Jason Rhodes

Rich prefer to give money away than enjoy art, wine?

Jason Rhodes — Wed, 06 Oct 2010 15:02:40 +0000

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.

“You seem to hear a lot about these services when they are being launched but then you never really hear much about them again.”

Following the example of high-profile, billionaire philanthropists like Bill Gates and Warren Buffett, there is a significant and growing demand for good advice on how the rich can return some of their wealth, private bankers told a Reuters summit in Geneva.

Coutts has one of the longest established philanthropy divisions among British private banks, a service more deeply established in U.S. wealth management.

“Our philanthropy forums, where we have very eminent from the philanthropic world are always incredibly well attended – they are oversubscribed,” said Fleming.

Fear factor driving gold higher

Jason Rhodes — Tue, 05 Oct 2010 16:13:12 +0000

“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.

Some anecdotal evidence suggests he may have a point.

Bankers at this week’s Reuters Private Banking Summit said investors were loading up on gold to the tune of some 7 to 10 percent of their portfolios.

The traditional motive of hedging against inflation was conspicuous by its absence.

The wealthy were buying gold because they were worried by the possibility of deflation, by a collapsing dollar or by the threat of prolonged financial turmoil.

Many were getting exposure through gold-backed exchange traded funds or gold stocks related stocks.

And one couple even bought a tonne of the stuff and drove off with it.

“If we did have a global financial meltdown, what do these people think they could actually do with the gold,” said the investment advisor.

As for the pair with a tonne of gold — worth well over $40 million at current prices — let’s hope they hid it somewhere safe.

You can’t avoid the taxman, but there may find a friendlier one in the Alps

Jason Rhodes — Tue, 05 Oct 2010 15:55:14 +0000

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.

JP Morgan, which specialises on clients with $20 million to invest, is hoping to tap into the pool of wealthy exiles.

“We are seeing an affluence of international people moving to Switzerland and we want to develop a practise that can serve families,” said Pablo Garnica, head of private banking for Europe, Middle East and Africa at JP Morgan.

Crisis-hit rich wanted cash they could count on

Jason Rhodes — Tue, 05 Oct 2010 15:22:27 +0000

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.”