Wealth managers in style battle-clubby or slick?

By Toni Clarke

BOSTON (Reuters) - Plush carpets, oak-paneled walls, numbered accounts, hidden vaults, and bankers whose impeccable manners are exceeded only by their unparalleled discretion, are all part of the private banking folklore.

These days, however, the very wealthy are just as likely to be ushered into modern, minimalist offices with designer furniture and matching modern art as they are to sink into a velvet armchair surrounded by old masters.

"Our clients have enough oak paneling and fresh flowers in their own homes," said Richard Ditizio, head of the high net worth unit at Citi Private Bank, who described his offices as "contemporary" and "avant-garde." "We are first and foremost a business, not a club."

Citibank's (C.N: Quote, Profile, Research, Stock Buzz) style, said Ditizio, speaks to the kind of wealthy clients the bank attracts - entrepreneurs with a minimum of $25 million who have been with the firm on average 12 to 15 years. These are people who have not only made a fortune but are continuing to borrow and invest in new businesses.

"The view of the single fortune being managed in oak-paneled

rooms is anachronistic," he said.

Well, not quite.

Guards usher the supremely rich to JPMorgan's (JPM.N: Quote, Profile, Research, Stock Buzz) executive Park Avenue offices in New York via private elevator; the reception desk is redolent of the concierge desk at a luxury hotel and art from the company's private collection hangs on the walls. The firm prides itself on its exclusivity.

"Our business model has never been to be all things to all people," said Catherine Keating, chief executive of JPMorgan Private Bank. "Families with more than $25 million are probably most suited to us."

Much of that wealth is old money, going back a century or more, with roughly 40 percent of the firm's new clients coming from what Keating calls "corporate transition events" such as initial public offerings or the sales of businesses.

"The needs of the very wealthy and the needs of the simply affluent are very different," she said. "The very wealthy have very long term investment time horizons because they know their wealth will outlive them."

At stake in this battle over style are the high fees commanded for managing such wealth. According to the Boston Consulting Group, global wealth is expected to top $100 trillion this year, and the United States has by far the highest number of millionaire households.

For the big banking institutions, the challenge is to create a sense of intimacy for private clients within a big corporation.

"Our goal is not to act big," said David Lamere, chief executive of the wealth management business at BNY Mellon.

At a time when retaining wealthy clients is a challenge, especially as wealth changes hands from one generation to the next, Lamere said one of his firm's goals is to ensure that clients are loyal to the firm, rather than to specific individuals, or "relationship managers," who in a prior era acted as man Fridays to their clients.  Continued...