The client/private banker relationship has always been at the heart of wealth management, but over the past 20 years it has taken a much more central and broader role.
Passion for markets, with its fascinating mix of economics, politics and psychology, and love for people remain the private banker’s core skills, but today wealth managers are expected to have a more holistic approach to clients, understand their full balance sheet, their goals and objectives. They must meet the needs of an increasingly demanding, socially- and environmentally-conscious diversified client base, who approach life with a more global lens and operate in an increasingly complex world. This is a far cry from the product-push-based relationship of the past.
“What has become very evident over the past two decades is that bankers have to spend much of their time creating and nurturing that relationship, because that’s where the true value is,” says Dina de Angelo, director at Pictet.
Private bankers must have great listening skills, strong cultural awareness and empathy. “Good bankers today need to be very broad thinkers and not just solve that one issue the client brings to the table, but also its broader implications, its effects on the rest of their lives,” says Ms de Angelo, highlighting the importance of constant training and education to any banker’s success.
Technical skills are also key, as the investment world has expanded and become more complex, but while professional qualifications required by regulations have raised industry standards, they are not sufficient on their own.
“Top bankers today are those that have a very strong investment knowledge, but it takes a long time to get there. You have to go through market ups and downs and that’s not just something that you learn overnight, it’s learned over a lifetime,” says Ms de Angelo, emphasising the importance for senior bankers to nurture junior hires to help see them through market cycles.
While in the past wealth managers operated more in isolation, today they must be able to lead a team of specialists surrounding the clients, including wealth and tax planners as well as investment advisers, to deliver rounded wealth management solutions, while also complying with regulations aimed at increasing client protection.
“The private banker role has evolved from playing golf, wining and dining and owning the client to a highly educated relationship manager role,” states Anna Zakrzewski, managing director and partner, global leader wealth management at Boston Consulting Group. Private bankers must be able to navigate across a wide range of expertise and partners, to deliver “the best of the bank’s ability” to the client.
Source of knowledge
They also must have as broad a knowledge as possible, and gain a greater understanding of the client and what is important to them. “Clients should know we are their port of call, we are not trying to be expert in everything, but we have to make sure to bring on board that expertise, in-house or externally,” says David Durlacher, CEO of Julius Baer International.
As wealth has become more global, clients’ business interests are also global, their personal wealth is managed on a global basis and private bankers too need to have a global mindset. “You cannot operate through blinkers any longer,” says Mr Durlacher.
In addition, many clients have institutional-like needs, which makes the wealth management sector increasingly multifaceted. “No one expects relationship managers to ‘know it all’, but rather to ‘know them all’ and provide the correct access,” states Marcello Chilov, head of international wealth management at Credit Suisse Brazil.
Yet wealth managers today need to have a much deeper understanding of financial markets and products than in the past.
“They need to have a passion for the financial industry, macro-economic dynamics, credit, corporate finance as well as deep knowledge of the regulatory environment in which they operate, not only from the bank’s point of view, but also where and how it affects their clients,” says Caroline Kuhnert, wealth management head, central and eastern Europe, Greece and Israel at UBS.
In addition, they need to be able to understand and quantify risk for both the client and the bank. “Being a wealth manager today has become one of the most complex roles in the financial services industry, which was certainly not the case 20 years ago.”
Wealth managers must also have a good understanding of asset allocation techniques, which today are more sophisticated, encompassing a wider range of asset classes, with alternatives such as private markets now mainstream. They need to master portfolio construction and be able to orchestrate the execution of complex transactions. The rising importance of ESG investments also brings an additional layer of complexity, as it involves testing portfolios for compliance with ESG standards, while digitalisation means a better informed and therefore more demanding client base.
Purpose-led
Conversations with clients have become deeper and focus more on family values, legacy and purpose of wealth, rather than just markets and financial returns.
“Twenty years ago, private bankers were bankers and primarily responded to their client’s banking needs,” says Susan Mayo, executive vice president, wealth and investment management at Wells Fargo.
“Today, this is an advice business and in order to be successful, advisers have to be curious and dogged in understanding not only their client’s financial goals and needs but also their life and legacy aspirations and potential gaps.”
