presentations I held School of Business Administration / HEG-FER Fribourg, on wealth managemen. Overview, Advisory Process and the future of Wealth Management
1. V 1.0
Certificate of
Banking & Insurance
Banking
Wealth Management
$ CBI Prof. Dr. Hans Brunner
$ $
Professor for Banking and Finance
School of Business Administration Fribourg
November 2011
10.11.11 1
2. Wealth Management V 1.0
2 lessons @ 45 min.
Guest Speaker
Marc Lussy
objtec GmbH
Senior Manager More than 20 years experience in Banking
Schoenenbergstr. 100 Trader, Relationship / Portfolio Management and Project Manager
8820 Waedenswil ZH
marc.lussy@objtec.ch
marclussy@bluewin.ch
CBI Financial Markets – Prof. Dr. Hans Brunner 2
3. Wealth Management V 1.0
2 lessons @ 45 min.
Index of Contents
Overview
Roles and Products
Advisory Approach
From the Past to the Future
CBI Financial Markets – Prof. Dr. Hans Brunner 3
4. Wealth Management V 1.0
2 lessons @ 45 min.
Overview
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5. Wealth Management V 1.0
2 lessons @ 45 min.
Why do wealthy individuals need advice to manage their assets?
CBI Financial Markets – Prof. Dr. Hans Brunner 5
6. Wealth Management V 1.0
2 lessons @ 45 min.
For the same reasons ill people need a doctor
Expertise Experience
Hold clients
Diagnosis
hand
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7. Wealth Management V 1.0
2 lessons @ 45 min.
What is ment by Wealth Management?
Providing highly customized and sophisticated investment management and
financial planning services to wealthy individuals.
Which client groups are covered....and which not?
O Ultra High Networth Individuals
O Affluents
O High Networth Individuals
X Retail
X Institutionals
O Very High Networth Individuals
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8. Wealth Management V 1.0
2 lessons @ 45 min.
Classification of Clients by Wealth
Ultra
HNWI
$ 50 million
Very HNWI
$ 5 million
HNWI
$ 1 million
Affluent
$ 100´000
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9. Wealth Management V 1.0
2 lessons @ 45 min.
Classification of Clients by Residence
Onshore Offshore
Resident
Resident
Management
Management
of Assets
of Assets
assets are managed in country in assets are managed in country in
which owners of assets is resident which owner of assets is not resident
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10. Wealth Management V 1.0
2 lessons @ 45 min.
Types of banks in Wealth Management
Global banks with private banking units
Traditional offshore focused private banks
Traditional onshore focused private banks
Retail or affluent focused local banks
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11. Wealth Management V 1.0
2 lessons @ 45 min.
Market shares global AuM
(on- and offshore)
Total around 110 trillion USD
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2 lessons @ 45 min.
Market shares AuM offshore
Total around 7 trillion USD
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2 lessons @ 45 min.
Importance of Wealth Management
for a Global Bank
Core Results Credit Suisse by Division in Billions 2007 - 2010
10
2007 2008 2009 2010
5
0
Private Banking
Investment Banking
Asset Management
-5 Shared Services
-10
-15
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14. Wealth Management V 1.0
2 lessons @ 45 min.
Roles and Products
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15. Wealth Management V 1.0
2 lessons @ 45 min.
Roles in Wealth Management
Investment Portfolio
Consultant Manager
Relationship
Financial Tax
Manager
Planer Specialist
(RM)
Analyst Trader
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16. Wealth Management V 1.0
2 lessons @ 45 min.
Role Relationship Manager (RM)
Relationship managers are the customer service giants that own the
customers, know everything about them, manage that knowledge as an
asset, and are able to meet the full complement of financial needs.“
[Ernst & Young ]
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2 lessons @ 45 min.
Key Activities of an RM
Client retention
- Make sure that existing clients stay with the bank
Client selection
- Identify profitable clients
Client Acquisition
- Increase client base
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18. Wealth Management V 1.0
2 lessons @ 45 min.
Key skills and Know-how needed
to be a successful RM
Profound product know-how
Social Skills
Sales Skills
Knowledge of compliance regulations
Know-how IT Tools
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19. Wealth Management V 1.0
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Mandate types 1/3
Advisory Mandate
- Client makes investment decisions himself
- RM provides specialists expertise and current
market information
- Client follows the markets on a regular base
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20. Wealth Management V 1.0
2 lessons @ 45 min.
Mandate types 2/3
Trading / Investment Consulting Mandate
- Client makes investment decisions himself
- Short term approach
- Active Trading
- Market sentiment is more important than fundamentals
- Relationship Manger / Investment Consultant provides trading ideas on
a daily base
- Client follows the markets on a daily base
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21. Wealth Management V 1.0
2 lessons @ 45 min.
Mandate types 3/3
Discretionary Mandate
- Relationship / Portfolio Manager makes investment decisions
- Relationship Manager informs the client several times per year about
development of the portfolio
- Client does not need to follow the markets
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22. Wealth Management V 1.0
2 lessons @ 45 min.
