It looks like U.S. Bank might be in the market for a wealth management practice.
The bank has done a “great job” of growing the investment services business internally, but that wouldn’t stop it from considering buying a wealth manager, the bank’s president and CEO, Andy Cecere, said during its first-quarter earnings conference call.
“If there are opportunities that present themselves, we will take a look,” he said.
The bank’s CFO, Terry Dolan, clarified that the bank was interested in what it referred to as a “real wealth manager” and not “traditional asset managers,” which merely manage client assets and then collect commissions on trading activity.
The bank would look at a wealth manager because “culturally it would be a better fit for the bank,” Dolan said.
Wealth managers are more relationship-oriented and holistic in their approach to managing financial assets than asset managers, the bank’s director of investor relations explained.
The acquisition of a wealth management shop wouldn’t be surprising. A number of banks have purchased RIAs and advisory practices this year in a bid to grow their wealth management businesses. Last month, Fifth Third Bank bought a $531 million retirement advisory firm in Cincinnati, while Meridian Bank of Malvern, Pennsylvania, bought a local RIA with roughly $550 million in assets under management. First Midwest Bank was another acquirer, purchasing Premier Asset Management, a $532 million Chicago-based RIA that caters to high-net-worth clients, in March.
Driven by intense competition, financial institutions are more eager than in the past to grow their wealth management businesses and diversify their non-interest income through acquisitions, say industry observers.
U.S. Bank’s wealth management business posted solid revenue growth in the first quarter. It generated $193 million, up 6% year-over-year, according to the bank’s latest earnings release. The business is part of wealth management and securities services, which earned $109 million on $577 million in revenue.