Improving communication with clients is undoubtedly a top priority in all private banks’ agendas. The market downturn of the past two years, the collapse of Lehman, the Madoff fraud and the seismic shocks suffered by the biggest private banks, which affected the whole of the industry, has deeply shaken investors’ confidence in their wealth advisers; reporting to clients timely and effectively is therefore key to gain back their trust.
“Keeping clients informed is vitally important – there is nothing that the client dislikes more than not hearing from their relationship managers. There is a need to keep clients up to date with their financial matters. That could mean something as simple as the value of their portfolios,” says Stephen Taylor, director of MBA Systems.
Wealth managers have traditionally relied on monthly, quarterly or even yearly reports to keep their clients up to date. Although these remain a very important medium for some clients, they alone are inadequate to meet increased demand for information.
Secure portals on the internet which enable clients to long on and obtain up to date daily portfolio information have been available for some years. Now a new service solution from MBA Systems called Portreport, has been specifically designed to enable investment and wealth managers to deliver summary client valuations and reports securely to portable handheld devices. “Often clients are travelling and increasingly the PDA [Palmtop Computer Device] has become their favoured communications medium. To be able to receive that information to a handheld device becomes even more valuable,” he says.
The Wealth Passport – which is the Northern Trust owned internet based proprietary system, giving access and transparency to all the ultra-high net worth clients’ assets in custody at the bank – proved particularly helpful during the crisis, explains John Craig, strategic business development manager at Northern Trust bank.
Drilling down
A few years ago, the bank tailored an extensive institutional platform of custodial services to the ultra-high net worth clients, which are the institution’s target segment in the Emea region.
“Clients can see what their assets are worth, get the net asset value as of last night’s prices, at very high level, or they can look at the sector exposure, at the currency exposure and they can start drilling down right away down to the underlying securities. It is a real live picture of the client’s assets that are held on our custody system,” says Mr Craig.
“For a wealthy family, which has a lot of different investment pots, putting all their assets into custody with Northern Trust is an effective way to aggregate them all in a secure place. There is far greater risk awareness and the use of tools like wealth passport and the power of the custodian is seen as part of improving their overall risk management of their assets,” he says.
Mr Craig knows of a patriarch from a wealthy family who, while on holiday, wanted to know his exposure to Lehman, just before the investment bank collapsed, and had to wait for three weeks before his family officer was able to assimilate his exposure through the different fund managers and underlying investments. “If that client had been with Northern, they would have clicked three buttons and they would have had their total exposure to Lehman.”
The system can give restricted access to the portfolio to different passport holders, be it the children of a patriarch or an investment adviser. On the Wealth Passport, clients also have access to the performance analytics reports that are produced by the custodian bank on a monthly and quarterly basis. Clients will also be able to see the screen through a mobile device, but any form of drill down would be a bit more restrictive on it, says Mr Craig.
“Regulation is going to be an ever increasing burden which cannot be met purely by manual process, but it has to be built into the systems and processes,” says Bruce Weatherill, independent consultant and founder of Bruce Weatherill Executive Consulting.
Virtually every jurisdiction in the world has the requirements to treat customers fairly, mandating that investment portfolios are built in line with the risk profile and individual preferences of the client.
“A bank needs a process where it can demonstrate that it is actually controlling the client mandate, electronically, rather than relying on each of the relationship managers to perform, because if you are doing that, you are prone to human error,” says Mr Weatherill.
According to research findings from financial services provider Sapient Global Markets, around 80 per cent of private banks operate at between 80 and 100 per cent of capacity. “This means they can’t scale their operations to meet the growth they anticipate, they can’t cope with the increased regulatory reporting requirements and they can’t cope with improving their front office client experience,” says Mr Weatherill, who was consultant to the study.
