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The mysterious world of the private banker

Private banking is about receiving a personalized service or point of contact for families or entrepreneurs with larger amounts of investible money say from £5million up to many billions. It is also something that is difficult to replicate in retail banking because of the sheer cost and chemistry required. With discretion, attention to detail and exclusiveness as just some of the criteria, how do you pick the best private banker for you? Often a confusing, conflicting line up might be suggested and very little information is available to help guide you.

Often choosing a private banker and bank are synonymous. Private bankers are the first port of call, and the face of the business, and at its heart private banking is a relationship business. With that in mind, Citywealth invited a selection of the industry’s private bankers to share their leadership style, what makes their bank unique, and how they are adapting to and overcoming challenges. From embracing technology to deepen client relationships, to ensuring a diverse team who can not only communicate to clients from different nationalities but also crucially, understand their culture.

Citywealth’s April French-Furnell, explores this rarefied world with profiles from select individuals in private banking.

Dominic Tremlett

Managing director

Lombard Odier (Swiss)

How do you manage Lombard Odier?

I would describe my leadership style as inclusive and collaborative. It is important to me to lead by example, and to take a hands-on approach. I maintain close relationships with my clients, and still manage several key relationships, which means I share many of the same joys and trials as my team members.

New meets old

The private banking industry faces many challenges, as it has done for much of its centuries-long history. Today, we hear a lot about technological disruption: well-financed new companies, which lack the expensive legacy infrastructure of big banks, using web-based platforms to undercut traditional providers. At Lombard Odier, we think technology is a huge opportunity, rather than a danger. We recognise that this will be different for banks that have to position themselves and build a presence from scratch. But for over 25 years, we have invested heavily in cutting-edge banking infrastructure, hardware and software solutions, and we now successfully market our in-house platform to other banks. Nothing can replace human relationships, and the level of bespoke service that we devote to our clients – but the strength of our platform helps enrich and deepen our exchanges with them. And with about thirty percent of our staff working in technology jobs, our bankers are free to spend more time on building the relationships.

Sustainability rules

We believe that a global shift is transforming our economies and the companies that drive them, and that the Sustainability Revolution will be the most significant investment opportunity of our lifetime. Clients are very much aware of the overall sustainability challenge and are increasingly keen to engage with us on the topic. We always start by sharing with them our view that the transition to a low carbon and more sustainable economic model is accelerating. Most of them would typically agree with this. We are then confronted with two different types of clients:

Those who would like to integrate sustainability into their existing portfolios without substantially changing their investment process. For these clients, there are essentially three main avenues: more actively engaging with companies in their portfolios, changing their benchmark to sustainability benchmarks thus forcing their asset managers to adjust, or relying on ESG tools to make more bespoke adjustments to their portfolio. Our offering here is concentrated on the use of ESG tools. 

Those who are willing to take active bets that sustainability will drive returns and are willing to integrate high conviction investment strategies in their asset allocation. For these clients, we offer enhanced thematic strategies, more sophisticated sustainability strategies, and pure impact strategies

Why should people choose your private bank?

Many banks define themselves by their products, or their presence in one market or another. At Lombard Odier, we believe our philosophy and DNA are unique. We are wealth management specialists and have been a family business for seven generations. We are the oldest private bank in Geneva and have always had a focused business model. This means we are well-placed to advise our clients and help them protect and grow their wealth, as we have lived through forty financial crises so far. We are independently owned, which aligns our interests with those of our clients and gives us a long-term view. Our Partners can speak to them from one entrepreneur to another – and share many of the same concerns, for example on wealth transmission. As a firm, our philosophy is to ‘rethink everything,’ which means we strive to find creative solutions and fresh perspectives on existing problems. We have no external debt and are proud to have one of the highest capital ratios in the industry. We were among the first signatories of the United Nations Principles for Responsible Investment, and developed ESG investing methodology as early as 1997. When you put all of this together, our DNA and client offering becomes something unique.

