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GUEST ARTICLE: Are You Really A Relevant Private Banker?

Aseem Arora

23 January 2017

Private banking as a career has changed considerably in recent years, and a person well qualified to talk about trends is Aseem Arora, who is president at Silverdale Capital, a Singapore-headquartered wealth management firm (see below for more details). The editors of this news service are pleased to share these insights; we do not necessarily agree with all opinions from guest contributors - so do please respond with your own views. This item is republished with the author's permission.

Just a few years back, if you were good at schmoozing the ultra-rich, inviting them to your bank’s “cultural” fun events, drowning them in fine wines and impressing them with your bank’s smart “portfolio allocation” tools along with tips on stock picking and leveraged fixed income portfolios, you could become a successful private banker. Not anymore!

Why?

Because, earlier the clients were first generation wealth builders who wanted to take every investment decision personally and highly valued their relationships with the bankers. They used to love being seen with their bankers and would feel proud being acknowledged by them in public. Yes, portfolio returns were important even then but not so much as now.

Fast forward to the current decade and the wealth management market has had a seismic shift in Asia. The reason is not only the cataclysmic global financial crisis but a number of underlying trends.

Wealth has been transferring at a very fast pace from the first generation to the second generation. While the first generation valued relationships, the current generation, which is usually Western educated, was born into the wealth created by the “dad” and hence does not have the pain and attachment to it like the dad. They look at the wealth more dispassionately and professionally, so give importance to the value a banker brings to the table, the investment returns he can generate consistently and not so much to the relationship. Call them more “business-like”!

Private banking clients of today have information at their fingertips, i.e., various financial information websites, mobile apps etc., so the private banker does not have the information arbitrage that he used to have earlier. Result - just having information for taking an investment decision is not important anymore. You really need to back up your advice with the investment thesis and that requires you to work much harder and get savvier yourself before you talk to your client.

Most of the financial products have become commoditised and every private bank sings the same tune of “open architecture”. So how is one bank or private banker better than the other? Today, the bigger allocation of a client’s wealth goes to that private banker who provides a “smart solution” and not a “smart product”. This means that simply being just a private banker will not get you the big money. You will need to really upgrade your skills and become a private banker, a quasi-corporate banker and a wealth structurer, all rolled into one, so you can provide the client financial solutions for his business, personal or family needs, and he then sees value in your relationship to be worth the big money that he can entrust to you.

Today’s private banking clients are more demanding and much more aggressive than their parents ever were. They are not fighting for a few more basis points in extra returns, they are actually looking for two-to-three times more return than their parents were used to. Such high returns, which although come through investments which are riskier in nature, are only possible through private equity, venture capital, off market deals and certain bespoke solutions, which may not be possible for every private bank to provide, especially the standalone private banks that are not part of universal banks.

If you are a private banker with such a private bank, then it is even more important that you think like an enterprising entrepreneur who would be willing to provide solutions to his clients through third party product/solution providers if these are not available in-house. If you want to have the biggest share of your client’s wallet then you need to make every effort to try and provide him with what he wants and not what you have!

If you want to remain a relevant private banker for your clients and be a successful one at that, you need to make the shift quickly. If not, given the low margins, high costs, and superfast technological and regulatory changes faced by private banks, you may be looking to become irrelevant sooner than you think!

About the author
Aseem Arora is president of Silverdale Capital (www.silverdalegroup.com), a Monetary Authority of Singapore-licensed asset management firm based in Singapore. The firm manages the award-winning Silverdale Bond Fund, Silverdale Fixed Income Fund, Silverdale India Equity Fund and several bespoke funds. Silverdale’s primary client base consists of private banks, independent asset managers, family offices, institutional and ultra-high net worth clients. The author has a career spanning 25 years establishing and running regional and global wealth management/private banking businesses at senior levels with institutions like Citibank, Merrill Lynch and Bank of Singapore. Aseem holds a MBA degree from Heriot Watt University, Edinburgh, Scotland and has been based in Singapore since 2000.