(Bloomberg) — It’s a strange time even for the richest Americans: A pandemic rocked the world and yet everything went up in value. Now many people are calling their money managers, asking more — and often unusual — questions.
Can a third or fourth house be a good investment? Should I add cryptocurrency to my investment portfolio? How do I take advantage of my art collection? Is it time to sell the family business and move to Florida—or maybe just move to Florida? Can grandparents attend the next estate-planning call on Zoom?
As head of Bank of America Corp.’s private bank, Katy Knox is listening to it all, and then some, overseeing the more than 4,000 employees that help prepare customers to invest at least $3 million. help – and often far more. The 35-year-old banking giant took over the division in 2018, leading the business through a period of re-branding previously from US Trust to Bank of America Private Bank. Some clients have more than a billion to invest.
Knox’s current experience shows an industry on the verge of rapid change. Competition among wealth advisors, especially for individuals with ultra-high net worth, is high. And the wealth is increasing.
The first thing to note is that suddenly many more millionaires are seeking advice in financial firms. The economic earthquake set off by COVID-19 has been tough for much of society, but by and large, good for those who started out with significant amounts of cash and assets, or businesses that benefited from the pandemic. Stocks, real estate and fine arts prices rose. Fields like technology flourished.
BofA’s private bank now has a local presence in 40 markets across the US, growing to 25 since Knox took over. This year it aims to increase that number to 50, which will essentially double over a period of four years.
But with that rise and the pandemic, there have been a lot of questions that would have been unusual just a few years ago. One of the main themes: Moving residences – or buying a second, third or fourth home as a future investment.
“It’s the hottest market ever,” Knox said in an interview from the 50th floor of her office opposite Bryant Park in New York City. One in every five properties purchased by customers of a private bank or Merrill Lynch division is now an additional home, up from every seventh before the pandemic.
Many customers start by shifting home. Some left cities during the initial COVID outbreak and “fell in love” with bunkers in cozier locations like the Hudson Valley and the Hamptons, Knox said.
Florida Homes
But they’re also eyeing hot spots like Palm Beach, Naples and Miami in Florida. In addition to the weather, the state has another attractive feature: low taxes—which is another hotly debated topic in the bank. The wealthy have spent the past year pressing their advisers for insight into the Democrats who control the White House and Congress from the high-income earners.
Knox said “there were a lot of scenarios at the start of the pandemic, mainly around the capital gains tax” that were being discussed. The new year presents the possibility of more changes to come.
Clients are looking for opportunities to mitigate potential tax changes, including managing income and trust distributions, she said.
To the next frontier, crypto is generating interest among the wealthy, especially those looking to diversify their investments.
“Our customers are curious about the entire ecosystem that is evolving, from currencies to various applications of blockchain technology,” Knox said. “This is clearly a rapidly developing area of the capital markets and clients want to understand whether they should invest, and the different ways to gain exposure.”
Philanthropy took off even during the pandemic, Knox says, and remains at the private bank. “Many customers are choosing to give over the course of their lifetime so they can see the impact and connect directly with the organizations or individuals they are supporting,” she said.
Knox’s experience of over three decades across the bank gives her a unique perspective to share with her customers. She has become one of Bank of America’s most prominent women, occupying a seat on the management team and reporting directly to Chief Executive Officer Brian Moynihan.
His role is expanding in the new year, with the additional responsibilities of a team of trust experts as well as leaders in the banking and credit-strategy unit.
NFL Games, Art Baselli
Over the years his leadership has touched every unit of the company in commercial, corporate and retail banking. In his current role, Knox often hangs out with entertaining clients—whether over dinner, a private tour of the Rubel Museum at Art Basel in Miami, or New England Patriots owner Robert Kraft’s private box for an NFL football game. When the COVID-19 pandemic was at its worst, and personal events were curtailed, customers opted for video or phone calls with their family members.
Knox has also seen a change in the way people think about their wealth and the legacy they leave behind. They “want to live out their legacy right now. That doesn’t mean they’re not planning for their family. It means they’re giving, their passion for organizations and their influence has increased,” she said. said.
Customers are also thinking about the next generation. According to Knox, at the private bank, customers have contributed 25% more to trust accounts in the past 12 months than in the past two years. They are also investing in art, building collections that they can use as collateral.
The pace doesn’t seem to be slowing down. The business has added more than 3,400 new customers since the beginning of 2020, and growth is now exceeding pre-pandemic levels. Advisors are also being added as per the requirement. What started as 300 professionals in 2015 has grown to 500 and is expected to grow to over 600 over the next few years.
The private bank represented $625 billion of the total $4.3 trillion in total assets under management at Bank of America during the last quarter of 2021. The unit reported an all-time high asset under management balance of $360 billion, up 15% from the same period a year ago.
To contact the author of this story:
Katherine Doherty in New York [email protected]
