Asked the exact date of his arrival at US Trust, Peter Scaturro demurs (it was May 9, 2005, and he recently celebrated his first anniversary). But he jokes that he can still remember the exact date he was fired from Citigroup: October 19, 2004.
Embroiled in a regulatory scandal in Japan that resulted in Citigroup’s private bank being banned from the country, Mr Scaturro was one of three high-ranking executives who were brought down, along with Thomas Jones and Deryck Maughan.
But six months later, Mr Scaturro landed on his feet at US Trust, after being personally courted by Charles Schwab, who had bought the firm in 2000. Speaking to FT Wealth, he pre-empted the discussion of first-year accomplishments with numbers to support them: pre-tax income grew from $152.4m in 2005 to $177.1m on an annualised basis during the first four months of this year, while net new business increased by $86m in the same period – more than double the growth for 2005.
US Trust, a traditional investment manager for the very wealthy, seemed an odd fit for Schwab, the dominant US discount broker, which pioneered dealing across the internet. But Mr Scaturro has now spent a year re-thinking the business and assembling a team around him that resembles an all-star selection from his former employers.
Peter White, vice chairman, and Frances Aldrich Sevilla-Sacasa, president, worked with him at Citigroup’s private bank, and at Bankers Trust. Leo Grohowski, chief investment officer, knew him at Bankers Trust before and after Deutsche Bank took it over.
With the new team in place, Mr Scaturro has done much to wake up US Trust, which is widely perceived as a 150-year-old sleeping giant.
First, he is pushing beyond traditional specialities of tax and estate planning, and offering more products and services in-house. “We’re not the boutique that can’t get access to ideas; we’re not the behemoth that has to use its own desk,” he says. “We want the intellectual capital here. The execution, we don’t care. That’s a commodity.”
He is also expanding into offering credit to clients – a historic weak spot for a firm without the balance sheet of a Citigroup or a JP Morgan – through a partnership with an undisclosed firm. The arrangement, Mr Scaturro argues, will help US Trust clients get the best pricing, as the company is not constrained by its own proprietary trading desk.
And, crucially, he plans to make more of CTC, a Portland, Oregon-based group within US Trust, which has been involved in consulting with clients on alternative investments for the past 25 years. With an average account size of $260m, CTC has a database that matches hedge funds and strategies for ultra-high-net-worth clients.
“We can customise solutions,” Mr Scaturro said. “We’ve always had the bulk of the portfolio in traditional assets; we want to diversify it now.”
To this end, Mr Grohowski, the chief investment officer, has built up hedging and foreign exchange capabilities since arriving in September. “When I came here there wasn’t a house view [about] currency,” he says. He has changed that. Through Schwab, the firm can now act on that view.
Mr Grohowksi is also trying to make US Trust more attractive to clients with its tax-efficient structure equity platform that is designed to maximize post-tax gains for clients with stock they bought at low price.
Still, Mr Scaturro does not want to neglect US Trust’s traditional strengths in managing its own funds.
“We’re not a distribution channel,” he says. “We have world-class strengths but also the wherewithal to pull in other products. If you’re pure open architecture, you’re a distribution network.”
On the personnel side, US Trust has hired 250 new people – having let go slightly fewer than that number. It has closed six offices, shrunk five others and made Miami and San Francisco regional hubs with capabilities approximating those for New York.
Those two new hubs are intended to help lure clients from outside the US, where the ultra-wealthy are increasingly to be found. “We’re going to be looking to bring in some of the larger European and Latin American families we’ve known for years,” says Aldrich Sevilla-Sacasa.
Meanwhile the family wealth team will be re-branded as a multi-family office for clients with more than $100m, and its capability will be moved beyond New York to California and North Carolina.
Mr Scaturro’s remaining ace in the hole has been the same for the past 15 years. Peter White has carved out a niche for himself as counsellor to the very wealthy, especially in helping their children. More pastor than private banker, he has looked ever more deeply into a critical question for the wealthy: how can their children be motivated and not crushed by their family’s wealth?
At US Trust, Mr White is undertaking a three-stage programme, which will be his broadest yet. The first part, beginning in June, is a basic financial competence class for adolescents. He will be explaining stocks, bonds and savings accounts.
The second is about inter-generational wealth issues; a three-day seminar focused upon “the psychological and spiritual issues of – and the family dynamics around – wealth.”
The third class is, in Mr White’s words, “slightly weirder than the first two”. He describes it as a way to “bring people into thinking about their lives and world in a more ecological way”. One of these seminars will take place around a chamber music concert in New York; another will be a retreat to a cabin in Montana.
“It’s about what I’m interested in and what I do,” he says. “I think that’s where the action is to help people struggling with the meaning of abundance.”
“Our clients have come to us for certain capabilities in the past,” Mr Scaturro says. “But 2006 offers a lot more investment opportunities in hedge funds and private equity. We want to have a holistic response to our clients. It’s about not putting the cart before the horse. We’re focused on wealth management. It’s our core business, and we’ll invest in it.”