MyPrivateBanking Blog
Daily Comments on the World of Wealth Management

Posts Tagged ‘wealth manager’

You Want to Change your Wealth Manager ? Determine your Investor Personality First !

Tuesday, March 30th, 2010

Following the feature on MyPrivateBanking in Bloomberg we got a fairly high number of questions from private banking clients on how to find the right wealth manager for their needs and assets. Unanimously they stated that the are unhappy with their current wealth manager, however, somehow feel “they all are the same” and do not know where to start when looking for a new one.

We have different guides providing a systematic approach to tackle these challenge, but I would emphasize in particular one measure every client (also the ones that do not want to switch providers) should take as a first step: Determining his/her financial personality.

Before shopping around for a wealth manager every client has to become clear on his/her investment goals, risk tolerance and ability to cope with uncertainty. A mandatory, but too often skipped first step (unfortunately also by most wealth managers).  Only after such an honest and thorough self-assessment one has the right parameters for the selection of a wealth manager and portfolio strategy.

For determining your financial personality you can take our questionnaire. For determining the subsequent steps please refer to our various guides on how to choose the right wealth manager, cut the wealth management costs and determine the best asset allocation.


Almost 50% of UHNW Don’t Use Wealth Managers

Tuesday, January 19th, 2010

According to a recent report of the Spectrem Group the Ultra High Net Worth households (net worth of $5 million to $25 million) in the US kept last year a strong hand in the management of their assets: 47% of the 523 surveyed wealthy households stated to invest their assets without any professional help. 35% consult advisers, but make their own decisions. A mere 18% allow advisors to completely handle their portfolio management.

Stunning results, which most likely would have looked more in favor of the wealth managers two years ago.


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 ?


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.