Altratas billionaire census: inequality, climate and North America, Citis Asia family office ambitions take shape, Valderrabano promotion signals Citis global wealth intent, Private bankers embrace independence in Brazil, Lecomte on sailing, sustainability and digital disruption, HSBC private banking enters the metaverse, Global Private Banking and Wealth Management Virtual Event, Private Banking and Wealth Management Survey 2022: JPMorgan strength in adversity and diversity, Private Banking and Wealth Management Survey 2021: UBS strength in numbers, Private Banking and Wealth Management Survey 2021: Bankings new engine, Private Banking and Wealth Management Survey 2021: How Santander became a leader in global wealth, Junior private bankers: (Not) learning on the job, HSBC Global Private Banking looks to China for growth, Worlds Best Bank for Wealth Management 2020: UBS, North America's best bank for wealth management 2020: UBS, Asia's best bank for wealth management 2019: Credit Suisse, CEE's best bank for wealth management 2019: UniCredit, Latin America's best bank for wealth management 2019: Credit Suisse, World's best bank for wealth management 2019: Credit Suisse, Kleinwort Hambros guides clients into a new era, Digitizations impact on private banking and beyond, Kleinwort Hambros: Maintaining a high-touch personal service, Societe Generale Private Banking: Building a pan-European footprint, Modern Slavery Act Transparency Statement. Two other factors look set to drive consolidation as wealth management grows. Getting sustainability right is imperative. Global Editor, Private Banking and Wealth Management, Global Publisher, Private Banking and Wealth Management, The material on this site is for financial institutions, professional investors and their professional advisers. The 10 largest wealth managers control about 27% of the industry. Wealth managers are keen to engage with clients on biodiversity, but concerns over liquidity and access pose challenges to retail and private clients. It helped its clients profit, both in the serene waters of 2019 and in the wake left by Covid-19 as it spread across the world in 2020. It is an investment bank-like mandate, but it sits within private banking; the lender that finds the right deal at the right price and with the right set of people will profit handsomely and earn the clients loyalty. The Swiss lender employs 75 people around the world whose sole job is philanthropic advisory. Plenty of European private banks would of course contend that managing money was always what they did best. But even they face an uncertain future. Global wealth assets will continue to grow, emerging economies will grow faster than developed markets, says a leading private banker. During Covid, [clients] really appreciate that touch.. Thiam believed wealth was no longer a distinct part of the financial furniture. This drive to deliver underlies many of the strategic decisions banks now make. It knows if it fails to cater to their investment aspirations now, another bank will and will profit from that familys future needs, including high-margin work like estate planning and pre-IPO funding. The question over the next 10 years is how you marry technology with the human touch.. Rules that boost transparency make it easier to value not only the service but also the provider. It is the kind of factor that matters to its wealthy clients and to the private bankers we poll every year. Some wealth managers are ahead of the curve. As more wealth is concentrated in the hands of a monied elite in regions such as Asia and Latin America, those individuals need better services about preserving wealth and helping it grow and generating income streams for philanthropy and inter-generational transfer of wealth, says Rajan. We envisage consolidation as firms look to achieve larger scale in order to drive down costs and acquire greater assets under management, says Jim ODonnell, head of Citi Global Wealth. It is easier to deal with food supply chains or new drugs than the intricacies of offering financial services in multiple highly and differently regulated markets. The choice of ODonnell to head the new division is telling. This matters in all kinds of ways. Please read our. When someone says: My wife and I are not sure our children or grandchildren share our values, or: Im not sure I trust my future daughter-in-law thats a pretty deep and personal conversation, he says. However, there are costs to bear and rules to follow. Thats what our advisers do for families.. The business model of yesterday is no longer fit for purpose, says Gregson. Sustainability is increasingly the beating heart of private banking, which in turn is driving income across corporate and investment banking. He is based in Hong Kong. When you see banks merging their wealth and consumer business, it is essentially about cutting costs and managing headcount, says DBSs Poon. hnb asiamoney euromoney recognised magazines ft rozanne almeida institutions In November 2020, DBS bought the distressed Indian private bank Lakshmi Vilas. The material on this site is for financial institutions, professional investors and their professional advisers. Banks are already exploring ways to gain the right kind of scale. That is not to say consolidation will be easy. We use cookies to provide a personalized site experience. We always say we have seen more than 40 crises, and they all bring their own challenges and situations.. With a new strategy of regionalization, integration and innovation, Credit Suisses wealth management business has set itself apart from its peers and brought the ethos of Swiss personalized service to an international platform. It slowed down last year due to the pandemic, but we will see multiple mergers and acquisitions across Europe and especially in Switzerland, where we have come down from 300 private banks to 100. Wealth managers will focus most heavily in 2021 on investing in technology, followed by cyber-security, and regulatory risk and compliance.

