It’s hard to imagine that a banker who represents multimillionaires would be anything but professional - but a top executive at a leading global bank thinks that’s precisely the wealth management industry’s problem.

“There is so much mediocrity in the industry we have to raise the bar here,” said Gerard Aquilina, vice chairman of Barclays Wealth, at the Reuters Global Wealth Management Summit in Geneva.

    To Aquilina’s way of thinking, private bankers need the same “institutional rigor” as investment bankers in the way they operate. To this end the bank is looking to pursue only top-quality hires.

“Our strategy is not to be the hoover that comes and hires willy-nilly, we want to be much more selective,” said Aquilina — perhaps an ironic view given Barclays acquired thousands of investment bankers from the ashes of the fallen Lehman Brothers last year.

    But he and his colleagues are so sure of their position that he said they are working on developing MBA-level courses with some unnamed top universities on private banking, especially as they see fewer and fewer interns turning up their noses at the prospect of a three-month rotation in the private banking shop.

    They’re not alone, either. Alexander Classen, head of EMEA wealth management for Morgan Stanley, said his firm too was seeing more and more people turn up to recruiting presentations on college campuses, whereas at one time they would have summarily shunned the private bankers for the investment banking sessions.

Things may have changed since then, but private banks may still have their work cut out if they want to attract talent early. After all, as Aquilina himself admitted, ”There are not many people at eighteen who say, ‘Hey Dad, I want to be a private banker’. Most people just fall into it.”

  By Neil Chatterjee
    The U.S. has promised it will hunt down tax evaders.
    And it seems tax evaders are on the run.
    DBS bank, based in the growing offshore financial centre of
Singapore, told Reuters it had been approached by U.S. citizens
asking for its private banking services. But when told they would
have to sign U.S. tax declaration forms, the potential clients
disappeared.  
    Swiss banks also approached DBS on the hope they could
offload troublesome U.S. clients to a location that so far has
not been reached by the strong arms of Washington or Brussels.
    DBS said no thanks. In fact many private banks and boutique
advisors now seem to be avoiding U.S. clients.
    Will this spread to other nationalities, as governments
invest in tax spies and tax havens invest in white paint?
    Is this the end of offshore private private banking?

Private bankers still getting their ears bashed from clients enraged about massive portfolio losses now are chanting a new mantra.

    Murmur along with me, those seeking inner peace and appeased clients: the word is “holistic”.

Three years ago, before Lehman and Madoff shattered clients’ confidence, the soothing formula might have been “absolute returns” or “structured products”. No longer. 

    Bankers shooting French cuffs in Super 180 suits and obsessed with spread sheets now are seizing on a word redolent of green tea, acupuncture, crystals and the New Age. 

    “Holistic” bubbled up at least four times at the Reuters Global Wealth Management Summit as bankers and consultants in Singapore and Geneva outlined how to keep clients after the market meltdown. 

    But what does a word meaning that whole entities have an existence other than the sum of their parts have to do with rich people and the gnomes that mind their money?

    “Holistic” in bank-speak translates as handholding, face time and hustling to assure wary clients bankers are on the job. Mass mailings are out, daily phone calls are in.

    The results have yet to be seen but bankers hope their ”holistic” approach will prove to be more than the sum of its parts.

It is a little known fact that private bank Wegelin, Switzerland’s oldest bank is also active in the bars and restaurants business.

In its ‘Nonolet’ bars – a play on the Latin saying pecunia non olet (money doesn’t stink) - in St. Gallen and in Geneva, hedge fund managers and other financial professionals rub shoulders with other locals in the early evening over sparkling wine or champagne and snacks.

It may sound an odd sort of diversification, but Wegelin says there were forced to try a new line of business to ensure an upmarket crowd mingled on the ground floor of the Wegelin building.

“You cannot have a strange business there like a kebab shop,” said Wegelin partner Christian Raubach.

Wegelin was forced to launch a hostile takeover on a local bar which had attracted a lot of unruly drinkers near its St. Gallen branch office.

“We bought the bar, we fired the owners, and we put a nice Café in so we get a different crowd. The crowd that sits during the day drinking coffee and not vomiting drinking beer at night,” Raubach said.

The operation proved to be a success but is unlikely to develop in to a brand new business area.

“Everybody thinks Nonolet is probably very profitable..let me tell you private banking is a much better business,” Raubach says.

Those who tend to avoid posh restaurants in Geneva’s expensive Rue du Rhone district and famed private banks because they believe they are not rich enough may be given a second chance at century-old wealth manager Julius Baer.

The Swiss private bank, which has made its name thanks to the services it offers to the ultra-rich, believe its powerful high-end brand may be keeping potential clients away.

“It’s a bit like the nice chic restaurant on Rue du Rhone you walk by 10 times and think: “I am not so sure I can go in there, it might be a bit sophisticated,” Boris Collardi, Chief Executive of Bank Julius Baer, told the Reuters Wealth Management Summit in Geneva.

“And then you end up going in there and you have a wonderful meal.”

Private banking services at Julius Baer start at around 1 million Swiss francs.

Worth trying?

Even for an American who’s not wealthy, Geneva has a reputation as a global centre for wealth management - the place the world’s rich come to stash their money and (they hope) make it grow.

    But you don’t necessarily expect it to be so aggressive — after all, the rich tend to be demure when it comes to their banking.

    Imagine one reporter’s surprise, then, on arriving in the airport in Geneva and seeing bank ads everywhere. Think of the casino adds in Las Vegas’s McCarron Airport or the technology ads in San Jose’s Mineta Airport: it’s the exactly the same in Geneva, only with wealth managers.

    Look left - there’s UBS. Look right - there’s Julius Baer. Look up in the baggage queue - there’s a Swiss bank that emphasises a focus on the Arab world. A complete unscientific guesstimate suggests the display ads in the terminal run about 75 percent wealth management and 25 percent fine watches. (No surprise that every other storefront in the Ville Centre area of Geneva has watches on offer.)

    There is one plus to all of the bank ads in the airport for the less wealthy though. Tell your cab driver to head toward their addresses and you’re likely to find the city’s best cafes.

Spare a thought for the mega-rich.

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.

Javier Arus Castillo, general manager of Santander Private Banking International, explains.

“With the markets down, if you have lost $100 million and have $300 million left then that makes you think. Your life is not going to change but you start to feel a little concerned.

“The top people who have their own plane or have NetJet shares of $8 million and one-third of a jet are now saying ‘does it make sense that to fly from Latin America to Europe costs me $100,000? Maybe I should buy a first class ticket.’”

Puts our own worries in perspective.

The credit crisis may be hitting the man on the street hard, but spending by the “other half” on the latest super yacht or Damien Hirst work of art looks set to carry on relatively unaffected.

Super-wealthy individuals in commodity-rich areas such as Russia and the Middle East are reaping the benefits of a five-year boom in oil and other commodity prices.

Even though oil and commodity prices are now coming off sharply, the boom is still feeding through into their spending power, provided they haven’t done anything too risky with their cash in the meantime.

And it’s happening just when everyone else is cutting back on non-essentials.

“It’s like philosophy,” explains ING’s Deputy CEO of Private Banking Bernard Coucke.

“Philosophy always comes after a century of economic prosperity, never before. Spending always comes after prosperity, never before.”