The wealthy have always relied on financial advisors to help manage their riches. Now they have technological as well as human help.
When VirtualBank, a Palm Beach Gardens, Fla.-based online bank, acquired CMS Financial Services-a Rockville, Md. investment management firm-in January, it was in a position to offer a wealth management service aimed at what the bank dubs the "info-riche"-tech-savvy professionals enriched by the stock market and technology boom of the late 1990s. Focus groups conducted with this target segment of first-generation wealth found that they seek a high-tech, high-touch package offered by few firms today. Often these customers are newly wealthy and unaccustomed to handling big portfolios, bank officials said.
Even before the acquisition, VirtualBank catered to the affluent, with consumer banking products such as checking accounts for customers with average account balances of at least $30,000. With $300 million in deposits, VirtualBank offers private banking services to those with at least $5 million in liquid assets, said Courtney McCashland, executive vice president of marketing and strategic alliances.
Launched in April, the wealth management service provides fee-based financial advice, diversification of assets, estate planning, accounting, detailed reporting and other features. It also allows real-time financial monitoring and a consolidated view of accounts ranging from checking to investments, even frequent-flier accounts.
Unlike most of VirtualBank's other offerings, the wealth management service is not accessible though the bank's Web site (www.virtualbank.com). Instead, it is provided via meetings-at least once per quarter-between clients and relationship managers, McCashland said.
Still, the reporting is automated and can be delivered via e-mail. "The next step is to provide it to the client through the Internet."
For CMS clients, that will be a first, McCashland said, noting that VirtualBank expects to triple its wealth management business over the next few years.
CMS, which will continue to exist as an independent entity, targets people with balances of $5 million or more, and manages $4 billion in assets.
"We focus on three key objectives: simplicity, actionability and accountability. We ultimately will offer a version of what we do now but more technology-based," said Steve Lockshin, chief executive officer at CMS.
CMS didn't lose any clients when the acquisition was announced, he added. The bank has provided "a ton of great business."
The CMS acquisition fulfills the VirtualBank's strategy of providing unbiased advice to the affluent.
"Our whole focus is building private banking for the wired world," said McCashland.
CMS' technological expertise was another factor. "Most wealth management companies don't have such good reporting and tracking systems," she said, noting that CMS performs the back-office work for major financial management firms.
Unlike many banks whose systems were patched together over time, VirtualBank built its open-platform technology from the ground up, McCashland said.
According to the bank's Web site, "VirtualBank is the only bank that has built an in-house system with a single service interface and back office database."
That ties front- and back-end operations together seamlessly, McCashland said. Information need only be fed into the Windows 2000-compatible system once.