Winning back trust is a must

The recent filing of civil fraud charges against Goldman Sachs by the US Securities and Exchange Commission is making more people question not only the safety of their investments but also the ethics of their private bankers. The past year was noteworthy for the scandals that affected high-net-worth investors, among them the collapse of some high-profile hedge funds and the jailing of US Ponzi scheme supremo Bernard Madoff - and the panicked liquidation of private banking assets by clients. According to the 2009 Capgemini World Wealth Report, more than a quarter of high-net-worth investors in the US offloaded assets due to a loss of trust and confidence. Rebuilding the trust of wealthy clients remains a top priority for private bankers. Those who can instil confidence are likely to remain top performers. But how are they going to achieve this? Joanna Chu Yuen-yi, head of North Asia at Barclays Wealth, identified two key areas related to winning back trust, particularly among Asia's multigenerational family businesses - the core of the region's private banking clients. 'First, there is a demand for more sophisticated solutions involving mergers and acquisitions capability, and corporate financial needs. This is an all-in-one solution requirement,' Chu said. 'Clients prefer private bankers who can provide them with a one-stop shop and advise not only on what would be required for their personal investment but also a corporate solution for their family business. A more international bank with worldwide capabilities and more cross-business functional capabilities is what customers are looking for now.' The second challenge was expanding the customer base while trying to win back trust over and above the performance of the portfolio, Chu said. 'When we talk about performance and the restoration of trust, we have to look at the individual performance of the bank, the banker and the portfolio.' The financial strength of the bank was critical, with clients looking for an institution that is stable, financially strong and having weathered the financial crisis well. The performance of the banker, on the other hand, depended on continuous training in investment products, handling of customer inquiries and close monitoring of the portfolio activities to facilitate a tailor-made customer service. Lastly, the performance of the portfolio depends very much on the quality of the investment advice. At Barclays Wealth, a global approach to service meant a global team that looked at macroeconomic strategy, which was translated for the different regions, Chu said. With the financial crisis over, many banks were focusing on organic growth through the acquisition of assets, from either new or existing clients. But the only effective way to expand their market share was to offer the best advisory services with more senior and experienced bankers. 'We're talking about seasoned and mature bankers with the kind of experience that would give them some reference to the past and how customers in previous crises weathered the various economic cycles,' Chu said. At Bank Sarasin, chief executive Enid Yip said its aim to be the most client-focused bank in the world had not wavered during the financial crisis, nor had its style of advisory. 'We have always concentrated on providing a classic private banking service offering quality advice from quality advisers,' she said. Part of this banking service is proffered through an open-architecture approach, which is increasingly attractive to Asia's high-net-worth investors because of their sophistication. 'These investors know when they are being sold. They want all the options. Because they are often multifiscal, multigenerational, and multijurisdictional, they require customised solutions, and these can't be provided by a mass-affluent service offering,' Yip said. Despite the high number of products available, this was not what private clients were looking for. They wanted a fully dedicated service, in which time is spent and value given, Yip added. 'Some banks are more focused on research, some on asset management, still others on private equity. And some of the big players have a natural bias towards providing their own products - this is part of their strategy to drive revenues. Our focus is private banking clients and that is critical to our credibility,' she said. The open-architecture approach followed by Bank Sarasin and others was becoming more popular among high-net-worth investors in Asia. It means providing the client with focused, tailor-made services model rather than a large-scale, sales-oriented product model. Clients can take advantage of what Yip called a 360-degree holistic approach corresponding to their needs. In other words, products are balanced and evaluated, and the right mix of products and providers is found for each client. 'It's a committed, client-focused approach, where our prime aim is to provide our clients with customised solutions matching their overall needs,' Yip said.