By DAVID MOON, Moon Capital Management
When Bank of America closes on its
purchase of the Charles Schwab subsidiary U.S. Trust Corp. next month, it will
be another step by the investment management industry toward providing a high
level of personalized service ' but only to ultra-high-wealth
By combining the private bank and family wealth adviser units of BofA and
U.S. Trust, Bank of America will create a new private wealth management unit
servicing clients with a minimum of $3 million.
Another BofA unit, the specialized client solutions group, will provide
an even higher level of fiduciary services. But don't bother calling if you
don't have at least $50 million.
Admittedly, super-wealthy families have burdens and challenges that
escape the merely mortal wealthy. Someone with $100 million needs some services
and thought processes that you probably don't.
But there aren't many differences in the investment needs between the
client with $800,000 and the one with $3 million.
From the investment management firm's point of view, however, the $3
million client is significantly more profitable.
For the last several years, large institutions have chosen to focus their
energy, effort and employees on their largest clients. That's certainly their
prerogative. As long as the firms retain their clients, it's the easiest way to
make the most money.
When Big Bank is purchased by Bigger Bank, which is then purchased by
Huge Bank, Small Guy is often the last concern. Client service for 'little
clients' gets relegated to an occasional visit from someone at the home office
hundreds of miles away or, worse, a toll-free number.
And we haven't even begun to discuss the potential impact on real
financial issues like investment performance and asset, income and expense
planning. Try preparing for retirement or college education via an
If you have money to invest, you can do it yourself, trust someone else
to do it, or employ some combination of those two.
It's not impossible to do it yourself, but successful investing requires
a certain temperament, average intelligence and the time to do it. The more you
have of any of these three variables, the greater will be your odds of
If you're going to trust someone, it's often nice to have an actual
person to trust, and not to have to constantly get to know a new
Some people are lucky enough to hire a local account manager they like,
but then they're increasingly likely to need a new game program each quarter or
two with pictures and a roster of the new players. If the institution isn't
constantly moving the personnel around, the employees themselves are probably
constantly switching teams. Or a new corporate owner arrives to change all the
Whatever the cause, the clients end up with rotating service contacts, or
no personal service at all.
Change is good. Change is bad. Change is inevitable. But when change
means growth, and a corporation's vision for growth is focused on people
wealthier than you, change can be dangerous, painful, lonely and possibly
David Moon is president of Moon Capital Management, a
Knoxville-based investment management firm. This article
originally appeared in the News Sentinel (Knoxville, TN).