Wealth-firm holding company fills a gap as it pursues three-prong strategy. Boston Private Financial has a new CFO. As of yesterday, David Kaye, formerly CFO of Columbia Management, oversees all financial functions for the Boston-based holding company and its wealth-management affiliates. Boston Private says Kaye's appointment supports its effort to solidify its standing as a multi-brand wealth-management organization with a national footprint.

Kaye's "experience in driving the financial and strategic guidance and vision necessary for growing companies will be invaluable for Boston Private as we continue to build a national wealth-management organization," says Boston Private's CEO Timothy Vaill.

Big names

Kaye has replaced Robert Whelan as CFO of Boston Private. Whelan joined Boston-based asset manager Eaton Vance this past spring. Since then, Boston Private's president Walter Pressey had been filling in as finance chief.

In his previous role as CFO of Bank of America-owned money manager Columbia, Kaye was responsible for all financial reporting for the organization. Before that he was CFO of the Private Bank of Bank of America (now part of U.S. Trust Bank of America Private Wealth Management).

Prior to joining Bank of America, Kaye held positions with Goldman Sachs, Lehman Brothers and Coopers & Lybrand (which merged with Price Waterhouse in 1998 to form PricewaterhouseCoopers). He was also a lieutenant in the U.S. Navy, where, among other things, he was a mission commander for the Oceanographic Research Squadron.

Early adopter

Now, instead of managing the finances for a monolithic national brand, Kaye is CFO to a company with more than a dozen brands within a three-track wealth-management strategy that embraces private banking, wealth advisory and investment management.

Five of Boston Private's 14 affiliates are private banks; five are open-architecture wealth advisories, and four -- counting Anchor Capital Advisors and its sister company Anchor/Russell as one -- are investment managers.

This three-pronged approach to wealth management has been in play at Boston Private for more than a decade. Pressey says he and Vaill, who worked together at the Boston Company before it merged with Mellon (now Bank of New York Mellon), and other Boston Private executives realized by the mid 1990s that wealth management was set to become a major industry.

"We could see that the demographics were compelling," says Pressey, referring to the bulge of well-to-do baby boomers then entering the peaks of their careers. But because Boston Private's brass guessed that other financial institutions would be scrambling to keep pace with the needs of affluent boomers, the firm had to come up with a plan that would help it enter the fray on a national scale in competition with big-name players as well as nimble local wealth managers.

Lifecycle

The solution was to acquire a base of asset-management affiliates -- which Pressey says throw off a pre-tax profit in 40% to 70% range as opposed to the wealth advisory's 30% to 35% average pre-tax take -- while selectively bringing in private-client RIAs and local private banks.

This combination also covers what Pressey calls the client's "financial lifecycle" from business- and private-banking services and jumbo mortgages through financial, tax and estate planning, and investment consulting and management.

Though Boston Private has affiliates on both coasts -- and Pressey notes that technology has made asset management and, to some extent, investment consulting a "virtual" endeavor -- it has yet to find a perch in the heartland.

"We're in six of the seven regions we've targeted, and we're looking at [acquisitions in] all the regions all the time" says Pressey. Texas' vibrant wealth-management market is a possible site for expansion -- though Pressey says it would have to be in partnership "with a fairly significant firm."

Right now Boston Private has affiliates (or affiliate branches) in Boston, New York, San Francisco, Seattle, Miami and Los Angeles. Its affiliates managed or advised on about $36 billion at the end of June 2007. Boston Private's support to its affiliates includes sales and marketing, leadership development, risk management, human resources and legal and compliance support. -FWR

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