In an effort to serve the ultra-high net worth market and grab market share, Wells Fargo Company (NYSE: WFC - News ) has launched its Abbot Downing brand. The company had announced the plans late last year and made the official launch yesterday.
With $32.9 billion in client assets, Abbot Downing targets to expand business among approximately 10,000 U.S. households that have $50 million or more in investable assets. It serves ultra-high net worth clients, their foundations and endowments. Services include planning and family dynamics, asset management, private banking, as well as trust, fiduciary and administrative services.
Abbot Downing is a combination of the former Lowry Hill and Wells Fargo Family Wealth businesses and is part of the company's Wealth, Brokerage and Retirement group. It derived its name from the 19th century New Hampshire builder of the iconic stagecoaches that have come to represent Wells Fargo, which was Abbot Downing's largest customer.
We believe the launch of this Abbot Downing brand will cater to Wells Fargo's initiatives to grow its top line in an otherwise challenging environment with tepid economic growth. Wells Fargo's wealth management unit is one of the notch playsers in the wealth management business besides those of Bank of America Corp. (NYSE: BAC - News ) and UBS AG (NYSE: UBS - News ). The company has substantially strengthened its position in this market following the Wachovia acquisition.
Going forward, we believe that opportunistic acquisitions and strategic measures will help expand Wells Fargo's business and improve its profitability. The company's solid business model, strong capital position and expanded business through the Wachovia acquisition along with its integration, expected expense management as well as improved credit quality will also support its profit figures. Yet, a sluggish economic recovery in addition to regulatory issues might limit its growth to some extent.
Wells Fargoshares maintain a Zacks #2 Rank, which translates into a short-term Buy recommendation.
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