Mediolanum determined to pass on family values

Back in 1981, Italian insurance salesman Ennio Doris talked a then up-and coming businessman Silvio Berlusconi, later to become one of Italy’s richest men and prime minister, into buying a stake in his ‘virtual bank,’ Mediolanum, through the creation of a jointly controlled company, Programma Italia. Today Mr Berlusconi, still a major stakeholder in Mediolanum, has become one of Europe’s most controversial political leaders and media owners. Mr Doris on the other hand – the Veneto villager turned finance boss through promoting a family-based approach – has gone from strength to strength, with Mediolanum regularly outselling Italy’s largest banks when it comes to provision of investment products. He has been particularly adept at acting in times of crisis. Four hours after US terror attacks of September 11 2001, he made a presidential-style broadcast through his corporate television network, instructing advisers to visit every client in their homes and tell them to stay invested. While competitor banks suffered huge outflows during the uncertainty following the atrocities, existing clients handed over new money to Mediolanum. Similarly, when Lehman Brothers folded in 2008 and private clients across Europe were hit by exposure to their structured products, Mr Doris, together with his old friend Mr Berlusconi, spent €120m to personally bail out all those customers who had bought Mediolanum indexed-linked policies with Lehman bonds as the underlying investments, even though this was not required by the provisions of their policies. As a result, in 2009, Mediolanum’s 5,000 advisers, known in Italy as ‘promotori’, sold nearly €6bn worth of investment products, amounting to almost a third of total sales across the Italian industry. Over the years Mediolanum has introduced a series of innovations, including a suite of investment products, sub-advised by the likes of Aberdeen, Credit Suisse, JPMorgan and BlackRock. The latest innovation is a brand new corporate university, built at a cost of E50m, to train the bank’s entire workforce on allocation, product structures and sales techniques. Mr Doris has appointed his sharply-dressed, fast-talking 40-year-old son-in-law, Oscar Di Montigny as CEO of the institution, employing 53 staff and running 47 courses, opened in March 2009. What was the rationale behind the establishment of the corporate university and which institutions did you get your inspiration and ideas from? Oscar Di Montigny: The training department at Mediolanum had a short talk with Mr Doris three years ago about our learning requirements. He said: “I don’t know exactly what I want, but I want something legendary.” At that time, we were already offering a better quality of training than our main competitors, Banca Fideuram and Banca Generali. If you want to become a financial adviser, you have a better chance to achieve your goal with us. But after the state exam, in which our advisers enjoy a 76 per cent pass rate, many of them leave us, as other networks catch them, and by the time you know, it’s too late. So we kept wondering, how can we make our new programme legendary enough to keep them? We made the analysis of the training needs of our network and designed a dream. Then we went to visit places in the States where the dream was already a reality – the GE corporate campus, McDonalds’ Hamburger University, the Disney University in Florida – and matched our aspirations with what we saw on the trip. Our 5,000 advisers will all go through the university. From entering the company to leaving the company, they will be followed by the shadow of our training process. How will you use the training programme to help put across your complex ideas on contrarian asset allocation and product selection to your advisers and clients? ODM: We are focused on making the financial adviser feel important as they are at the centre of the network. If we look at Mediolanum, the very beginning was not Ennio Doris, but his family. All his ideas are based on his family experiences, on teachings from his father and mother and events in their village. These are simple values based on relationships, transparency and truth. Other companies can steal our people and our products, but not our values, our founders and our background. This is what makes the true difference. We prefer to start from a clean slate, by taking people who have never done this job before. We co-design our training offer with the sales network, with a hard offer of training on tools and products and a soft offer, examining the mind, emotions and how you work to produce a win-win situation for company, client and financial adviser. It is not a matter of which is the best product, but showing advisers how to put themselves in front of people. PWM: In the past, some of the world’s best known investment managers, including Goldman Sachs and State Street, have managed your clients’ funds. Is there a problem of these external sub-advisers getting preferential access to your bankers, who need as much knowledge as possible about the products they are selling to clients? ODM: We have a multi-fund with BlackRock, JP Morgan and other companies, who give us their products, but the big brand name we use is always Mediolanum. Officially, they can’t speak to our bankers and we write it into their contracts. Sometimes, they get through to them, but in our investment strategy, we can immediately see if somebody is selling too much of something. You need to diversify your markets and products. It’s not in our DNA to do just one thing. We remind people that they are out of the door if they breach our strategy. It’s not just that we are trying to defend our people from the influence of BlackRock or JP Morgan, but if you break this strategy, then it really doesn’t work. PWM: Mediolanum has a reputation among Italians as a very high pressure sales organisation. Will you try and change this perception through your training programme and how is your approach perceived by Italy’s regulators? ODM: The Mediolanum image is a hard-sell one among Italians, but any time we have someone meeting us and spending time with us, they change their minds. In future, we will also open the university to our clients, offering them financial education. Italians are very ignorant about finance and economics. I prefer to sit in front of an intelligent client with much stronger knowledge. That way, you can be soft instead of hard, as you can talk about things you both know and share. We were the only company which decided to refund losses from Lehman Brothers, where they were a counterparty to our structured products. We gave a message to the market that we would refund our clients down to the last Euro, which amounted to €120m. This came from the owners of the bank [the Doris and Berlusconi families.] The law didn’t force us to do this. Our advisers need to respect the rules of the state and we do double what we are asked to do by Banca D’Italia. This is something we pay a lot of attention to, as it could be a big problem for Mr Doris if somebody from the network was doing anything wrong. If we see $2,000 lying around in somebody’s house, then we need to tell Banca D’Italia. People who work for the state prosecutors, dealing with the mafia, come and talk to us to teach advisers the risks of doing something wrong.Also selling the right product to the wrong person turns into the wrong product. That’s why part of the fee which goes to our advisers is based on the quality of service they provide to the customer, not just on what is sold. PWM: There was a time when Mediolanum tried to distance itself from the Berlusconi name. With the current controversy surrounding the Prime Minister, can the Berlusconi link to Mediolanum put off some potential customers? ODM: Mr Doris and [Mr Berlusconi] are friends. They love each other. The link could be a reason to become a client in some cases. In others it might be a reason not to be a client. Maybe in Toscana, or a politically oriented ‘red’ region, like Emilia Romagna, it might change something, but it is marginal and only a few clients are gained or lost this way. We still cater for the average ‘Signor Rossi’, as we are a bank for the family. But in recent years we have changed a lot. Our private banking department is getting more and more high-level clients.

Oscar Di Montigny, Mediolanum