Suddenly, the private banking and fund management industries are talking about their clients once more. Despite the daily bad news which affects European finance houses and their customers, this is one positive element emerging from the current crisis.
Talk of pitching the latest structured products and hedge fund combinations has been postponed, for now at least. There is a realisation that clients are in a state of high anxiety, that their hands must be held, that their private bankers must be on hand for constant reassurance. Banks such as BNP Paribas made their reputations and assets through a very sales-led mentality. Private banking was seen more as a distribution channel for asset management than a client-driven business.
Changing landscape
That is changing, as those houses creating products purely for profit are being found out, or cancelling launches. The French bank’s takeover of BNL in Italy meant that a new outlet for funds and structured products had arrived almost overnight. But subsequent outflows have shown the need for dialogue rather than product pushing.
Clients also need regular access to discretionary portfolio managers, not to place them into the latest strategies dreamt up by investment banking cousins, but to vet and thoroughly scrutinise even the simplest, humblest money market instruments for potential exposure to toxic assets.
While investment banks are shedding large numbers of bankers, wealth managers are taking on both trading staff, to buy and sell additional volumes of super-safe securities such as treasury bills and other bonds, and private client advisers, who can continue the constant dialogue about portfolio composition and restructuring which wealthy customers are demanding.
Career change
Can the investment bankers who have ended up on their ear after the unmasking of the asset-backed industry just march in to the new vacancies in private banking, with banks such as UBS and Société Génerale launching a wealth management recruitment drive?
Up to a point, their technical expertise is valued. After all, it is not enough just to lend a sympathetic ear to clients or give them a shoulder to cry on. Advisers need to act on the feedback they are receiving. This means coming up with often technical solutions, which must then be communicated to the trading desks and discretionary managers.
Investment bankers generally have the technical abilities for this role. But do they have the long-term perspective to serve the financial needs of a family and then the next generation?
This is where many can fall short, as devotees of the deal-led culture they sprung from. Private clients require a totally different attitude. The private bank must be more than a temporary parking place for out-of work speculators.