If there is one extraordinary opportunity that wealth management has to look carefully at, and which presents fantastic opportunities, it is the way in which society is looking at its future economic model, says Odier.

Eric Cardozo, co-founding partner, COO and CFO of Brazilian private banking boutique WHG, talks to Euromoney about quitting a mainstream firm in 2020 and why more private bankers in the country seem to be following suit. We are always in the market, says Poon. Perhaps the most interesting one from a will it work standpoint is the retail banking-wealth management combination. Beta specialists like BlackRock and Vanguard add new layers of competition by creating simple low-cost options, with or without ESG lenses on portfolios. Santanders breakthrough moment came in 2017 when it merged its private banking operations and tapped Victor Matarranz to run the division. Private bankers tip HNW clients with $5 million to $30 million in investable assets to present them with the greatest growth opportunities, followed by super-affluents with $1 million to $5 million and ultra-HNWs. UHNWs and HNWs will continue to expand dramatically around the world and we want to be a part of that.. It is for information only. The unknown is whether it will work for the end-customer and the private banker. GLOBAL PRIVATE BANKING AND WEALTH MANAGEMENT SURVEY, Euromoneys 18th annual private banking survey, but also offered a form of financial salvation, and tapped Victor Matarranz to run the division, Private Banking and Wealth Management Survey, Modern Slavery Act Transparency Statement. It will simply be how things are done it will just be what a good investment portfolio looks like., ODonnell adds that ESG will be a critical lens through which all investing happens. DBS has been active in the M&A market for years. For the second year running Credit Suisse is Latin Americas best bank for wealth management, this year bolstered by the completion of a three-year turnaround across the whole bank. We had three regions in wealth management that made more than $1 billion in pre-tax profit last year, and in Switzerland we made $600 million, says Tom Naratil, co-president wealth management Americas, and president UBS Americas.

Every financial institution has its own approach, and Switzerlands big wealth managers are constantly refining their operating models. If not well handled, it could spark risks such as a loss of identity that RMs [relationship managers] start wondering: Am I the big brother or the little brother in this relationship? and, How does this affect me when I see my peers in the industry? It is a delicate situation. Net new money is easier to predict, and it is possible to see, up to three years in advance, where earnings will be. One banker points to a number of company founders he serves who are frantically cleaning up their corporate act just to convince a scion to join the family business rather than a funky startup. Theyre at risk of facing potential buyouts by larger banks or even private equity.. He was right. When banks make big business model changes merge assets or carve them up for example you run the risk of infighting and of a sense of one division absorbing the other, says Poon. By hiring two private bankers from outside the industry to power its Asia family-office business, Citi offers further proof that its peers should take its ambitious regional wealth management plans seriously. But change is clearly in the air and, like most revolutions, its seeds were sown long ago. Good independent wealth managers trade at decent double-digit price-to-equity multiples and nearer two times price-to-book, he adds. At the very highest echelons of wealth, the way a wealth adviser has to think reflects the deal-fever creativity that drives M&A. Technology has only just begun to disrupt the industry. Youll see firms buying $5 billion in assets here, $10 billion there, and piecing it all together.. Santander, a rising power in private banking, topped the polls in a host of awards. Europes Markets in Financial Instruments Directives; the revised Payment Services Directive; the packaged retail investment and insurance products regulations; and the coming replacement of Libor are all well-intentioned but costly to implement. Van der Hooft-Cheong says it helps ABN Amro make simple, personal decisions that matter, such as sending flowers on birthdays or anniversaries. Private banking clients are critically important to the corporate and institutional banking business, says ODonnell, head of the new Citi Global Wealth unit.

