerned about retirement and ensuring that they don’t outlive their wealth, whereas investors with ten times that are concerned about legacy, generational transfer, and charitable giving. We see that the ultra high net worth investor wants more involvement with or control over investment decisions, and very often want exposure to more esoteric/cutting edge investment ideas.

eFC: Do wealthy and ultra wealthy families feel it is part of the family’s duty to preserve wealth over time?

DH: Not all, but many do.  Some are reluctant to pass on huge sums to future generations out of concern that the wealth will make the next generation less motivated and rob them of the entrepreneurial initiative that created family wealth in the first place. Many wrestle with the conflict of preserving family legacy and providing financial security with not wanting to ‘spoil’ future generations.

eFC: What types of new investments are the ultra wealthy seeking? How do you see this changing over the next 5 years to 10 years?

DH: The ultra-wealthy commonly are interested in private equity and direct investing, as well as investing in what we call ‘frontier markets’ which are in countries with economies that are just starting to develop, such as in Eastern Europe or Africa. But of course, we counsel them to hold those new investments as part of an overall strategy that includes a whole range of assets in a diversified portfolio.

eFC: Are you finding UHNW clients are more hands-on and savvy with investing than previous generations?

DH: Yes, definitely.

eFC: Is there a major shift from the old family broker model toward a more active approach?

DH: Yes to this also. We are seeing strong demand for more advisory, consultative and holistic models, and that fits very well with our own investment philosophy and our role as fiduciaries.

eFC: Are HNW and UHNW clients interested in passive investments such as ETFs? If so, is it just to mitigate risk?

DH: Yes, somewhat, but those kinds of investments typically aren’t a key part of an investment strategy. Often investors are in those vehicles just to get market exposure to a particular market or segment opportunistically.

eFC: Do you think that HNW and UHNW clients in the U.S. or North America are more or less inclined to care for family members and provide for future generations than their counterparts overseas? How about Canada?

DH: My general sense is that family governance issues are similar across geographies. No matter where they live, whether South America, Asia or here, all families struggle with when to disclose the extent of their wealth to their younger generation, ways to discuss the responsibility that comes with wealth, and how they can preserve a family legacy that still encourages the next generation to work and create their own wealth. I think you can say those are very universal concerns.

eFC: Are HNW and UHNW clients generally global citizens who are more open to investing in other parts of the world, including emerging and frontier markets?

DH: Yes, without a doubt.  And with now more information and access to data and investment strategies from various parts of the world, the UHNW segment is more likely to expect their advisors to give guidance about and provide access to these types on investments.

eFC: How do the attitudes of clients vary across the various geographies where you are expanding or opening offices?

DH: U.S. investors still tend to be a bit more home country focused than investors elsewhere in the world – partly because the US is still the largest market in the world. In other regions, where local markets are smaller and/or less liquid, investor portfolios tend to be more globally diversified (i.e. Canada, where a portfolio may be one-third or less in Canadian stocks and the balance outside the country). In Asia, real estate is a big part of UHNW portfolios, often times outside of their home jurisdiction.

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