U.S. Bank Expands Ultra High-Net-Worth Unit
Michael Cole has big dreams for the ultra-high-net-worth business he leads at U.S. Bank.
He wants to do for wealth management what Starbucks did for coffee-offer a unique experience and a destination for ultra-wealthy clients.
"We looked around the industry and didn't find anything like that," Cole says of his vision for a new kind of ultra-high-net-worth wealth management provider.
Since launching Ascent Private Capital Management almost two years ago, Cole has been busy translating that vision into reality. He opened four new facilities in Minneapolis, Denver, Seattle and Cincinnati that he hopes will become "destination locations" for wealth management clients. The ultra-sleek facilities feature client offices, family rooms, learning labs, libraries, and even catering kitchens.
Cole described each of the facilities as a combination private club, university, wealth management shop and boutique hotel all rolled in one. "There's nothing like these spaces anywhere," Cole boasted during a sit-down interview.
And more of them are on the way. Cole plans to open a new facility in San Francisco next month and another in San Diego in 2014.
Last year, Ascent used the spaces to host several hundred events for clients, including family meetings and a talk by family wealth expert and author James Hughes in Denver that was video simulcast to all locations.
"The idea behind it is to build a destination location where clients can come and interact among their family and interact with others," Cole says.
Regardless of whether the facilities turn into the destination locations Cole envisions, the business appears to be making headway in a fiercely competitive market where banks and other players struggle to differentiate themselves. The market is not only crowded, it's also small.
The "utter scarcity of investors" is the biggest challenge facing ultra-high-net-worth wealth management providers, says Donnie Ethier, senior analyst with Cerulli Associates. In the U.S., only 53,215 households have $20 million or more in investable assets, representing a minuscule .04% of the total population, according to Cerulli.
For Ascent, the universe of potential customers is even smaller, as it targets prospects with more than $50 million in investable assets.
Despite the odds, the newcomer has already accumulated $5.3 billion in assets under management and attracted 56 clients with an average net worth of $200 million. Cole expects Ascent to reel in more than $1 billion in additional assets under management this year and add 20 new clients to the firm's roster.
Cole has also built a formidable force of wealth professionals. In a relatively short period of time, he established four regional teams, each with nine to 10 client-interfacing professionals, as well as a national team of more than 30 wealth experts with backgrounds in everything from law, accounting and risk management to organizational psychology and genealogy.
Observers have taken notice. In February, Ascent was recognized by Private Asset Management, an industry trade publication, as the "Best Private Wealth Manager Newcomer" in an awards ceremony in New York City.
U.S. Bank hired Cole in 2010 to build a dedicated business group to serve ultra-high-net-worth clientele. He had the credentials and experience the bank was looking for, having built similar businesses for other banks. He created a family office for Merrill Lynch Trust Co. and then built the Family Wealth Group and Wealth Planning Center at Wells Fargo, which subsequently became Abbot Downing.
Cole says that while U.S. Bank was a fantastic retail bank with a great name and a great reputation, it had no brand equity in the ultra-high-net-worth space.
"We knew we needed to do something that would give us brand equity and also be a differentiator," he explains.
Similar to other leading ultra-high-net-worth wealth management shops, Ascent has focused on providing services beyond traditional wealth management, delving into areas such as family dynamics, family governance and what the firm calls "wealth impact planning."
"Wealth is more than money," Cole says repeatedly. "The vision behind Ascent that we started was to build a wealth management firm that didn't just manage wealth but also helped our clients manage the impact of wealth."
Today's ultra-high-net-worth investors, he notes, want more than financial guidance on investments, taxes and insurance. They also want help in figuring out the purpose for their wealth.
Ascent's services in "wealth impact planning" revolve around helping families think and talk about how they can use their wealth to make a positive impact on their communities and, more broadly, the world, Cole explains.
These services and ideas are not new to observers of the industry. Many ultra-high-net-worth wealth management providers-including, for example, Abbot Downing, Wilmington Trust and BNY Mellon-offer services in family dynamics, family governance, multigenerational wealth planning and other areas that address the concepts Ascent touts.
The ideas took root after a 2003 study that tracked 3,250 ultra-high-net-worth families over 25 years. It found that for 70% of those families, wealth dissipated by the third generation. The failure rate was attributed primarily to a lack of communication and trust among family members (60%) and poorly prepared heirs (25%). Only 5% of the failure was due to poor investment performance, poor tax planning, poor legal structure and poor advice from advisors, says Cole.
So while wooing the ultra-wealthy with services to improve family dynamics and a family's "wealth impact" is not uncommon, Ascent's strategy of building dedicated facilities does help set it apart, Cerulli's Ethier says.
Stephen Wall, a wealth management senior analyst for research firm Aite Group, agrees. "Others haven't really gone down that route," Wall says of the facilities and their four-in-one role as private clubs, universities, wealth management shops and boutique hotels.
"Ascent is delivering things that perhaps would be traditionally available in the family office space or other silos or channels and bringing them into one place to service the clients, rather than going to four or six different institutions," Wall observes.
Cole acknowledges that there is growing focus in the industry on helping the ultra-wealthy manage the impact of their wealth, as well as the wealth itself. "There's a movement in the industry in that direction," he says.
Still, Cole believes that Ascent has taken the thinking further than anyone else in the industry because, he insists, "we believe in it deeper."
"I think we built it out to an extent that doesn't exist in the industry," he says. "We think we're sort of breaking new glass in terms of building a wealth management business that looks at not just the wealth-and maximizing that wealth-but also how to have an impact with that wealth in the things that matter most to our client base."