The not-so-private bank: South Florida's community banks have entered the private banking fray and are competing for tomorrow's millionaires today

South Florida CEO,  March, 2005  by Jennifer LeClaire

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Unlike Gibraltar, BankUnited does have a minimum asset requirement. Pelham says the bank targets individuals with $500,000 in investable assets, though not necessarily all at his institution.

"A young professional, such as a doctor or an attorney, may be at the beginning of their career and have a strong earning capability," he says. "But these professionals may have a greater need at this time in their life to borrow money rather than invest money."

Old School vs. New School

To be sure, not all area banks are lowering minimum investment thresholds. Old-line financial institutions, such as Northern Trust Bank of Florida, still aggressively compete for the multi-million dollar private banking accounts. The bank was founded in 1889 and has $44 billion of assets nationwide, $2.6 trillion of funds under administration and $572 billion of funds under investment management, making it an upper level financial institution alongside Citicorp and JPMorgan Chase.

Northern Trust President Sheldon Anderson says his institution is well situated to serve the shifting customer base because it offers a wider array of services and products.

"We all realize that our client base is changing. It's more informed. The bar is being raised in the marketplace," Anderson says. "The successful private banking operation will have a wide array of solutions to meet client needs no matter what stage they are at in their life cycle. That requires a value-added, consultative approach that offers solutions instead of products."

According to Henry Raattama, a trust, estates and family law attorney in the Miami offices of Akerman Senterfitt, more private banks are playing the role of financial consultant, and tailoring offerings and customizing services to meet individual needs.

"There seem to be more beauty contests than before and all of the contestants are not the classic private banks," Raattama says.

So instead of managing all assets for their clients themselves, private bankers are hiring a variety of outside investment managers. The approach, he explains, helps clients achieve portfolio diversification and helps wealth managers comply with the Florida Prudent Investor Act that seeks to ensure investments are in line with an investor's tolerance for risk.

"Every bank has products, but individuals need a banking consultant who is going to help them frame the choices, define financial success and understand what it is going to take to achieve those objectives," Gibraltar Bank's Hayworth says. "That is the biggest role of a private banker today."

BankUnited's Pelham says bank products are mostly the same from institution to institution. The points of differentiation are the bankers delivering those services.

"All of our private bankers have a minimum of 10 years experience in the industry," Pelham says. "They all have life, health and variable annuity licenses. It's not about shopping a product to your client base .... Much like a doctor gives a patient a physical to identify their needs and prescribe a treatment, we meet with our clients and prescribe the right product or service."