Charlie Hoffman

Managing Director

HSBC Private Bank

How do you lead your team?

The quote by Margaret Wheatley really resonates with me, it says: “Leadership is a series of behaviours rather than a role for heroes.” I think this also very much chimes with HSBC and its core values and behaviours. 

I run a small team dedicated to some of the largest UHNW clients in the UK. My team is like a mini family office that brings the best of the bank globally to our clients’ doors.

Everyone is recognised for the vital role that they play in the team. I try to ensure my team feel informed, included in important decisions, and most of all, appreciated. For me, thanking people is very important.  It is so easy not to thank someone or recognise their contribution, and yet conversely so easy to do so if you make it a habit. 

As a team we have very high expectations of ourselves and others - attention to detail, responsiveness, vision and decisiveness are important to us. Our team motto has always been ‘Restless Momentum’ meaning we always strive to do better and do more. My advice to the team is to be humble, and let our achievements be viewed in terms of how our clients view us.

I am passionate that the ‘client voice’ is at the centre of everything we do, and so I believe that with this approach you cannot help but find success for clients and consequently for your team. 

What challenges are you facing in the industry?

Now more than ever, our clients are looking to us, to not only consider the potential performance of their investments, but to also help them truly understand the risks they are exposed to, and how they can be managed.

We strongly believe that the on-going advice we give our clients must be based on insightful analytics, and robust data. This being the case, embracing the right technology is a key focus area, and we continue to make substantial investments in technology to support growth and improve the client experience.

Last year we launched our new Prism Advisory proposition in Switzerland and France, which leverages BlackRock’s Aladdin Wealth Platform; bringing institutional level analysis to our private clients. This allows our Investment Counsellors to have much deeper conversations with the client; enabling more informed decision making; and providing strong ongoing monitoring of their portfolios.

We are looking to launch a similar offering in the UK in the next 12 months, in addition to developing a new digital offering for clients as we continue to invest in our infrastructure.

How have client demands and needs evolved?

In the UHNW space clients continue to become more fee conscious, more discerning, better networked and informed. They are also arguably increasingly more sophisticated as they can find information faster and more easily. This means that a bank or wealth manager needs to be very clear about what it considers to be unique in its offering.

Most clients want to find cheap beta and pay for alpha i.e. buy the market, but do it cheaply, and pay where you find real outperformance.  If you extrapolate that into our offering, we have a strong discretionary track record over many years using mainly passive trackers, whilst paying for performance with a strong alternatives offering. The HSBC Alternative Investments team, is one of the largest investors in private equity in the world.  This gives our Private Banking clients unique access to secondary and co-investment opportunities.  Our hedge fund team is one of the largest investors in third party funds in the world and with one of the largest secondary markets. 

Finally, we have strong lending capabilities, we have deep experience in terms of doing complex lending deals based on a wide array of assets and payment profiles and offer a full range of customised lending solutions.  

What makes your bank unique?

I believe our offering and our ethos make us unique.

As a large international bank operating across 64 countries and territories, we can connect clients to truly global opportunities. As a universal bank, we can also introduce clients who own or manage a business to HSBC’s corporate or investment bank to help them with M&A advisory, capital financing or commercial banking needs. Many clients also appreciate banking with one of the world’s largest and best capitalised financial services organisations.

While we can talk about our performance, our access, our reach, our personal banking, and our credit capability, none of this works without our people. Clients don’t like change; they like continuity, relationship and permanence.

We have a high proportion of long serving employees in Private Banking in the UK. This reflects the care and focus on our people and the positive environment we strive to achieve. I believe that happy employees make happy clients. That has to be a win win

James Penny

Managing director, Head of UK International Private Bank

Barclays Private Bank

Tell us about you and your leadership style

I would describe my leadership style as flexible – the breadth of the job is one of the best parts of my role. Every day I use different styles for different situations. My team is incredibly diverse, with bankers coming from thirty different countries and speaking twenty seven different languages. Our clients are equally diverse so having a good cultural understanding is essential. If I had to select just one leadership style, I would describe myself as a ‘coaching leader’. I have been in the industry for a very long time and I enjoy greatly developing people. It is hugely satisfying to watch people grow and one of the best business strategies in a talent-constrained industry.

