In a move to build its base of wealthy clients, Legg Mason Inc. said yesterday that it bought a 50 percent stake in a trust company that is owned by Bingham Dana LLP, a large law firm based in Boston.
Legg paid an undisclosed amount of cash for its share in the joint venture company, which is called Bingham Legg Advisers LLC, and manages about $1.3 billion in assets for clients of the law firm.
"Bingham Legg Advisers is an intriguing new opportunity for us," said Raymond A. "Chip" Mason, chairman and chief executive officer of the Baltimore brokerage and asset management firm. "Increasing our penetration of the high-net-worth market is a primary strategic focus for Legg Mason, and partnering with Bingham Dana allows us to enter an important segment of that market in Boston."
Banks and money management firms are building their businesses that cater to wealthy individuals. Last month, Legg bought Berkshire Asset, an investment management firm in Wilkes-Barre, Pa., which has wealthy clients and $600 million in assets under management.
"The high-net-worth market is very important," said Michael Flanagan, a brokerage analyst at Philadelphia-based Financial Service Analytics. "That segment of the industry contributes a significant portion of the industry's revenue and earnings, and it continues to grow."
Assets in Legg's high-net-worth business total about $6 billion, and represent about 6.5 percent of total assets, which were $93.4 billion June 30. Mason has said he wants the high-net-worth business to be larger.
"A lot of wealth is being created in a short period of time," Mason said yesterday. "We are in a very changing world. The amount of assets that individuals have is just substantially greater than anyone has ever dreamed."
Bingham Dana has provided trust administration and portfolio management services to wealthy individuals and families through Fiduciary Services Group. These services, which include equity and fixed-income management, will be provided to Bingham Dana clients with Legg Mason advisory subsidiaries assisting the new firm in its equity investment process.