Departure of Lydian's MFO opens doors for Fortigent, Lydian's private bank. Bank holding company Lydian says the impending sale of its multifamily office subsidiary Lydian Wealth Management to Beverly Hills, Calif.-based City National frees it to concentrate on building out Lydian Bank & Trust and Fortigent, its remaining wealth-management businesses.

Lydian Bank & Trust provides private-banking and wealth-advisory services to ultra-affluent clients in its home state. Fortigent provides outsourced wealth-management and performance-reporting platforms to advisors who serve high-net-worth clients.

Rockville, Md.-based Lydian WM -- its main office is in the same building as Fortigent -- is scheduled to become part of City National's Convergent Capital Management subsidiary, a Chicago-based wealth- and asset-management firm holding company, by the end of June this year.

Shake up

No one is saying what City National has agreed to pay for Lydian WM, but Lydian says in a press release that it plans to spend some of the proceeds from the all-cash transaction on Lydian BT and Fortigent -- "two of its existing businesses that hold the greatest opportunity for rapid growth and market penetration."

For Lydian BT, the plan is to add 15 new offices in Florida -- and only Florida -- by 2009. This push is meant to put Lydian in front of new high-net-worth clients, a group that includes newcomers to the retirement-destination state as well as Floridians who may feel less bound to their banks in the wake of frenetic M&A activity. According to Lydian, 12 of the 25 biggest Florida-based financial institutions have gone on the block since June 2004.

"Florida continues to experience significant consolidation in its financial-service sector, creating incredible demand for an entrepreneurial firm like Lydian that delivers superior private-banking and wealth-management solutions," says Lydian's chairman and CEO Rory Brown.

Right now Lydian BT has two locations: a client-service office at its corporate parent's headquarters in Palm Beach, Fla., and one on the other side of the state in Tampa.

City National's acquisition of Lydian WM doesn't include the multifamily office's sole Florida office. That business will become part of Lydian BT. It's already in the same Palm Beach location and it doesn't count as one of the 15 new private-bank offices Lydian plans to build.

Fortigent, which started out as a part of Lydian WM and became a stand-alone Lydian subsidiary last year, will also get some of City National's cash. "This is a huge opportunity for us," says Fortigent's president Andrew Putterman. "This gives us capital to stay highly competitive."

Family

Fortigent provides customized, open-architecture investment management (including a broad roster of alternative offerings and capabilities), performance reporting and wealth-business consulting services to banks, trust companies, fee-based brokers and independent advisories that, generally speaking, work with clients in the $1-million-to-$10-million bracket. It has about 30 institutional clients and roughly $14 billion on its platform.

Scott Welch, Fortigent's head of research and strategy, says the money that Lydian has earmarked for Fortigent will be spread across all facets of the business. "This capital will help us build out our investment offerings, our performance reporting and give us more for business development and sales -- it's really a nice statement of support from Lydian."

Fortigent also stands to benefit from Lydian BT's prospective growth. "As Lydian Bank & Trust expands in select ultra-affluent Florida markets, it will continue to utilize the institutional-quality research, alternative investments expertise, and reporting and technology platform provided by Fortigent," says Brown. "Since inception the two firms have integrated their respective offerings to deliver a truly unique banking and wealth management experience."

Fortigent provides investment and performance-reporting services to Lydian WM as well -- and that won't change when the multifamily office leaves the Lydian fold and changes its name to Convergent Wealth Advisors this spring, according Lydian WM's CEO Steve Lockshin. "It doesn't matter who owns us in a month or two; Fortigent is family," he says.

Putterman agrees. "Steve and I have been business partners and friends for 10 years," he says. "We're going to continue to work together."

One of the principal benefits to Lydian WM cited by parties to its acquisition by City National is the prospect of its hauling in new business from the bank's wealthiest private clients.

In addition to Lydian BT, Fortigent and soon-to-depart Lydian WM, Lydian owns transaction-processing provider Lydian Data Services, high-net-worth lender Lydian Mortgage and VirtualBank, a web-based banking platform for mass affluent customers. -FWR

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