After a little more than a year at the helm of Umpqua Bank’s wealth management business, Kelly Johnson can point to some big accomplishments, but he knows that he still got a lot of work to do.
Johnson arrived in January 2009 to head the newly created unit. Since then, Umpqua, a unit of Umpqua Holdings Corp. [UMPQ], has created a private bank. And its retail brokerage unit has gone on a hiring spree that has helped bring in more than $1 billion in new assets under management, more than doubling its asset base to nearly $2 billion.
But Johnson, an executive vice president who had been a senior managing director at Royal Bank of Canada's RBC Wealth Management unit, still must shepherd a new trust unit into existence. And he will oversee Umpqua’s effort to add wealth management offices in Washington, Oregon and California.
The expansion, which is part of a two-year-old effort by Umpqua to enlarge its non-traditional business lines, could result in $10 billion of assets under management within five years, Johnson said. Umpqua’s effort got under way in the midst of the financial crisis, and has meant building aggressively during a tumultuous period for the industry, he said.
“At that time, frankly, there was panic in the streets,” Johnson said. “When there’s panic, there’s usually opportunity.”
In August, Umpqua hired Donna Huntsman, who was an executive with Key Private Bank, to oversee the development of Umpqua’s newly formed private bank, which provides tailored services and products to customers with more than $1 million in investable assets.
The following month, Umpqua reached a referral agreement with the financial advisors at Ferguson Wellman Capital Management. Under the deal, Umpqua’s clients with at least $2 million of assets to invest will be referred to Ferguson Wellman, which is in Portland.
“That doesn’t mean they will all go there,” Johnson said. “What it does is give us an institutional product from a pricing standpoint.”
Ferguson Wellman is an ideal fit for the institutional corporate trustee business that Umpqua is seeking, he said. The advisory firm, meanwhile, will refer private banking prospects to Umpqua.
Johnson said he would like the relationship with Ferguson Wellman to expand eventually, but said the bank has no interest in acquiring the business down the road. “That’s not our intent,” he said. “They’ve built their reputation on their independence.”
Because Umpqua has investment platforms available through both its retail broker dealer, Umpqua Investments, and Ferguson Wellman, its new trust and private bank units will not need investment platforms of their own, Johnson said.
“We already have investment professionals within our umbrella and outside our organization,” he said. “Why would be build it internally when we already have the best of the best?”
Umpqua wealth management’s hiring spree last year brought 44 professionals to the company, about 28 of them advisors who joined the company in the midst of turmoil in the brokerage industry. Prior to July, Umpqua Investments was known as Strand Atkinson Williams & York, the title of the brokerage company that the bank bought in 1999.
Asked to name a challenge to the growth of Umpqua wealth management, Johnson singled out a “war for talent” among his business and its rivals.
“Because of our aggressive hiring last year, I do think we got a jump on many organizations,” he said. “But I’d bet the war for talent is going to get a little stronger.”
However, if competition for brokers does heat up again, it will likely center around those with the largest books of business, said Howard Diamond, a managing director of Diamond Consultants, an executive search firm in Chester, N.J.
If Umpqua and others are in the market for advisors with annual commissions in the more modest $300,000 to $400,000 range, they should have less trouble recruiting—provided they make respectable offers, Diamond said.
A major item still on Johnson’s to-do list is expanding the wealth management presence beyond its current single location throughout the bank’s wider footprint. There are a number of possibilities for how the wealth management units will be laid out; private banking operations, for instance, will most likely be paired with Umpqua Investments or its commercial banking locations, he said.