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At Deadline

Wachovia Unit Refocuses On Wealth Sweet Spot'

Wachovia's $63 billion wealth management unit is refocusing to target business owners, executives and professionals with $2.5 million to $15 million of assets as its new "sweet spot."

Stan Kelly, president of the banking company's wealth unit, said this is how he intends to grow his business.

"Firms have to determine who their sweet spot' clients are and deliver to those clients," Kelly said. "Otherwise, you can find yourself trying to be all things to all people.

"We are not seeking out the affluent or the ultra-wealthy," he said. "We want to target this middle group that is developing their wealth." Wachovia previously targeted anyone with more than $1 million of assets.

"We want to get ourselves extremely focused on these clients," he said. "In previous years, we could be all over the board in terms of the customer we pursued."

The company has reviewed its wealth management portfolio to determine the sources of its East Coast clients' wealth. The analysis found that 80% of the unit's wealthy clients had earned their wealth and that this was most true for professionals, such as doctors, lawyers, certified public accountants, engineers and architects; professional athletes; media or entertainment workers; and visual or performing artists. The second-largest group was business owners, followed by corporate executives.

"This sweet spot is clearly an opportune market segment," he said. "There is generational wealth transfer and a lot of wealth accumulation going on. We want to work with these clients from the point where they are creating wealth to where they are leveraging wealth to where they are preserving their wealth."

Deborah Shore, a senior vice president who was the wealth management director for Wachovia in Richmond, Va., has been named director of market segmentation, in charge of client acquisition and customizing service, products and marketing for each client segment.

Kelly said Wachovia's wealth unit has a unique opportunity to increase cross-selling by working with the parent bank. The unit will try to sell products and services to customers of Wachovia's corporate and investment banking units, he said.

Analysts said a segmentation strategy can be very effective but would be difficult to police at a large bank like Wachovia. Geoffrey Bobroff, an analyst in East Greenwich, R.I., said it would be tough for Wachovia to avoid "turf wars."

However, if the bank can get its units to cooperate, Kelly's strategy could work, Bobroff said. "If you look at Wachovia's history, they have a rich heritage with this ultra-wealthy population." When First Union acquired Wachovia two years ago and took its name, "it brought them good penetration. It makes sense for them to pursue this segment," he said.

Kelly said small and mid-size banks must be selective about which market segment they pursue. By contrast, Wachovia's brokerage company and investment services unit, Evergreen Financial, serves the affluent and mass market, he said, allowing his wealth management unit to focus on the market's upper end.

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