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.

By Neil Chatterjee

Top private bankers are no different from the rest of us when it comes to looking after their money.

Some, such as Citigroup’s head of investments in Asia and ex-Lehman banker Debashish Dutta Gupta sold everything when his former employer went bust. Others held on and took the paper losses, before increasing their fixed income exposure and slowly edging back into equities this year.

Chris Meares, the head of HSBC’s private bank, is content with his conservative portfolio. To add some juice to his fixed income portfolio, he bought some Chinese A-shares, which were perhaps overvalued but he’s sure he’ll be happy in ten years.

His main regret? If only he had followed what he told clients — to buy a basket of ten banks at the start of the year “If I had, I wouldn’t be sitting here, I’d be very rich now. I gave the advice but I didn’t do it,” he told the Summit in Singapore.

What’s your biggest investment regret?

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 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:

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.

However the unprecedented financial crisis has dramatically changed the talent landscape, with rookie bankers facing a harder time to move up the ladder, said a Merrill Lynch executive.

“Musical chairs are not taking place. People with limited experience, with fewer assets are not today being seen to move in the manner that they did in 2006, 2007,” said Rahul Malhotra, head of Asia-Pacific Advisory for Merrill Lynch.

Malhotra also said that the pace of growth in the wealth management industry outstripped the pace of growth in its talent pool.

What do you think?