Wealth management should be a trusted long-term, multi-generational relationship with families.
Younger generations in particular emphasise the importance of values as a lens for their financial lives, states Arne Boudewyn, head of family wealth and culture services at Wells Fargo Private Bank. They demonstrate significant interest in speaking with advisers about social impact opportunities that span philanthropy, investing and entrepreneurship as current and future business leaders.
“The most important quality in serving our clients is listening, listening, and then listening some more,” he says. “This is what establishes a sense of fit.”
The clients of today, many of them emerging wealth creators with significant success behind them or in their futures, do not want to be told what to do, says Mr Boudewyn. They want to be educated about how to make good money decisions during the different phases of their financial lives.
Private bankers work with clients to understand their individual goals and identify opportunities that are important to them, to help build and preserve their wealth for now and future generations, says Luigi Pigorini, head of Citi Private Bank and Citi Global Wealth, Emea.
But increasingly their conversations gravitate not just around investments and wealth, but also towards the purpose of the wealth and leaving a legacy. “Our bankers are very much focused on the wider meaning and responsibilities of wealth than 20 years ago,” he says.
Shared values
In the past, younger clients may have appreciated a purely investment and banking focused relationship, says James Holder, Citi Private Bank cluster head, Europe. “Today they expect their private banker to share their values, to be more environmentally and socially aware, and to think about how their wealth makes an impact beyond returns measured only in basis points.”
This purpose-led approach is in stark contrast to what was seen in the industry two decades ago, when the paternalistic language was very much its prerogative.
With the rise of entrepreneurial wealth, or “democratisation of wealth creation” across so many different sectors from agriculture to technology, “clients aren’t so much interested in which school the private banker went to, or in which regiment they might have been in,” says Julius Baer’s Mr Durlacher.
“What clients want is someone to level with them, who can equip them to ask the right questions and who can help them think more strategically about their wealth. This is our role as an industry, to level with people and get away from a slightly paternalistic, slightly patronising language.”
What clients, especially younger ones, are looking for today is an “emotional connection” with their private banker, he adds. This is why recruitment of private bankers today relies less on their network and more on their EQ (emotional quotient), namely their ability to communicate, to translate market and client needs into action, to demonstrate empathy, flexibility and resilience.
“I do not see too much of a role for the pinstripe three piece suit in the private banker of the future, but more chinos and an open neck shirt,” adds Mr Durlacher.
Tech-savvy
Importantly, today’s wealth managers need to master the digital world, be tech-savvy and keen to learn new skills. They must also be aware of the impact of social media for themselves, their clients and the bank.
“A wealth manager who does not embrace technology has no place in the industry today,” says UBS’ Ms Kuhnert. The tech industry is churning out lots of millionaires who are younger and highly tech-savvy, and wealth managers need to fit in with this new client base.
The speed at which clients want information and their higher expectations, as well as regulatory pressure, have increased to the extent that private bankers could no longer do their jobs without the help of technology.
“Whereas previously an answer was expected in a week or two, today’s expectation is to deliver almost instantly, and at a very high level,” states Ms Kuhnert.
Client interactions have also significantly changed, from mainly physical meetings, bound to office hours, to personal omni-channel anytime communication. This has had a huge impact on the life of the private banker.
“I think we have broken the mould a little bit in terms of that nine-to-five mentality, the working day is much longer, much more flexible and much more creative compared to 20 years ago. It’s not uncommon to do client meetings very early morning or very late at night,” says Pictet’s Ms de Angelo, finding this a positive development.
The pandemic and remote working has accelerated this trend, also driving a certain ‘degree of intimacy’ in the client banker relationship, allowing people to get into each other’s homes.
The wealth manager of the future will be using all technology tools available to them to gain greater insights into the clients and offer them more personalised and valuable advice. But wealthy clients, who will be more tech-empowered and increasingly self-directed investors, will always need their private bankers when it comes to more complex, strategic and emotional matters.
“It is safe to say that bankers in our current guise are going to be around for a long time to come,” ventures Ms de Angelo. “That relationship is somehow sacred and will be the same in 20 years’ time.”