We have built new ESG lenses for our people and have developed leading sustainable investing capabilities, says Odier. Elliot Wilson is Greater China editor and Private Banking and Wealth Management editor. Banks are playing catch-up here. But the industry is changing. Technology is an amazing enabler. It is being driven across the entire wealth spectrum by pension funds, institutional investors, UHNW investors and the next generation, who care deeply about ESG issues and want to invest with purpose in line with their beliefs.. Providers will fight for the right to serve a prized client, driven by a raft of factors, from the industrys capital un-intensive model to its elevated valuations, higher fees and better return on equity. UHNW clients want to book in multiple locations for their asset and liability needs, says Philipp Wehle, chief executive, International Wealth Management at Credit Suisse. Standard Chartered finished a three-year internal re-jig in January 2021, while HSBC announced plans to combine a business with $1.4 trillion in assets in March 2020. It could sell to a rival bank or to a buyout firm. The human factor will only grow in importance, particularly in terms of serving the worlds wealthiest families. It helps to lessen the load when corporate and investment banking struggles through a down-cycle.. He saw providing elite wealth services to ultra-high net-worths (UHNWs), including those with a family office, could drive activity across the franchise, from corporate lending to pre-IPO funding and help the Swiss lender to gain underwriting spots on juicy stock listings. Others will cut their losses and sell up. Some financial institutions will emerge better and with their reputations enhanced. It is likely private banking has never been more important. Please read our. Things can get muddy. It performs well in good years and when times are tough. Get the first one right and the effects cascade through the institution. It ranked number one for best private banking services and secured more votes in a host of other global categories, from family offices to international clients, and high-net-worth (HNW) individuals to ESG/impact investing. It offers complex solutions from equity derivatives to FX, with a focus on the needs of wealthy clients. Add in punitive actions (in 2017, Boston Consulting Group put the fines paid by banks since the global financial crisis at $321 billion) and the result is sheer exhaustion. But technology will only get you so far. The combined group will employ 280 investment managers and oversee 44 billion in assets. In Euromoneys 18th annual private banking survey, UBS Global Wealth Management was again leader of the pack the gold standard for others to emulate. It also ranked number one in Spain, Poland and Mexico, second in the US, and fourth overall in North America. In a crisis situation, private banking clients have an opportunity to buy cut-price assets, says ABN Amros van der Hooft-Cheong. UBSs global wealth management (GWM) division accounted for 54.3% of group-wide operating profit and 81% of net interest income in 2018. It is also worth noting that Citis incoming chief executive Jane Fraser served as chief executive of its global private banking operations from 2009 to 2013. A far newer offering is the $400 million Natural Capital Fund, launched by Lombard Odier in November 2020. That is in addition to all the other stuff banks must do: modernize core systems, roll out new products and navigate a pandemic. We wouldnt buy an asset just because it is available at the right price.. There is no one-size-fits-all model for private banking, but a few all-purpose models are starting to emerge. This is why the upper reaches of private banking are such a crowded space. Philipp Wehle, chief executive, International Wealth Management at Credit Suisse, says: The UHNW client wants and deserves to get the best from multiple disciplines. Scale, he adds, gives you the profitability that is key to future investment. Our review period was a difficult one for private banking operations in the region, as it was worldwide: the fourth quarter wiped out huge chunks of revenues and assets for some international and local players, and it was a year that required sound individual advice for clients. It also walked away with the award for best private bank in Latin America. The Private Banking and Wealth Management Survey provides a qualitative review of the best services in private banking, by region and by areas of service. Wealth managers who fail to prepare for ESG are preparing to fail. They are always looking for returns, and there are opportunities now in real estate, in buying companies. To ABN Amros van der Hooft-Cheong, it makes sense for a bank to put all the wealth services it extends to its retail clients in a single place. In terms of the look and feel of the brand, its the same in each market, says the global head of Santander Wealth Management and Insurance. Take, for example, a Europe-based family office (FO) that wants to invest alongside a group of FOs in Latin America. A confluence of factors has converged to create some of the most profound pressures and changes on the industry for a generation. It helps to create synergy and to synthesize costs.. Last year, UBS created a new internal group called Global Family Office, a joint venture between GWM and investment banking, offering what it describes as holistic, institutionalized coverage for sophisticated family offices. Allied to this is a sense that the financial industry isnt ready for the radical change set to sweep across the sector. Second, the HNW universe is full of future UHNWs, notably in places like Asia, where Citi is strong. Some institutions are still figuring out how to make ESG work for them and for clients. He says Lombard Odier has been working on sustainability insights and investment expertise for 25 years looking at which opportunities are growing and expanding faster than anticipated, and if the current economic model has reached its limits of exploration., Odier says that in his view, the limits of our economic model are being reached. Not long ago, it was a supplementary income stream for banks important but hardly a valuation driver. A pilot programme in 2020 secured a 50% conversion rate in terms of matching products to clients. Amin Rajan, chief executive of UK-based financial advisory network Create Research, reckons we are entering an era where banks must offer what he calls hyper-personalized advice to rich clients. Gaillard at Banque Syz says the M&A cycle has only just begun. The Swiss bank stands apart from its peers. In the face of a pandemic that hit every economy hard, but also offered a form of financial salvation for the worlds best wealth managers courtesy of long periods of heightened volatility, UBS flourished. So, talent retention and grooming were key priorities for us, and thankfully we didnt lose a single member of staff.. In our case, we look to avoid offering our clients standard mass products.