What challenges are you facing?

There are always challenges in the industry, so I look for the opportunity in the challenge. Working in many of the world’s global growth markets – such as India or the Middle East- presents an extra set of challenges over and above the standard industry issues, you learn very quickly to think on your feet. I would say technology, increasing regulation and competition are the perennials we face.  We are investing heavily to ensure that our IT interfaces are world class, we keep abreast of developing global trends from regulators, we keep a close eye on the industry, and can change course quickly. That is how you stay in business.

What do clients ask for?

In a competitive marketplace, you need to adapt swiftly, look ahead and anticipate. Several years ago, we looked to incorporate ESG (Environmental, Social and Governance) attributes to achieve sustainable investments both from a client and a societal perspective. ESG investing allows you to invest in any sector or company while taking into consideration ESG factors to screen sustainable investments over time. Impact Investing seeks to generate financial returns as well as a positive social or environmental outcome, making a positive contribution to the world. At the beginning, this was something that we were raising with clients. Now clients are the ones coming to us because of our track record in this space. And whilst there are many differences in the investment objectives of the clients we cover all across the world, this is a topic which resonates everywhere.

Why would someone choose Barclays?

The great thing about working for Barclays is that it needs little introduction wherever you are in the world. We have been in business for over three hundred years and very few other banks have existed that long. This heritage and Barclays’ strategy – summarised as being a British universal bank- puts us in a strong niche. Also, I always say that our people are what makes us stand out. In today’s world, where much of the banking service iscommoditized, I am pleased to say that our people and way of doing business still makes a real difference to customers.

Richard Saunders

Managing Director (Channel Islands)

Butterfield

How do you lead your team?

Butterfield is a people-focused business with a flat organisational structure. I take an informal, transparent approach to leadership and like to foster a culture of open discussion about business issues as much as possible. I sit on the same floor as the team to ensure communication is easy and informal. We use our company’s intranet as a tool to encourage dialogue across all levels of the business. While we use it to highlight our achievements, challenges and objectives, it is also an effective channel for employees to submit feedback, questions and concerns to the senior management team, both at a local and Group level. We also hold annual town hall meetings, where all employees are invited to attend and are encouraged to submit questions anonymously to the management team. 

What challenges are you facing?

The COVID-19 outbreak is an unprecedented global concern challenging all organisations. We have enacted our business continuity plan and have established a dedicated team to monitor the COVID-19 situation, develop policies and plans, and communicate with our employees. From an industry perspective, this is the biggest challenge of its kind that we have ever had to face. It continually evolves each day.

Other than this immediate concern, our biggest opportunity this year was bringing our two Guernsey businesses together as one, following Butterfield’s acquisition of ABN AMRO (Channel Islands) in 2019. We have made great progress integrating the teams and we are now working on our policies, procedures and systems. We continue with business as usual for our clients, ensuring that all their needs are met and that we continue to offer an exemplary service to them.

What do private banking customers want?

The biggest evolution has been changes in technology, which have had a huge impact on how we interact. We live in a fast-paced world and we need to ensure our service can keep up with that. Thankfully, we have a dedicated team of IT developers, which means we can integrate with our clients’ systems wherever they are needed.

Why choose Butterfield?

We are one of the only dedicated offshore banks. We pride ourselves on offering a swift decision-making process. Being able to provide fast answers is an aspect of our business that many clients appreciate as it helps them with their planning. Efficient and timely account opening is also a priority for Butterfield as we look to make the process as seamless as possible. We are committed to the jurisdictions in which we operate and our aim is to create an environment where employees can join us and spend their career working for across our international business.