When the dust finally settles on the financial crisis, it won't be hard to spot one group of winners. The so-called boutique private banks, which stuck to their principles of thinking long-term and putting client interests first, are seeing an upsurge in business and, as a result, are sketching out suitably cautious plans for expansion.
'There is a strong sentiment against the bigger, integrated banks,' said Burkhard Varnholt, chief investment officer for Swiss-headquartered Bank Sarasin. 'Clients believe they have a natural bias towards selling their own products in order to drive revenues. But we are committed to being a pure-play private bank, specifically not a franchise, and our greatest asset in these challenging times is trust.'
Illustrating the point, he noted that Sarasin saw an acceleration in net inflows last year. Fiscal results showed the bank attracted more than US$13.1billion in net new money last year, with the larger proportion of that in the second half, when market turmoil was at its worst.
This suggests investors are indeed undertaking a 'flight to safety' and relearning the virtues of a more traditional approach to wealth management.
'Clients are focused on capital preservation; they are seeking safe, secure homes for their assets,' Mr Varnholt said. 'We have benefited from this because we are unencumbered by an investment bank, and clients can see that [we] are committed to the best for them, not what is best for the bank.'
Despite continuing economic uncertainty, he felt the environment gave private banks an opportunity to build relationships that could last for generations. The key is to offer an independent outlook, an open architecture approach, and to find the right product and right provider for each investor.