Last month, Seattle-based Washington Federal Bank launched its own registered investment advisor, WaFd Wealth, and recruited John Chavez, a 30-year Merrill Lynch veteran, to run the new wealth unit. Chavez has big plans to grow the division.
He explained that the bank entered the wealth management business to diversify its revenue stream. The ultimate goal is to have wealth management, trust services, and boutique banking all under one roof, enabling the bank to offer virtually any service clients may need.
To help achieve this vision, Chavez is collaborating with Pike Street Labs, a fintech subsidiary of WaFd Bank, to build a financial planning technology platform aimed at the mass affluent market. “Fast forward three years from now, we’ll have a technology solution for the mass affluent segment that could possibly dwarf the AUM of the core wealth management business,” he said.
The technology will not be a robo-advisor but rather a questionnaire-based financial planning tool that builds scenarios with artificial intelligence-generated outcomes. Human advisors will then review these financial plans to ensure quality and personalization.
Chavez added, “If we empower the human capital on the bank side to pursue CFP designations two years from now, we could have a couple thousand financial planners across the bank’s footprint that we train to plan the way we expect them to plan.” These advisors can take automated planning outcomes, review them, and engage with clients in local markets about their specific situations. This will be complemented by a more dynamic, automated investment solution managed by the bank’s CIO team.
In addition to technology, Chavez is actively looking to hire CPAs and attorneys to establish a trust company, which the bank plans to launch within the next three to four months. This trust company will operate as a subsidiary of WaFd Wealth.
A number of WaFd Wealth clients require support with special needs trusts. Chavez noted that recent federal estate tax law changes could revitalize irrevocable life insurance trusts, which are valuable tools in special needs planning. “These are people that are members of your family, and if they have a family member with special needs, they want you as an advisor to be connected to supporting them when they’re gone,” he said. “If that account and that team is at a different firm, it’s really difficult to stay connected, not only from a compliance perspective but from a practical perspective.”
Chavez’s relationship with WaFd CEO Brent Beardall goes back many years—they’ve been neighbors and golf buddies. In early 2023, Beardall survived a deadly plane crash in Provo, Utah, and was seriously injured. Following his recovery, Beardall and Chavez began discussing the launch of the wealth management business.
Their timing coincided with the collapse of Silicon Valley Bank and First Republic, which Chavez sees as an opportunity for WaFd to fill a gap left by big banks unwilling to customize lending products for their clients. “A lot of high-net-worth clients have financing needs that are ‘outside the box,’” he explained. “They may not have income profiles that fit in neat little boxes that big banks have to check to get to a ‘yes’ in an underwriting environment.”
At the same time, approaching age 55, Chavez considered retirement or leaving the wirehouse for a new venture. He chose to join WaFd and launch its wealth management division, a project that has re-energized him.
Chavez declined to disclose the exact amount of assets under management (AUM) he and his partner brought over but emphasized it was substantial. “I’m interested in building a scalable practice with relationship managers and specialists who do heavy lifting for all of our clients,” he said. “While our clients may not need all of the breadth and depth of services we provide today, we want those services to be available as their lives change. What they may not need today, they might need next year.”
Looking ahead, Chavez anticipates that the majority of WaFd Wealth’s growth will come from “natural hunting.” The pro forma financial statements do not include bank referrals; however, bank presidents have already started referring prospective clients with wealth management needs.
https://www.wealthmanagement.com/ria-news/what-wafd-bank-is-building-with-its-new-wealth-business
