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Wilmington Trust buys wealth firm from Legg Mason

Thomas Coyle

8 May 2007

Delaware-based trust company sets up in Boston's lucrative wealth market. Wilmington Trust has agreed to buy Boston-based wealth and investment advisory Bingham Legg Advisers from asset manager Legg Mason and law firm Bingham McCutchen. Wilmington Trust says the acquisition gives it a foundation in New England as a complement to its national wealth-business strategy.

BLA is an equal-share joint venture between Baltimore-based Legg Mason and Boston-based Bingham McCutchen. It provides investment management, tax and financial planning and family-office services. It had $1.5 billion in assets under management and another $887 million in assets under supervision at the end of March 2007.

Big market

The financial details of the deal weren't disclosed. When the transaction is completed, probably within a month or two, BLA will take the Wilmington Trust name and become Wilmington Trust's Wealth Advisory Services office in Boston. BLA's president and CEO Peter Simmons will become president of the office; BLA's remaining 30 or so employees will become Wilmington Trust staffers.

"Wilmington Trust has had wealth-management clients in the New England area for many years and we have been looking for the right opportunity in Boston for some time," says Wilmington Trust chairman and CEO Ted Cecala. "Our two firms fit well together, and I am delighted to be entering one of the nation's top high-net-worth markets with such a capable, highly regarded, and well established team already in place.

The addition of BLA gives Wilmington, Del.-based Wilmington Trust a beachhead in Boston, the fifth biggest high-net-worth market in the U.S. behind New York, Chicago, Los Angeles, and Washington, D.C. With the exception of Chicago -- home turf of its bigger rival Northern Trust -- Wilmington Trust has wealth-management offices in or near each of these markets in addition to offices in six other states including Delaware, where it is also a leading retail and commercial bank.

In addition to being a big one, Boston is an uncommonly concentrated wealth market. Nearly 5% of Boston-area households qualified as millionaire households in 2004, according to San Diego-based market-research firm Claritas. Northern Trust figures the number of Boston-area millionaire households -- about 58,000 in 2004 -- will hit 88,000 by 2009.

On purpose

Boston's high per domicile wealth puts it on par with rapid-growth wealth towns like Atlanta and Dallas. But where those spots have populations that are growing across the board, Boston's s high-net-worth household growth exceeds that of its overall household growth. As a result Boston's economic elite is likely to have a greater impact on the city's commerce and culture than their counterparts in other high-growth wealth centers.

Simmons, who has been with BLA since its inception in 1999, says the deal with Wilmington Trust will help BLA "better serve the highly sophisticated needs of our clients."

More specifically, Wilmington Trust Wealth Advisory Services head Rodney Wood says BLA's clients will benefit from the opportunity to access "a larger and more robust suite of family-office services" through Wilmington Family Office, a group within Wilmington Trust with a staff of around 70 that provides family-office services as a separate retainer-based offering to ultra-high-net-worth families.

BLA "is in the family-office business the same way we were and as many firms are: you just end up paying your clients' bills," says Wood. In terms of breadth and sophistication BLA's legacy family-office platform doesn't approach the one Wilmington Trust rolled out last year.

"This is an opportunity to ramp up services to families in Boston and New England and to enhance business for ," adds Wood.

More generally, says Wood, 104-year-old Wilmington Trust -- which began life as the private family office of the industrialist DuPont family -- "is a natural fit for high-net-worth individuals and families in Boston and New England."

A way in

But Paul Lonergan, president of Boston-based Congress Trust, says that Boston "is a tough market to crack." Before joining Congress late last year Lonergan led Oaks, Pa.-based SEI's multifamily office in Boston, a practice that has since closed.

"Boston has a mature wealth market and the players here are well established," says Lonergan. "If you're going to get clients here you're going to have to steal them from other firms."

That said, Lonergan thinks the combination of a "well regarded" personal-trust and investment-advice provider like Wilmington Trust and the former investment-strategy arm of "a top-tier law firm" with strong local brand recognition "might help" Wilmington Trust expand in New England.

Wood agrees that it can be hard for an outside wealth-management provider to make headway in Boston. "With its many multi-generational relationships, Boston -- probably the oldest wealth market in the country going back to the 1600s -- can be a difficult market to come into as an outsider," he says. "The reason we wanted to come in as an acquisition was to overcome some of that. It makes more sense to acquire an established firm with 30 people and $1.5 billion in assets than to lift out a team and try to start from scratch."

Name game

To that end Alois Pirker, a senior analyst with Boston-based business consultancy Aite Group, thinks Wilmington Trust might, in other circumstances, have hung on to BLA's legacy branding. In that context, Pirker points to E-Trade 's decision to retain the legacy branding of Boston-area capital manager Kobren Insight Management after it acquired it in 2005.

But here the legacy names in question -- "Bingham" and "Legg" -- are probably too closely associated with the former owners for the comfort of anyone involved with the transaction, says Pirker -- a view that Wood shares.

But then Wilmington Trust tends to re-brand the firms it buys anyway. Atlanta-based Balentine & Company -- which Wilmington Trust acquired in 2002 and subsequently re-named -- is a case in point.

Grant Tani Barash & Altman is an example of a partial re-brand by Wilmington Trust. Wilmington Trust acquired the Beverly Hills, Calif.-based multifamily office in 2004 and let the name stand in its pre-acquisition footprint on the West Coast. In the rest of the U.S. Wilmington provides enhanced family-office services, based on Grant Tani's core capabilities, through Wilmington Family Office.

In addition to the locations already mentioned, Wilmington Trust and its affiliates have offices in Connecticut, Florida, Georgia, Maryland, Nevada, New Jersey, Pennsylvania, South Carolina, Vermont, the Cayman Islands, the English Channel Islands, London, Dublin, and Frankfurt.

Legg Mason has been whittling its way out of the transaction and advice business for years. This process took off in 2005 when it swapped its retail brokerage to Citigroup in exchange for the New York-based bank's asset-management group.

The sale of BLA cuts the number of Legg Mason's client-facing wealth-management affiliates to seven: Barrett Associates, Bartlett & Co., Berkshire Asset Management, Legg Mason Investment Counsel and Trust Company, Private Capital Management , the Permal Group and the Seifert Group, a separately branded investment team within Barrett Associates. -FWR

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