MyPrivateBanking Blog
Daily Comments on the World of Wealth Management

Archive for May, 2010

Liechtenstein: Net New Money Negative

Monday, May 31st, 2010

Liechtenstein had net money outflow of CHF  7 bn (USD 6.5 bn) in the year 2009 (source in German). However, overall assets under management increased by 17% to USD 250 bn. The negative net new money is most likely a consequence of the actions against offshore tax shelters taken by EU countries and the US. Liechtenstein’s pro-active policy to work with EU governments and the US authorities on the revision of double taxation agreements is probably one factor that money outflows could be contained to less than 3% of total assets. MyPrivateBanking has found that the outflow of money from Switzerland has probably been more severe in 2009.


How to Grill Your Money Man Subtly

Tuesday, May 25th, 2010

This is a great piece from Forbes on how to give all the important and critical questions to your wealth advisor. I particularly like the point on “bedside manners”:

“Just like picking a primary care physician, a compatible “bedside manor” is critical in establishing a long lasting relationship.  Does your prospective PM treat you with respect, encourage questions, and answer them in a way you can truly understand? Or does your advisor talk down to you?

If you want more background and even deeper suggestions for choosing your wealth adviser check our wealth guide on “Choosing the Right Wealth Manager“.


A New Generation of Wealth Management Clients?

Wednesday, May 19th, 2010

We have just released our new German client wealth management monitor and the most important finding is that Germans are a bit shaky with regard to their customer loyalty. 43% of the 300 surveyed wealthy clients are considering to switch their bank within the next six months. (3% say they have already made their mind up to switch and 40% say they think about switching). The interesting part is that the younger customers (under 35) and the wealthier ones (investable assets of more than 500,000 €) express an even higher likelihood to switch (>50%).

Only a minority of these clients will in reality change their bank and find a new provider. But it is still a small revolution in a country where, in the past, you would rather divorce your spouse than change your bank. For the wealth managers this new situation brings threats but also opportunities for new market entrants and banks with a strong marketing strategy. Overall, we feel that more competition should be good for the  client as quality and transparency increase. After all, consumers spend a lot of time to make decisions about a new car or a new mobile phone contract - why shouldn’t they spend more time and effort to think about their wealth management, a decision that is far more important?


The New German Gold Rush

Monday, May 17th, 2010

The German Financial Times (FTD) reports that Germans are ordering gold, especially gold coins, in unprecedented amounts. Frank Ziegler, head of precious metals at Bayern LB is quoted with the words “People buy Krugerrands like crazy”. But other coins are in high demand too: Münze Austria, which makes the “Wiener Philharmoniker” coins talks about “Panik-Käufe” (panic purchasing). The spread between coin gold and the gold market price has risen to 8% - usually it is 2%.

Most likely it is the German fear of inflation, reaching a fever pitch after the Greek bail-out, that drives gold sales. People still have the historic memory of the hyper-inflation 1923 and the currency reform 1949 which detroyed the paper savings of millions. Some market experts are fanning the flames: Quirin Bank’s (a private bank based in Berlin) chief strategist Claus Vogt said last week that “in 8-10 years our money [the Euro] will be worth only the half”. This statement implies an inflation rate of more than 5% starting in 2011.

However, we believe that this panic may be ill-informed. Gold is not a particular good inflation hedge and the price of gold may have already reached a near peak. Rick Bookstaber, well known risk expert and former hedge fund manager, who is presently an adviser to the SEC, has warned investors about the gold bubble on Germans should heed his advise - in the long-run, returns from gold have been near zero.


Will It Be Different This Time?

Tuesday, May 11th, 2010

Here comes my quote of the day by Ken Rogoff, well-known economist with some very accurate predictions about the financial crisis:

“Greece spent more than half the years since 1800 in default”

It seems to us that EU finance ministers possess an unhealthy dose of optimism to believe that this time it will be different (the costliest sentence in finance). But don’t worry and check our latest advice on the Greek disaster and what you should do with your portfolio. At least, it seems, the EU and the ECB have bought us all some time to readjust our assets.