Advisory Approach
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23. Wealth Management V 1.0
2 lessons @ 45 min.
Advisory Process
Analysis
Financial concept
Profile
Strategy
Implementation
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2 lessons @ 45 min.
Analysis
Investments
- Get an idea of size and asset types
Wealth creation
- Inflows such as earnings on assets, salaries, expected inheritance etc.
Liabilities
- Current and future financial obligations
Expenditures
- Living costs, regularly payments, tax payments etc
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25. Wealth Management V 1.0
2 lessons @ 45 min.
Financial concept
Channeling and visualization of gathered information including clients
asset and liabilities, annual income and annual spending
The financial concept must reflect the clients overall situation
Allows the RM to provide his client a personalized investment solution
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26. Wealth Management V 1.0
2 lessons @ 45 min.
Client profile 1/3
Adequate classification of the client in a client profile is a key success factor
of a successful advisory process
Risk ability
Risk profile
Risk tolerance
Client profile
Service profile
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2 lessons @ 45 min.
Client profile 2/3
Risk ability 20
18
It defines clients ability to 16
14
cope with financial losses 12
without a noticeable effect 10
8
Spalte C
on their standard of living 6
4
2
0
1 2 3 4 5 6 7 8 9
Risk tolerance 20
18
It defines how a client deals 16
emotionally with investment 14
12
risks 10
Spalte C
8
6
4
2
0
1 2 3 4 5 6 7 8 9
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2 lessons @ 45 min.
Client profile 3/3
Service profile
In order to suit different client requirements it is very important to
understand which services he needs and to define an according service
profile
Possible service profiles are:
Advisory mandate
Investment consulting
Discretionary mandates
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29. Wealth Management V 1.0
2 lessons @ 45 min.
Strategy
Risk profile Investment strategy
Low Fixed-income
Moderate Income-oriented
Medium Balanced
Enhanced Capital-gains-oriented
High Equities
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2 lessons @ 45 min.
Implementation
Implementation and maintenance of a strategy is an continuous process
Every strategy must be reviewed on a regular base
Risk control for every investment is a must
Implementation Control Adjustment
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2 lessons @ 45 min.
From the Past to the Future
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32. Wealth Management V 1.0
2 lessons @ 45 min.
Wealth Management – from the past to the future
Excellent Service
Personal Relation Performance
1990 2020
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2 lessons @ 45 min.
Wealth Management – from the past to the future
1990 2020
Expertise
Expertise
Experience
Experience
Diagnosis
Hold clients
hand
Hold clients
hand
Diagnosis
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34. Wealth Management V 1.0
2 lessons @ 45 min.
Wealth Management – the past
Strong banking secrecy
Main goal of a lot of clients was tax optimization
Performance of limited importance
Clients had limited access to market information (→ Newspaper)
Clients were loyal to the their bank
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35. Wealth Management V 1.0
2 lessons @ 45 min.
Wealth Management – the present . . .
Client
Well informed
Decreasing loyalty
Complex products
Competition Technology
New competitors Challenges Internet
Trading Platforms/ Client Retention Mobile
Discount-Broker Increase of Sales Potential e-commerce
Consolidation
Bank
Restructuring
Compliance / Legal
Higher Quality Standards
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36. Wealth Management V 1.0
2 lessons @ 45 min.
CRM Tools in Wealth Management 1/3
Operational CRM market operation
Analytical CRM
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37. Wealth Management V 1.0
2 lessons @ 45 min.
CRM Tools in Wealth Management 2/3
Issues Remarks Client data
- Get a new copy of passport due 25.5.11 05,1,11 Name
Became father
- Needs to sign risk disclosure due 31.12.11 Birthday
10,2,11
- Invite for golf turnament Would like to invest in commodities Riskprofile
15,3,11 Client since
Portfolio Plans to transfer more money
Monthly reports
20.4.11
Wife had car accident Hobbies
Performance Name wife
Number of Children
Responsibel RM
Relations with other clients
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38. Wealth Management V 1.0
2 lessons @ 45 min.
CRM Tools in Wealth Management 3/3
Where can a CRM add value?
Measure activities
Analysis of current situation
Identification of target clients
Manage sales activity
Quick access to client information
Consulting
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39. Wealth Management V 1.0
2 lessons @ 45 min.
. . . the future
?
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40. Wealth Management V 1.0
2 lessons @ 45 min.
Wealth Management . . . the future
Threats
Weaker banking secrecy
Regulations
Decreasing margins
Increasing costs
Increasing quality standards
The way forward
New markets (BRICS / Emerging Markets)
Increased effort for client retention
Increased tool support (CRM, product selection)
BPO (Business Process Outsourcing)
Mergers / take overs of smaller banks
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41. Wealth Management - Impressions V 1.0
2 lessons @ 45 min.
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