Restructuring: You shouldn’t be afraid to do it, even more than once if you have to, and even if your own family doesn’t understand it. Just ask John Riccitiello, chief executive of videogame publisher Electronic Arts. Here’s what he said at the Reuters Global Media Summit on Tuesday:
A year after the implosion of Lehman Brothers, private banking leaders will gather in Geneva, Boston, Tokyo and Singapore on October 5
Even the rich aren’t as well-off as they were a year ago but that’s not stopping the wealth management industry from focusing on what the future of private banking will look like after the economic downturn has passed. Click below to view my latest story:
Private bankers are guiding their rich clients into safer investments as financial market turmoil spreads, but when it comes to their own money they often take a different tack.
“I don’t have a very well diversified portfolio,” admits Timothy Vaill, chairman and chief executive officer of Boston Private Financial Holdings , which owns 15 independently operated financial services firms.
“The majority of my investments are in my own company,” he told this week’s Reuters Wealth Management Summit.
“And I invested additionally this quarter in my own company again because I really believe what we are doing is the right thing to do and it is a very strong company. And I’m there all day, every day, watching it like a hawk.”
David Lamere, chief executive of The Bank of New York Mellon’s wealth management unit, said his money is managed by his own company.
“I’m a big shareholder in BNY Mellon, and the rest of my assets is managed by our organization,” Lamere told the Reuters Summit. But his investments were “very diversified”, he added.
How much do they own?
According to Thomson Reuters data, Vaill owned 201,794 shares of Boston Private as of mid-August valued at about $1.8 million. As of Thursday afternoon, his stake would have retained its value at $1.8 million.
Vaill also said he does not borrow against his stock and does not invest in hedge funds.
Lamere owned 255,820 shares of Bank of New York Mellon as of May 9, valued then at about $11 million. As of Thursday afternoon, that was notionally valued at about $7.5 million.
Lamere said he was at a lunch on Sept. 18 when Bank of New York Mellon stock briefly fell 35 percent along with a slump in shares of other trust banks and asset managers.
“It all happened within about an hour in the middle of the day and I was in a lunch. I got called six times,” Lamere added.
Women have long bumped up against glass ceilings as they try to advance to upper level executive jobs.
According to research from the Harrison Group, a market research and strategy firm in Waterbury, Connecticut, when it comes to housework wealth men are dealing with barriers too, although it’s unclear where those barriers come from.
“Women handle the household’s employment, treasury and other functions” and are making real money for the family, said Jim Taylor, the group’s vice chairman who regularly researches how rich people behave.
Men work long hours at their jobs and at home they are now allowed only to care for lawns, shrubbery and maybe the swimming pool. That gives rise to the new term “the grass ceiling,” Taylor said at the Reuters Wealth Summit.
While the man or woman on the street cuts back on non-essential spending as the value of their home falls and they worry more about whether or not they will keep their job, so too multi-millionaires are feeling the pinch.
As global markets rallied over the past five years, talent in the private banking industry had become a heavily fought over commodity. Rain makers, top bankers and entire teams were poached constantly by rival organizations who offered top dollar for the move.
But according to Sebastian Dovey, managing partner of wealth management consultancy Scorpio Partnership, they need to spend less time moaning about it and more time working with regulators to communicate the benefits of the industry.