Family Wealth Report caught up with Atlantic Trust about its views on Texas as a key wealth management market.

Texas is regarded as a lucrative market for wealth managers, particularly since the controversial “fracking” revolution has led to a surge of energy wealth. For a long time, however, the state has had a diverse mix of industries contributing to a vibrant, growing economy, and a number of firms in the wealth management space have an expanding footprint there.

One such player, Atlantic Trust, has had a presence in Texas since 2003, when Scott Caven launched the Houston office, and subsequently opened doors in Austin in 2004. Last month, the firm launched an office in Dallas, and today has 135 clients across all three offices, representing 5.2 per cent of total firm clients. Of Atlantic Trust's $27.8 billion in total assets under management, $1.6 billion (or 5.7 per cent) is in the Lone Star state.

“The demographics in Texas are compelling, and growth in the state and in Dallas specifically has been very robust, so we are looking to capitalize on that,” said managing director John Winslow, who joined in April 2015 to help the firm establish a presence in Dallas and oversee its operations in north Texas.

According to Capgemini's US Wealth Report 2015, Dallas had $368.7 billion in total wealth in 2012, rising to $456.6 billion in 2013 and $513.1 billion in 2014. For Houston, those figures were $407.7 billion, $496.3 billion and $571.6 billion, respectively. While New York remains the US city with the largest high net worth individual population overall (around 963,000 as of 2014), the top six cities for HNWI growth in 2014 were in Texas (Houston), and on the West Coast.

“The top six cities in HNWI population expansion were all in Texas and the West Coast, where they were aided by robust real estate growth and, especially in Texas, more dynamic economic performance,” the report said. Houston experienced the largest growth in HNWI population of all the cities, at 14 per cent, taking it from eighth to seventh place - “the only shift to occur within the top-12 ranking,” the report added.

“The economy in Dallas, and Texas as a whole, has been growing much faster than the rate of the national average,” Winslow said. “In addition, the tax environment here is very favorable – we've seen a lot of corporations and individuals moving to Texas because there is no state income tax.” Several major corporations have expanded or relocated to the Dallas area, including Toyota, Liberty Mutual and State Farm, among others, he added.

Texas sits beside a number of other US cities as a key center of wealth: Boston, Chicago, Dallas, Detroit, Houston, Los Angeles, New York, Philadelphia, San Francisco, San Jose, Seattle, and Washington, DC – represent two-thirds of the US HNWI population, according to Capgemini's report. For firms in the business of advising on and managing family wealth, these will continue to be important regions in which to operate or have a physical presence. “We're trying to expand through organic growth and build where we have opportunities to do so. We think Texas is a huge opportunity to do that,” Winslow said.  

“With the dramatic growth in the Texas economy we have also seen an expansion of the unique challenges that some of our clients in Texas face. One such challenge is having a portfolio with a concentrated position related to energy,” said Winslow. “We have also been seeing an acceleration in the number of clients and prospective clients who are considering selling businesses due to the prosperous economy.”