But many banks have a way to go if they hope to compete as wealth managers. Fifth Third Bank has chosen Prima Capital to help conduct ongoing manager selection, research and due diligence for its new best-of-breed separately managed account (SMA) program.

"When our organization made the commitment to expand our wealth-management capabilities, we identified Prima Capital early on due to [its] robust due diligence, research capabilities and access to top quality managers," says Cheryl Rose, director of private-client portfolio management at Cincinnati-based Fifth Third. "Prima was the partner we needed to launch an external manager program tailored to strategically complement our existing investment management capabilities."

Seven-year-old Prima, a spin-off from KPMG's investment advisory services practice, was founded specifically to provide research and other information in support of open-architecture investment platforms for private-client investment-product distributors.

Gib Watson, Prima's founder and president, says banks and trust companies are "steadily migrating to adopt open-architecture as the foundation for their wealth-management offerings."

That sounds hopeful, but then banks have been losing investment assets to brokerages and investment advisories -- where access to outside managers is often a given -- faster than they've been becoming converts to open architecture. 3C Financial Partners , a Los Angeles-based investment bank and consulting firm, says that North American private banks saw their share of high-net-worth investors' professionally managed assets decline from around 86% in 1995 to 38% at the end of 2004. By 2010, 3C adds, private banks could be managing just 29% of those assets in North America.

Meanwhile global high-net-worth assets have increased dramatically. The total wealth of individuals and families around the world with at least $1 million in financial assets went from $14 trillion in 1995 to about $31 trillion at the end of 2004 with about a third of the total in the U.S. and Canada, according to 3C.

Banks that do make the leap to providing non-proprietary asset management show a "commitment to market leadership, and [to] providing a quality wealth-management experience and a high level of client service fits well with Prima's core competencies and values," says Prima's Watson.

Generally speaking

Al Chiaradonna, head of strategy for SEI 's private banking and trust group, says that banks are unusually well positioned to fulfill unmet needs for wealthy clients because they often have pre-existing relationships with these customers as a provider of commercial banking or basic depository services. But fulfilling this potential calls for a significant transformation of today's banking model -- one that goes beyond instituting open-architecture investment platforms.

"Banks are losing some customers due to a lack of differentiation," Chiaradonna told attendees of a wealth-industry conference in Chicago earlier this month. But some clients are staying put "because they don't see an alternative that offers them the complete package: a single trusted advisor at one institution who enables them to use their wealth to reach their life goals."

But to turn their positive standing in the community into wealth-management clout, banks will have to start delivering "differentiated client experience and relationship process, rather than people and products" and to provide advisory services based on a comprehensive assessment of a client's needs and goals, adds Chiaradonna. And to make that "a scalable, consistent client process" rather than a matter of depending on a charismatic staffer or two, banks need standardized approaches to identifying and developing relationship managers.

"Without a repeatable process to find and train capable relationship managers, there is no way to ensure a consistent service experience," Chiaradonna said in his conference presentation.

Oaks, Pa.-based SEI provides investment-platform and processing provider to financial-service companies. -FWR

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