Private bankers are focussing on helping their clients give away their money rather than indulge themselves with expensive treats like fine art and vintage wines.
“There have been various attempts across the industry on a sporadic basis over the last ten years to offer art advisory services and other assets such as wine buying,” said James Fleming, head of international business at Coutts, which lists Queen Elizabeth II among its clients.
“Gold is not an investment. It doesn’t pay you interest and it doesn’t increase wealth,” complained one investment advisor recently as he perused exploding client demand for the yellow metal.
“It’s just a cautious asset for scared investors,” he grumbled as he waved a chart showing prices had once again hit an all-time high.
With the German government hot on the heels of untaxed wealth stashed in Swiss bank accounts, and the U.K. government taking a tougher stance on clawing back bonuses, rich folks will likely head for the hills — or the Alps to be more precise — senior private banking executives said in Geneva.
“People are going to arbitrage different tax jurisdictions. We are going to see European clients moving to Switzerland, very large families,” said Alberto Valenzuela, deputy chief executive of Societe Generale Private Banking (Suisse) SA.
The credit crisis prompted a well-documented exodus of client money from risky assets into safer ones like government bonds, cash and gold.
But some rich clients of private banks would have preferred to take their money and run.
They were so rattled by the threat of financial instability to their wealth that they wanted the reassurance of having as much of it as possible in a form they could hold in their hands and count: banknotes.
Wavering confidence in the financial system led some to consider taking out their entire cash balance and holding it in banks’ vaults in physical notes, said James Fleming head of international business at British private banking blue-blood Coutts.
“That was a request on three or four occasions at the height of the crisis when everybody was concerned about the balance sheets of the banks generally, not us specifically,” Fleming said.
“We cautioned against holding cash in the vault,” he said, adding: “They didn’t do it.”