Time to freshen things up a little

The recently concluded evaluation process for PWM’s Global Private Banking Awards proved a fascinating exercise. It was a pleasure for me to work with a panel of expert judges, all known for their intellectual rigour and operational knowledge of the wealth management industry across Europe, the Middle East and Asia. One of the most striking factors was the similarity of the documents submitted by many leading wealth management groups to the panel. In terms of asset allocation, there remains a huge reliance on so-called ‘modern’ portfolio theory, even though much of this has been at least partially discredited by the recent crisis. True innovation in terms of products, asset allocation and customer service approaches is difficult to locate. It is clear from the on-going merger between leading French bank BNP Paribas and the formerly powerful Belgian stalwart Fortis that distribution strength and sales figures are the key metrics occupying the time and minds of wealth management bosses. If you have developed strong products for wealthy customers in one banking network and the clients are happy with them, why not adapt and sell them on to a new group of clients? There are also voices reminding us that performance and quality of investment process should not be forgotten during this focus on leveraging product provision and improving efficiency. But how an institution comes across and manages relationships with clients must be an important factor, particularly in the competitive mass affluent space. “Fortis had a huge cultural and social connection to its customers and employees. When you take that away, it could have an enormous impact,” warns David Haseler, head of branding agency Smith & Milton, which has done much work with both Axa, HSBC and retail organisations. A stale offering While much of the commercial world is moving to a new business model of emphasising locally sourced ingredients and “freshness” of both products and approach, he fears financial organisations are following a global template, offering a stale homogeneity across different regions, which risks alienating their clientele. The socially responsible, environmentally friendly approach can be a strong part of the move to “fresh” values and strategies, believes Mr Haseler, and can help improve and strengthen bankers’ relationships with clients. Swiss bank Sarasin, which had a major shake-up in its portfolio management system to make sure that all discretionary clients’ assets are screened according to environmental, social and governance principles, stands out among private banks in its attitude to innovation. It will be interesting to see how many competitors will emerge with their own ground-breaking approaches to both portfolio management and customer relationships during 2010.