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Here at Clusterstock, we’ve spent the whole day reading Richard C. Wilson’s ‘The Family Office Book.’(Have you seen volume lately? It’s August, and there’s just not a lot happening on Wall Street.)
So consider this a time for you to kick back, relax, and learn something new about the uber rich.
The book, Wilson talks to Frank Casey, who has not only been a money manager for decades, but also helped uncover Bernie Madoff. The guy has his eye on the industry.
And in his interview, Casey happened to concisely shed light on something we’ve been noticing — well, something everyone has been noticing: The ultra-affluent are dumping big banks for smaller shops.
Casey explains why:
The reason, perhaps, is that these wealth management teams were at these big investment banks for three reasons. The main reason being the financial branding, of course, the confidence that it exuded; number two being the balance sheet because people felt confident keeping the money there; and lastly, proprietary product, because these guys had trading firms and hedge funds that were embedded or serviced. Well, the name’s blow, the balance sheet is deleveraged 33;1 to 12:1, they are getting ri d of the prop trading desk to reduce risk exposures, and now the wealth management teams are spinning out.
Lesson to be learned here: If a client says, ‘it’s not you, it’s me,’ don’t believe them.