MyPrivateBanking Blog
Daily Comments on the World of Wealth Management

Archive for September, 2009

Au Revoir Offshore

Tuesday, September 29th, 2009

Our call of the end of offshore banking seems to materialize in a rapid pace. Yesterday BNP Parisbas, the biggest bank of France and one of the largest wealth managers worldwide, announced that if close all subsidiaries located in countries on the OECD’s “grey list” of nations which have not fully implemented global tax standards. Plan is, that already by end of the year the offices in Panama and the Bahamas should be closed.

“Conicidently” BNP made the announcement right after the G-20 meeting. It certainly will not take long and more bankers have to give-up their sunshine spots and will relocate to less exotic locations such as London, Madrid, Frankfurt, Zurich and New York….

 

Surprising Experiences When Looking for a Private Banker

Monday, September 28th, 2009

In our recent “Survey of Top European Private Banks” we were surprised about some of the respones and feedback we got during and after our visits with the advisers. Our favorites:

Blunt honesty: In two cases the advisers made pretty clear that they feel ok with their current employer, but neither could honestly tell the client who will own the bank two months from now nor what a change in ownership would mean for the client and his portfolio. Thumbs-up for honest answers.

Vast differences in size of proposals: From a one pager to a 47 page compendium. In respect to the proposal sizes private banks really differ.

Language mix-ups: We came across one company website that is only available in French and another that is offered in English, French and Italian, but not in German – the language with the largest population in Switzerland and Europe. But what really puzzled us was the one proposal written in an unclear mix of English and French. Maybe impressive on a restaurant menu, but certainly not for a client.

Madoff madness: The adviser of one major player promised to mail us the proposal once his bank has sorted out the “Madoff Mess”. Well, Mr. Madoff is waiting for his trial and we are still waiting for the proposal. The adviser of another bank that got heavily hit by the Madoff fraught just shrugged when asked about the consequences for the bank. He gave the trust winning comment: “No worries. The bank is not affected. It is only client’s assets”.

Have you had any strange experiences when talking with a private banker for the first time ?

 

USD 148,035.49

Wednesday, September 23rd, 2009

That is the amount a 22 year old college graduate in the US will have to pay over his lifespan for the 2008/09 government bank bailout. The calculation seems quite reasonable, the results are very unpleasant. From an economic point of view it’s much better to be old these days…

 

Sport Stars Score No Goals When Trying to Keep Wealth

Tuesday, September 22nd, 2009

“Within five years of retirement, an estimated 60% of former NBA players are broke and within two years of retirement, 78% of former NFL players have gone bankrupt or are under financial stress.” I am just wondering who is managing their money and whether they are so much different from all the other inexperienced wealthy individuals who fall prey to bad or ruthless advisers… Hat tip to Money Talks.

 

Europe Now No.1 Wealth Centre

Friday, September 18th, 2009

Today this interesting news release from BCG (the Boston Consulting Group, a leading strategy consulting firm) came across my desk: BCG  has just released a brand new study on Global Wealth 2009.

The most interesting point is that Europe has now overtaken the US as a wealth managment centre. Measured by Assets under Management (AuM) Europe is leading with USD 32.7 trillion whereas the US has only USD 29.3 in AuM.

Another interesting finding of the study is that pressure is mounting on offshore assets. A finding that mirrors the forecasts of MyPrivateBanking research. Switzerland is still the leading offshore centre with USD 1.8 trillion in AuM (28% market share).

The BCG study is another call to arms for the wealth management industry (particularly wealth managers in offshore jurisdictions) to transform its business model in order to meet the requirements of a rapidly changing business and regulatory environment.

 

Wealth Manager Kept a High Profit Margin in 2008

Tuesday, September 15th, 2009

Today the Boston Consulting Group released its annual report on Global Wealth. A summary you can find here and one particular quote got my attention:

“The wealth management industry has weathered the storm better than most other financial-services sectors, but it was hardly unscathed. Among the 124 institutions in BCG’s benchmarking study, the median pretax profit margin fell to 30.0 percent in 2008, down from 36.4 percent in 2007.

Performance was dampened by client behavior. Stung by losses and scandals, clients shifted their assets to basic, low-margin investments. “Dazzling product complexity is no longer seen as a positive attribute—if it ever really was,” said Bruce Holley, a BCG senior partner and a coauthor of the report. “It is unclear when—and to what extent—assets will migrate back to high-margin investments, but wealth managers cannot count on a strong resurgence of these products in the short term.””

Wow!! The average wealth management client loosing 30% to 40% of his assets in 2008 will be (or at least should be) stunned to learn that his banker operated with a 36,4%! profit margin in 2007 -  and even more that in the investors annus horribilis 2008 it still was around 30%. Another learning should be that these high profit margins are a direct result of high-margin (not to mix-up with high performance…) products.

In simple words: Wealth Managers in the last years made a lot of money from their clients by selling them complicated, costly products such as hedgefunds, certificates, absolute-return products. All of them completely failed in 2008. And if you read between the lines the wealth management industry would not mind to continue doing so, but for now have to be careful for since clients got suspicious. So better watch out and do not forget the lessons from the last year too early.

 

Tell Us What You Think & Earn Amazon Vouchers

Friday, September 11th, 2009

YOU are now invited to become one of our Wealth Panelists. MyPrivateBanking is setting up a panel to conduct regular surveys among clients of wealth management companies and private banks worldwide. It is confidential, it is secure AND it is lucrative. For your participation in three of our short surveys we will send you one Amazon.com voucher worth USD 15 . For those of you who would like to support the less fortunate - you can also donate your voucher to a large number of charities who have wish lists on Amazon.com. Please check als our panel terms.

 

Things You Should Never Ever Tell Your Banker

Wednesday, September 9th, 2009

Your total net value: Leave your banker in the dark about your total net value. You are treated much better as a client when your banker imagines you being even richer than you are.

Your past investment mistakes: Everybody makes investment mistakes but why should you admit them to the guy who has definitely made more investment mistakes in his career?

When you are unsatisfied with your other banks or wealth managers: He might feel too good about himself (even though he is not good enough).

That you feel good about how little fees you pay: Most wealth managers are always on the lookout for reasons to increase visible and invisible fees. Avoid to give them any.

When you expect a liquidity event: Your phone will not stop ringing. Nothing makes a wealth manager more aggressive than the prospect of net new money because big bonuses are waiting.

That he is your only banker: If that was the case, you should hurry to find another one anyway.

That you are happy about the performance: Except if he is such an exceptional investor who has consistently beaten the market for many years. Then hire him.

 

My Top 3 ETF Tools

Monday, September 7th, 2009

Last Friday I promised to check through all the ETF tools listed here. I did. And here is my very subjective Top-3-list:

Nr. 3: The ETF-map by finviz.com. Looks extremely cool and is extremely informative. Though it is somewhat US-centric.

Nr.2: The ETF-screen by etfscreen.com. You can screen ETFs by an unmatched multitude of criteria (I counted 38!). Not extremely user friendly, however - you have to spend some time understanding all the acronyms.

Nr.1: The Bloomberg ETF screener. Relatively simple but includes ETFs listed in 20 countries. Great global reach!

 

Top 50 Free Online ETF Tools

Friday, September 4th, 2009

Attention all index investors! Today I came across a page with a very valuable list of online ETF tools. On first glance, it seems that most of the tools are focused on the US market. I will check them over the weekend and condense a list of my favourites with some European additions.

 
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