The bold, the brilliant and the brave

As we examine the past 20 years since launching PWM, it is worth re-visiting one of the recurring debates of modern times. Is history, as suggested by Russian revolution-era philosopher Georgi Plekhanov, shaped more by individuals than immovable trends?

Two decades may pass in the blink of an eye for financial industry veterans, but it is long enough to witness seismic change.

Our first issue came off the presses amid global uncertainty,  coinciding with horrific attacks on the US by Al-Qaeda. Over the following years, we commented on wars in the Middle East and Europe, a global financial crisis, society’s technological transformation, the rise of China and other developing markets, climate change, the social revolution, populism, an attempted coup in Washington, and more recently, the Covid public health emergency. These have all significantly influenced realignment of private banking and asset management.

But certain personalities’ outsized influence on direction of wealth and asset management deserves to be highlighted. We categorise these as leaders or representatives of several classes of practitioners, namely the ‘bold’, the ‘brave’ and the ‘brilliant’.

Emerging market pioneer

Heading the ‘boldness’ category is a legendary investor, also famed for iconic baldness, whose funds have wowed private banks since before the turn of the millennium. 

The ‘Third World’ label, believed Dr Mark Mobius, insulted millions working in the globe’s poorer economies, and deterred potential investors. His brainwave involved repackaging regions into a more palatable sector of ‘emerging markets’.

The phrase exuded excitement, growth and reconstruction, all badly lacking in the staid investment industry, focused on long-term US equity and bond positions. When he arrived at Templeton’s emerging markets team in 1987, given just $100m to invest, he was described by colleagues as a prickly persona, with unremarkable performance numbers.

Yet he decided to go boldly into markets across Asia, Eastern Europe and Latin America, swept up in revolutions, military coups and currency collapses. His relentless schedule of site visits ensured each factory produced exactly what its owners claimed. As he criss-crossed the globe, Dr Mobius regularly faced off with authoritarian dictators and organised criminals, whose interests his funds threatened.

Templeton’s marketing teams quickly exploited his image of a mythical, white-suited saviour, particularly in superstitious Cantonese culture, where appearance of a bald man signals good luck to investors and gamblers. At the height of his fame in 2014, Dr Mobius managed close to $50bn as chairman of the Templeton Emerging Markets Group. Today, in his mid-80s, he runs London-based funds boutique, Mobius Capital Partners.

His personal brand was hugely important to private banks distributing his products. These banks were not exactly hubs of investment expertise. When we launched PWM, they were better-known as homes for money spirited away from one-party states by oligarchs and political entrepreneurs. 

The courage to change

That’s why we must celebrate those characters brave enough to confront and transform this anachronistic culture. This was about being ‘brave’ rather than bold, because courageous steps could easily backfire. 

When Juerg Zeltner, European wealth management boss at UBS, stood up at PWM’s annual summit in Geneva during the global crisis of 2008 to apologise, eloquently and humbly, on behalf of the entire private banking industry, for over-selling inappropriate structured products, that took real guts.

He also bravely painted a different future for UBS as an expert portfolio manager, setting an example for other Swiss banks. This bravery resurfaced in negotiations of a $780m ‘deferred prosecution’ agreement with US authorities in 2009, defying Swiss voices who said the industry should not be bullied. By negotiating before others could form a survival plan, Mr Zeltner’s courage saved and redefined Swiss private banking.

It also shaped today’s UBS into the world’s pre-eminent wealth management group. Sadly Mr Zeltner is no longer with us. His memory should, however, live long amid private banks.

Strategic view

Many of these institutions had a questionable track record. Some bosses at Citi, for instance, were more guilty of ‘chutzpah’ than famed for bravery or boldness. 

The work of private banking leader Jane Fraser, was, however, exceptional. While Ms Fraser’s main skills centred on her ‘brilliant’, strategic decision making, the communication of these strategies across offices in the US, Europe and Asia was also first class. Before her appointment to run Citi’s private bank in 2009, she was involved in selling 20 of the US bank’s prized assets, including its fund management arm, bringing in $9bn.

But the Scotswoman never blindly followed orders. She preferred to push top management hard to keep some of the units she was supposed to sell. In this way, she maintained Citi’s expertise in private equity and hedge funds, which other banks struggled to incorporate post-crisis.

She also encouraged co-operation between different arms of Citi, where others failed. Well before the height of the high-tech revolution, Ms Fraser drew together data and information held by separate strands of the business. This helped clients across Asia make better investment decisions, rather than defecting to regional banks.

As a former McKinsey consultant, Ms Fraser had the insight to restructure unprofitable operations, while maintaining the banks’ 30:1 client to adviser ratio. She also repositioned Citi away from high-commission brokerage to long-term client relationships, during a time when the brand was severely compromised by the financial crisis. In the following period, Ms Fraser out-strategised the opposition and now runs the entire bank.

These are just three examples of key individuals turning their crises into opportunities, as Winston Churchill suggested, the hallmark of true leadership. Twenty years on, in the Covid era, with tech giants increasingly challenging wealth managers for their business, further injections of boldness, bravery and brilliance are still badly needed.