In June 2012 BMO completed its purchase of CTC Consulting, a registered investment advisory firm in Portland, OR, and merged the business with Harris MyCFO - what was then the brand name of BMO's US ultra high net worth business. The two names were subsequently combined to create CTC Consulting | Harris myCFO.

CTC Consulting | Harris myCFO is predominantly US-focused and serves individuals and families with $25 million or more in liquid wealth and a net worth of $100 million+. Described by Benevides as a “full-service family office," CTC Consulting | Harris myCFO today counts some 330 clients, 215 staff and looks after $83 billion

Benevides said the business is a “meaningful piece” of BMO in that it is focused on the bank’s largest clients but acknowledged that it isn’t driving BMO’s overall earnings given the sheer scale of the wider group

Growth, areas of focus

In a sign that BMO is deepening its global footprint, the firm’s asset management unit – BMO Asset Management - announced that it is buying UK-listed F&C Asset Management in January of this year. Benevides said he is looking to expand CTC Consulting | Harris myCFO globally, hinting at how in Switzerland, for example, many of the Swiss private banks’ activity is private banking versus the “broad and deep investment work that we do.”

When asked what his areas of focus were for the rest of the year and looking ahead, Benevides cited staff and talent, technology and regulation, and profitability. 

“Those are the things I’ve been focused on and I know that in large measure many of my peers who run large multi-family offices or family offices are focused on as well,” he said, adding that issues around regulation are both a challenge and an opportunity for the business.

Speaking mindful of the fact that the firm is looking to grow its global presence, Benevides said that what has been “interesting and surprising” about taking service outside of the US is the heightened awareness and focus around compliance and related legal issues rather than simply a focus on tailoring service for individuals and families.  

“Regulation is definitely something that is impacting the business in a significant way,” Benevides said.

He anticipates that some of the smaller, boutique firms may not be able to absorb the cost of making sure they are compliant and as a result the industry may see an uptick in mergers and sales. Adding to the pressure is the fact that clients are starting to ask more related questions due to the industry’s intensifying focus on regulation and compliance. 

“So it presents a challenge to some of the smaller firms. That, for a firm like us, is an opportunity,” Benevides said.

Technology

On the technology front, Benevides cited client reporting and client interaction as his main areas of focus. He said he is keeping an eye out for the latest technology that allows consolidation, multi-currency activity, and more detail around alternative assets and illiquid assets. Crucially, he is seeking technology that enables the client to interact directly in today’s “world of mobility.”

Benevides noted that those clients who want to be interactive all the time tend to use a brokerage firm or would otherwise likely be found carrying out a lot of investment activities themselves.

“Clients that use a family office are used to delegating so they look to us to do a lot of the work. What they are looking for is access to the information when they want. That is the kind of demand we are seeing,” he said.

Sweet spot

There has been debate in the wealth management sector as to what is the client “sweet spot” – the most profitable client segment.

Some firms have ramped up their ultra high net worth businesses, turning their gaze to meeting the sophisticated needs of the ultra-wealthy. Citi Private Bank is an example of a firm that is seeking to capitalize on that fact that the “rich are getting richer, and they’re becoming richer faster”; the UHNW space is one where there are more and more opportunities, John Matthews, head of UBS Private Wealth Management, previously told this publication. On the other hand, some argue that clients in the mid- to lower end of the wealth spectrum may be a more lucrative market.

So is the HNW business more profitable than the UHNW business? “Almost always yes,” Benevides said. “The reason for that is the cost to serve to UHNW clients; the nature of the services they consume in a full-service offering means the margins are lower at the UHNW level.”

He continued: “I think the reason you might hear some people say that UHNW clients are more profitable is if they’re an investment manager and all they’re providing is investment management. Because you’re managing a larger pool of assets you could possibly have a strong profit margin…but I would argue that that’s not truly a family office offering - just an investment offering for people that are wealthy. If you compare a full-service HNW business to a full-service UHNW business, almost every single time the HNW business is much more profitable than the UHNW business.”

Hiring 

Meanwhile, in terms of CTC Consulting | Harris myCFO’s recruiting strategy, Benevides said the firm is “starting to shift back” by hiring junior people and training them.

“For a long time the strategy was to bring in senior talent from other firms, which we still do. I just think what’s new is that we are starting to bring people in from the junior ranks up,” he said.