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Don’t Waste Scarce Training Resources: Developing a Business Building Focus in Your Training Strategy

Philip Marcovici

Baker & McKenzie

27 July 2006

Private banks, trust and insurance companies and others recognize the opportunities in today’s wealth management world, and many are investing in a business that produces, for banks, twice the profits of investment banking. Wealth management surveys confirm healthy growth rates and an increasingly demanding global clientele. The business of wealth management, however, may not be in quite as good shape as one would hope. Families want continuity in service, yet turnover within typical private banks continues to destroy valuable relationships. Families are seeking help with increasingly complex issues, ranging from consolidated reporting to understanding the real risks associated with their investments. Yet relationship managers, with an eye on their next job, have every incentive to avoid institutionalizing the client by introducing the family to specialists within the organization. Soft issues, such as helping the younger generation deal with succession and other matters, are of increasing importance, and can create multi-generational relationships. But are relationship managers equipped to deliver what families really need? Having the right internal resources may not be enough if relationship managers don’t make the right use of such resources. When private banks add wealth planners and others with legal and/or tax training, is this costly expertise being appropriately introduced to the right clients? It is clear that the needs of families are changing, with a massive shift from private banks simply relying on bank secrecy to solve all problems to a need for knowledge, and the application of this knowledge to each individual family, influencing the design and delivery of products and services private banks offer. A truly successful approach to wealth management requires teamwork, and the gathering, management and delivery of knowledge. Key to this, however, is to change how people work within private banks, and requires something other than just spending more money on training. It is the case that the wealth management industry spends woefully little on training, despite the increasing need for knowledge to meet the needs of global families. Worse is that money spent on training is often wasted, and does little to encourage the goal-oriented teamwork that leads to success. Effective training requires a strategy, and most importantly, the full involvement of management and staff. Having outsiders conduct training can be valuable, but more valuable is to require internal specialists to be heavily involved in both training and ongoing sharing of internal “tacit” knowledge. I have often been engaged by private banks to provide relationship manager and wealth planner training, and despite many requests from me, too often there is little strategic input into what messages I am to deliver to those being trained. There are many ways training and knowledge sharing can be implemented, but a few basic elements can make a real difference. Setting Objectives Management cannot just budget spending on training and move on. Key is to set objectives at the outset, which objectives can and should combine risk management with business development (and with business development focusing not only on “hunting” new clients, but on the retention and growth of existing clients). This requires a time commitment from management to understand what appropriate training objectives might be, the pros and cons of using outside training resources, and to then agree on a training concept that makes business sense. Involving Internal Staff in the Training Approach There are many excellent outside training resources available, and these are often of great benefit. But there is a risk that those being trained develop a sense of “what a good trainer – if only we had him or her in the bank, we would be a great success.” This is not the objective of an effective training program. Rather, an appropriate goal should be to reinforce a sense of confidence that the organization has deep knowledge and expertise, and that a team approach can make a real difference. An outside training resource should be a catalyst for encouraging internal experts to share their knowledge. They should not be a replacement for this knowledge sharing. Training Objectives Should be Clear A good approach is to implement a “development framework” for all levels of staff, with an indication of the skills one is expected to have at each stage in one’s career. In relation to each required skill, suggestions as to internal and external resources for developing the skill should be provided. This development framework can, for appropriate staff, such as trust experts, wealth planners and others, require a real effort in relation to training, knowledge building and sharing within the organization, with efforts made to provide resources that help “train the trainer”. A successful seminar type training session can provide a quick boost to a group of relationship managers, but seldom provides lasting effects. I like training that has a beginning, middle and an end, and a role for the person being trained to take in contributing to their own knowledge building. An approach that has worked for me is to follow a five-step formula to an effective training and knowledge-sharing program. Step One: Strategy and Course Design This needs the input of senior management, and the involvement of those who will be leading the strategic initiative behind the training to be undertaken. If the objective is to equip relationship managers with what they need to address the needs of today’s global families, and to minimize risk for the institution, the course might be a twelve month program that relationship managers have to apply to participate in, an approach designed to encourage real participation and real learning. As part of the strategic design, the course might include elements on marketing to wealthy families, how to avoid price being the main part of the discussion, and a number of other business issues or challenges apart from the tax and legal issues that will need to be covered. Having comprehensive training, perhaps also covering asset allocation and other investment issues can be an effective way to ensure that the training reflects the real world the relationship manager faces day-to-day. Step Two: Training the Trainer An effective training program involves considerable internal resources being available both for formal training sessions but more importantly as knowledge sharing and support resources. I always like to begin a training program with a series of “train-the-trainer” sessions designed to put in place an effective internal team that will support the achievement of the objectives of the overall strategy. Step Three: Initial Live Training of Relationship Managers The first part of an effective training program will involve live training, something that can be of varying lengths of time, from half a day to several days, depending on the objectives. I like mixing relationship managers with compliance staff; mixing seniority; involving representatives of business units such as mergers & acquisitions and derivatives where the bank involved covers these areas. Part of the objective is to help to integrate private banking with other areas, and to encourage cross selling and collaboration. This is not achieved if only new starters among relationship managers are attending the course. Step Four: A Middle – With Real Involvement of Those Being Trained The initial live sessions are only the start. The key to effective training is making those being trained actually put into action the things they are learning. I like providing case studies to small groups that are formed from a mix of those being trained, and the internal trainers from the organization involved. An effective work group might be made up of a senior and a junior relationship manager, a wealth planner and a member of the compliance team. Case studies should reflect the typical clients targeted by the bank involved, with issues to address that include business building elements as well as compliance and risk elements. The groups work on their case studies on their own time, and are provided with appropriate training and work tools from which they can conduct their research. In training I conduct, the middle is where those being trained can be provided with online training tools designed to cost-effectively transform a private bank’s staff. The idea is to demonstrate how team work and advance preparation can transform client presentations and hugely impact success in attracting and retaining assets under management. Step Five: An End, Which is Only Another Beginning After the agreed training period, which might be as long as 12 months, there is another live session or sessions at which the groups can present their case studies, as if presenting to a typical family served by the bank involved. The idea here is to permit both trainer and group feedback on presentation and selling skills, and on the substance of what is presented. What becomes clear to those involved is that working as a team is what works in a world of increasingly complexity. And now, the group trained are given work tools that permit them to use their new knowledge in achieving success with families. Knowledge gathering and sharing, and teamwork are reinforced through an appropriate follow-up program. Philip Marcovici is a partner of Baker & McKenzie Zurich, and is the chair of the Global Private Banking Steering Committee of Baker & McKenzie. Philip is also the CEO of LawInContext Pte.Ltd., the interactive knowledge and training venture created by Baker & McKenzie. Philip and his colleagues use the LawInContext Private Banking Helpdesk, which provides country-by-country information on the tax and legal needs of high net worth families in more than 30 countries, in training programs they run for banks and insurance companies around the world. The Private Banking Helpdesk also includes a suite of online training modules covering trusts, foundations, insurance policies, the EU Savings Directive, succession and other issues key to developing and maintaining valuable relationships with global families. More information available at www.lawincontext.com