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Boston Private Sets Out Family Office Services, Wealth Advisory Ambitions

Tom Burroughes

13 August 2019

Boston Private, the US bank, is building the advice and family office services it gives to ultra-high net worth clients, an area of increasing focus for certain kinds of financial institutions. Earlier this year the bank appointed Bill Woodson as executive vice president, head of wealth advisory and family office services – new roles for the firm. Woodson, who came over from Citi Private Bank, reports to Anthony DeChellis, the CEO of Boston Private.

The firm is present in New York City, Boston, San Francisco, Los Angeles and Palm Beach – four of the largest such markets for wealth in the US. DeChellis has told this publication about how the bank positions itself very much as a trusted advisor and not some kind of “product shop”. 

Family Wealth Report recently interviewed Woodson – a person it knows well – about what he intends to do at Boston Private, and his views about the sector in general.

What is the group that you lead mainly focused on? How will this integrate with the rest of the Boston Private operation ?
I run wealth advisory and family office services for Boston Private which includes oversight of our wholly-owned affiliate, KLS Professional Advisors Group. KLS is a highly respected RIA based in New York which manages and consults on nearly $7 billion of client assets, which we are integrating with our broader Boston Private banking, lending, wealth management and trust platforms. My role will focus on helping Boston Private and KLS deepen existing client relationships and drive new business through the provision of advice and services to HNW and UHNW families, senior executives, family offices and closely-held business owners.  

Our team’s mandate is to enhance our existing capabilities in important areas like traditional tax, estate and retirement planning - which we do very well today - and add additional capabilities around philanthropic planning, wealth education and family governance. We will also develop programs that provide clients and their families with tailored content and education, unique experiences, and the ability to meet and collaborate with peers in their respective industries and among similar families. 

What sort of services will the family offices services provide and why? How will they differ and stand apart from what other firms do already?
“Family office services”, as it is used in the financial services industry, is an amorphous term as there are many different definitions. We approach the delivery of family office services in one of two ways based on the needs of the family.

For families who are managing their own affairs, we define family office services as helping those families better navigate and manage the challenges that come with substantial wealth. We do so in a formal advisory capacity at Boston Private, leveraging our experience and relationships with other families to help them gain insights, accomplish specific objectives, address issues unique to closely-held family businesses, collaborate with peers, and connect with other families and professionals with shared interests. Whether it’s helping to develop a business succession plan or evaluating private aviation providers, we are able to lend perspective from working with families like theirs tackling similar challenges. Our years of experience navigating these same challenges accrue to our clients’ benefit. 

For families who are, instead, interested in outsourcing the management of their personal and financial affairs, our KLS business has nearly 30 years' experience of helping executives, celebrities and wealthy families via what might be called a multi-family office/chief investment officer model. KLS works with wealthy clients who are interested in outsourcing investment, advanced planning and reporting needs to a firm that has the expertise, breadth of services, and scale needed to properly serve them.  

Relationships at KLS are managed by former tax attorneys and Big Four public accountants complemented by experienced Wall Street professionals. As a former tax professional myself, I can tell you that providing high-level tax advice to complex families throughout your career gives you a unique insight into the myriad of challenges that come with substantial wealth, and their solutions, across a wide spectrum of needs, including: investments, estate planning, philanthropy, closely-held business succession, insurance, reporting and administration, wealth education and, of course, taxes. In contrast to how many banks and financial institutions approach serving complex clients, the KLS model provides clients with broadly experienced advisors who serve as a single-point-of-contact for comprehensive advice, as opposed to relying on different specialists within a firm.  

How much growth could this family office services group achieve? Have you any rough targets or are you going to take progress as it comes? 
We believe there is a great deal of opportunity by focusing on the needs of family offices and closely-held family business, which collectively we refer to as “family enterprises.” In my experience, the financial services industry struggles to serve these types of clients effectively. This is largely because family enterprises are both "private clients" and "institutional investors/business owners" and do not fit discretely into one of these business groups. While large banks and brokerages collectively serve many family enterprises, the highly segmented nature of these firms between institutional and private clients, and between banking and brokerage, often limits the ability of their advisors to work across business units and holistically serve family enterprises. As a result, the separate business units within financial services firms, and their advisors, have varying levels of insight into the family enterprise and understanding about how best to advise them. 

