Top names back private solution

After a long period of silence since MyCFO.com in the late 1990s threatened to rebalance client influence in the wealth ­management equation, there is the pending arrival of a private, client-backed wealth management ­consortium business. The writing has long been on the wall in terms of launching a solution, but the ­obstacles to a new entry have been vision, capital, management and clients. Notably, this new business has all four – potentially at least: $36m (?25m) of capital, 31 frustrated Wall Street grandees, their address books and loyal lieutenants to run the shop. Fieldpoint Private Bank & Trust is being formed to combat the poor quality of services the founders have received at existing wealth ­management firms. Ironically, many of the founders used to lead the wealth management firms they now seek to attack. Nonetheless, putting their money where their mouth is, the founders have designed an operation that will offer a private bank, trust company, traditional wealth ­management and a multi-family office with concierge services all rolled into one. At first glance, this appears no different from anyone else. However, the composition of the founder group is significant. The names include ex-UBS Paine Webber chief executive Joseph Grano, and three former chief executives of Merrill Lynch – David Komansky, William Schreyer and Dan Tully. Additionally, another major founder is private equity guru Jerome Kohlberg (a K from KKR), which could prove a major entrée in the world of ­alternative investing and associated clients. Crucially, the founders have ­reputedly committed to using their ­networks to attract new clients. They have also all contributed a minimum of $1m, in return for stock in ­Fieldpoint. In essence, they are ­forming a quasi-syndicate of active founder-investors, and this is the major market differentiation. Notably, Fieldpoint has also set aside a further $9m of stock to be available to additional backers. In terms of positioning, Fieldpoint has stated it will build a “membership culture” and use the network of founder-clients to assist in developing specific service solutions, including co-investing and outsourcing to third-party providers. Indeed, the marketing slogan is: “You do more than bank with us, you join.” This should appeal to the Wall Street aficionados. Moreover, market players should take note of this overt co-invested approach. Indeed, there is a ­possibility – although not declared – that some of the $9m could be offered to new members. In reality, Scorpio Partnership believes this is a breakthrough case and the model will be replicated in the coming 36 months as wealthy clients seek better solution engagement that expands beyond pure wealth ­management. At this stage, Fieldpoint is a US ­initiative, but it is firmly held that the approach of the co-operative wealth business concept is one that has major traction globally. Significantly, Fieldpoint’s founders’ and ­management’s stated intent is that within three years of launch they will consider an IPO. Thus, it is clearly a new breed of investor-client that is also considering private banking as a viable wealth-­creation opportunity. Sebastian Dovey is a managing ­partner at wealth management ­strategy thinktank Scorpio Partnership