In January this year it promoted Willem Sels to the position of global chief investment officer of private banking and wealth management.

Piyush [Gupta] is telling us: You guys should do more, says Joseph Poon, group head of DBS Private Bank in Singapore, referring to his chief executive. Wealth managers are pretty steady in good and bad times; it is quite a resilient business. When you merge private and retail banking, the private-banking relationship managers generally fear they will be retailized, says DBSs Poon. Driving this in part is inequality. Tom Naratil, co-president of global wealth management and president Americas at UBS, says wealth management is not just something the bank does, but the core of its DNA. Either way, the auction should be guaranteed a good turnout. Specialist wealth managers will endure. JPMorgans Gregson says the financial materiality of ESG factors is too big to ignore for clients and a fiduciary from both a risk and return perspective. Altratas report is a fascinating study of the worlds billionaires and finds the 1% now has its own 1%. A new unified wealth management unit called Citi Global Wealth pools its global consumer banking and institutional clients group teams, incorporating Citi Private Banking and Citi Personal Wealth Management. But others, their shareholders unable to resist a buyer with deeper pockets, will surely succumb. We always look for the right acquisition and we are always in the market for the right franchise with a quality client base.. The Spanish groups rise to private banking prominence didnt happen overnight. China will be a key focus of all big wealth managers, as banks look ahead to the opening up of the cross-border Wealth Management Connect scheme, and seek more ways to find new clients and tap additional sources of growth in Asias largest economy. The majority of wealth managers tip revenues to be higher in 2021 than they were in 2020. His last role was co-head of investor sales, which involved distributing global markets products to Citis equities, fixed income, currencies and commodities clients. Once a handy add-on to the financial model, private banking will increasingly drive income and activity in investment banking, not the other way round.

And third, new forms of technology allow big banks to crunch vast pools of data to offer personalized wealth services once the preserve of the wealthy and super-wealthy to mass- and super-affluents. They also offer strong client relationships with the potential for cross-referral between other lines of business.. [When] we go for an acquisition, the other party would have to have a similar DNA to ours, says Gaillard. Unsurprisingly, one of the first institutions to put it front and centre was Swiss. Wealth will narrow at the top end, as it settles into the hands of a select group of the super-rich. We can never forget that this remains a people business, he says. It is more evidence of how integral wealth management is to every part of a bank. It takes a lot of effort and time to put all those pieces together.. Here is how he got on. The Wall Street bank was drawn to the targets expertise in ESG investing and bespoke high-end wealth services. The UK banks new fund aims to deliver metaverse-themed investment opportunities to wealthy clients in Hong Kong and Singapore. BNP Paribass top private banker talks to Euromoney about his love of Brittanys rough seas, the power of ESG, and digitals ability to transform and improve every step of the client journey. Others expect the industry to struggle to match last years outsized profits, in part due to lower market volatility. If you dont do that, your clients will notice as this has become a core offering..

The big IBD [investment banking]-centric banks tend to trade at lower multiples and less than one times book. In general, private banking is less prone to crises, says Choy-Lin van der Hooft-Cheong, chief executive of ABN Amro MeesPierson, the Dutch lenders private bank. The first group comprises alpha specialists like the Swiss independents such as Lombard Odier and Julius Baer that invest in harmony with individual and institutional investors. Any bank that merges its teams would be wise to keep an eye out for internal discontent. We use cookies to provide a personalized site experience. Amin Rajan, chief executive of UK-based financial advisory network Create Research, carves the modern wealth industry into four basic operating types.