Boston Private, complemented by KLS, is well suited to work with family enterprises because of: a) the scope of solutions we provide to both private and commercial banking clients, b) our experience with and understanding of the needs of UHNW families and small-to-medium sized family enterprises, c) the unique programs we are able to provide for these clients, and d) our size and the access that provides. Clients today tell us we provide the service and access of a boutique firm combined with the capabilities and solutions of a larger financial institution. We hope to extend that experience to family enterprise clientele - delivering the broad capabilities of a larger financial institution, in an integrated fashion, via a boutique service model.

There is a lot of debate in our industry about what truly independent wealth management looks like. With family offices created in some cases to achieve real independence, how will what you do ensure that independence is supported?
During my career, I have had the privilege of working for both completely independent RIAs and large non-independent banks and brokerage firms. What I learned through those experiences is that UHNW families and family enterprises are sophisticated consumers and usually self-select into the wealth management model that suits them best, whether by working with independent firms, large banks and brokerage firms, or a combination of the three.  

What these families care most about is whether they are being provided with advice that is: a) appropriate, given their needs, b) in areas where the institution is experienced, expert and competitive, and c) candid and transparent about how the firm and its advisors are being compensated.  

One of the benefits of Boston Private is that we can provide solutions to UHNW families and family enterprises that value independence while also making available the broader resources of a large private and commercial bank. 

KLS is a fee-only RIA owned by Boston Private. As such, they manage their clients, oversee investment strategy, and deliver broader planning and reporting services as a fiduciary. KLS views Boston Private as a partner that has resources and experience that can augment what they do. However, this is always under a “pull” as opposed to a “push” model whereby they can access these resources as needed but are not required to do so. Boston Private has always been and will continue to be respectful of this important distinction.

Some banks have cut investment banking risks and curbed balance sheets – how can banks that do this still give the kind of balance sheet support that UHNW clients, such as those with operating firms, look for? 
This can be a vexing challenge for both very large and smaller families that have commercial banking needs, albeit for different reasons. For very large families that have truly institutional needs, they struggle to find a place where they can be served by the institutional side of the firm. Some of the larger banks have addressed this by providing, through the private banking side of the house, institutional-level banking capabilities to these families, including the extension of balance sheet in scale.   

However, this has left a void for many smaller family enterprises who do not conduct commercial business at a size that these larger banks support. This requires them to rely more on local and regional banks that may not have the broader resources and experience to cover and serve them for both their commercial and private client needs. As a result, these families often bifurcate their business between regional commercial banks and larger, more traditional private client firms. This is the void we hope to fill at Boston Private.  

A lot of the services around family offices relate to topics such as governance, HR, aligning interests of families, and the professionals they bring in. Tell us a bit about how you advise families on these topics.
Boston Private has made a significant investment in hiring subject-matter experts who have experience of working with family enterprises for both family office and family business needs. The fact that Edward Marshall and I recently joined from Citi Private Bank is an example of this. We are developing new offerings and enhancing existing programs that address the needs and interests of the family enterprise segment, including: events and opportunities to convene, online collaboration tools, and access to a number of relevant solutions like family communication and governance technologies. We go out of our way to share with clients the collective wisdom and experience we glean from working with so many similar families, including selectively, and confidentially, introducing families to others for collaboration around common areas of interest. 

You have already developed quite a track record of thought leadership on family offices’ operations, concerns and opportunities. Can you talk about how you intend to continue with this at Boston Private? 
Thank you. I hope to continue sharing my knowledge and experience, as well as highlighting the expertise available through our network, via thought leadership initiatives. We recognize the importance of including within our client advisory teams professionals who have worked with and for family enterprises and have the credentials to create the kind of authoritative thought leadership that adds value to a client relationship. 

As a result, we are hiring a number of senior advisors to manage client relationships who have: a) grown up professionally advising wealthy families, b) have experience of working for a family enterprise at a senior level, c) are connected to the space, particularly among the professionals who work at family offices and family businesses, and d) would like to get back into providing advice and service to these important clients.  

For many of these professionals, it is a chance for them to leverage their unique insights into the dynamics of working for a family enterprise to provide more tailored and specific advice and services. And, to do so in a more integrated fashion across commercial and private banking, wealth management and trust needs - all within a firm that serves clients in a boutique manner and has segment-specific programs and resources.