The second thing we see is growing
disenchantment among law firms and accounting firms with the
infrastructure costs associated with trust and estate administration
and the liability of fiduciary work. We can be an outsourcing solution
by making available the same services we provide our own clients to law
firms and accounting firms for their clients. We recently formed a
division called Private Label Special Services to provide an
outsourced, turn-key, private labeled trust and estate administration
service for the law firms, accounting firms,
multi-family offices,
registered investment advisors and community banks that want to deliver
full wealth management services to their clients, without exposing them
to a competing financial institution.
Most banks will agree to manage unique assets, such as real estate or operating businesses, as a fiduciary only if they are indemnified from risk. NYPB&T is one of the few private banks that will manage these assets in a fiduciary capacity if the underlying business or real estate passes our due diligence review. We think there is some untapped growth to be had as a services provider and it nicely rounds out our portfolio of businesses.
Grove: You've spent a considerable portion of your career working with wealthy families and family offices. What do you make of the recent influx of multi-family offices?
Fuhs: In my experience, affluent families want everything from asset management to tax preparation to bill paying. Very few firms can deliver such a broad range of services at a competitive price and still make money. It will be interesting to see if all these players can stay in business.
To his credit, Howard has approached this venture with a long-term view. I spend most of my time focused on development, starting relationships, understanding client needs, activities that don't generate immediate revenue, but will lay the foundation for servicing our clients and building our future.
Grove: Speaking of the future, what's in store for NYPB&T three-to-five years down the road?
Fuhs: We will continue to expand regionally through partnerships with local families and a portable systems and operations infrastructure. Controlled expansion allows us to properly vet each opportunity, find the best professionals, attract the right types of clients, and maintain very high standards. There's an extremely promising future for the bank.
It doesn't take money to make people unique, but having money often results in a set of requirements and preferences that are particular to the state of being wealthy. So who better than a billionaire to reinvent the private bank for the 21st century? Howard P. Milstein, founder of New York Private Bank & Trust, expands on the above comment by sharing his perspective on the moneyed set and explaining how that knowledge will translate into a better banking experience for ultra-affluent individuals and families. "Wealthy families like ours require the same kind of diligence and talent in wealth management advice that was applied when their wealth was originally created. This means the bank must act as a fiduciary for our clients in every respect, there must be complete transparency in everything we do, and we must align our employees' compensation with our 'clients first' philosophy.
"We
understand that many wealthy families want to preserve their capital
base and compound their wealth, so our investment approach
relies on
sophisticated processes to do just that. Beyond asset allocation and
third-party manager selection, the only "products" we offer are
co-investments-the very opportunities that we take advantage of
ourselves and consider an important and interesting part of our
investment portfolio. Furthermore, our clients can invest alongside the
bank on a completely fee-subordinated basis; they get the same terms we
do and because we have significant 'skin in the game' our commitment is
clear.
"But we know that making wise investments is not the only
concern of wealthy families. Keeping the unique traditions and values
of a
family alive, and ensuring that subsequent generations are
motivated to fulfill their own potential has become increasingly
important. Some affluent families achieve this by bestowing financial
security upon future generations so they may explore their passion,
whether through philanthropy, the creative arts or some other area of
interest. Others may simply guide younger family members on the path to
productive lives or encourage them to give back in ways that better
society as a whole. There is no 'right' answer, it depends entirely on
the family and its priorities. We know this because we've faced many of
these issues ourselves and worked with other wealthy families to
address these concerns.