Our Wealth Management Market Report series continues with a look at Chicago, one of the premier markets in the country defined by strong growth and family-oriented, Midwestern conservatism.

One of the premier wealth management markets in the country, Chicago is dynamic, growing and lucrative, but at same time quintessentially Midwestern: somewhat conservative, family-oriented and close-knit.

It’s an environment that has allowed solid, sizable, resilient, home-grown institutions - Northern Trust being the most notable example - to thrive and prosper.

Harris Private Bank, Harris myCFO, The Private Bank, William Blair & Company, Gresham Partners, Altair and Guggenheim Partners also have local roots and a  strong market presence.

Chicagoans aren’t parochial, however. Well-established financial giants such as JP Morgan Chase, Goldman Sachs, UBS, Credit Suisse have also been well-received, and Wells Fargo, yet another powerhouse, is making a major push into the wealth market.

“Traditionally, Chicago has been a very conservative,” said Doug Regan, president of Northern Trust’s wealth management group. “The financial crisis confirmed a typically Midwestern orientation toward institutional safety through strong asset allocation and diversification.”

Family businesses cornerstone of market

Family business owners are also a defining characteristic of the Chicago wealth management market, say local executives.

“There is a great reliance on operating entities in this market,” Regan said. “People like to hold on to the family business. Even when they had good opportunities to sell, they like to hold on to operating revenue and cash, and I think the crisis confirmed that orientation.”

Many of The Private Bank’s clients are owners of small to medium-sized privately held businesses, said Wallace Head, chief executive of wealth management for The Private Bank.

“Business owners are very characteristic of this market,” Head said. “You can’t separate their business and personal needs. They tend to be conservative and use sophisticated, aggressive strategies in smaller doses.”

Even ultra high net worth clients in the Chicago market keep a low profile, said Matthew Bonaguidi, partner at Gresham Partners.

“They’re usually self-made, very low-key and not big spenders,” Bonaguidi said. “On the East coast, you’ll see more transactions, but here the focus is more on the operation of the business.”

Personal relationships critical

Chicago wealth clients also place great importance on personal, long-term relationships with their wealth managers, according to local executives.

“There’s a high concentration of people here who want to deal with people they know,” said Head. “Relationships are very important in the Midwest.”

“These are people who have built a business, delegated trust and expect a long-term personal relationship and performance,” said  Bonaguidi. “They are looking for similar characteristics in a wealth manager.”

Family business owners are particularly concerned with privacy and maintaining confidentiality,” said Rodney Goldstein, chairman and managing director of  Frontenac Company, a Chicago-based firm that invests in family founded businesses. “Owners here place a high value on integrity and relationships that stand the test of time.”

Part one of a two-part series. Tomorrow’s installment explores the changes in the Chicago market since the downturn and what to expect going forward.