PRIVATE BANKER

June 2015 Issue 321 www.privatebankerinternational.com

Champion's league Honouring winners of the PBI Awards: London 2015

• PBI Conference: London 2015 • World Wealth Report 2015 • Country survey: UK • PBI Greater China Awards: Winners

PBI 320.indd 1 03/07/2015 10:21:26 Intelligent Environments in association with Banker International, Cards International and Electronic Payments International

Join thousands of professionals who have joined The Digital Banking Club to understand and discuss the future of mobile and online financial services

Join now and receive* 10% discount on delegate passes for Europe’s leading conferences and awards: 10% discount on subscriptions to leading global briefing services: Retail Banker International Cards International Electronic Payments International Private Banker International Leasing Life 10% discount on subscriptions to intelligence Join the club for free services: Cards & Payments Intelligence Center www.thedigitalbankingclub.com Retail Banking Intelligence Center WealthInsight For more information please email PLUS 10% discount on expert research reports and research consultancy [email protected] mentioning MEMBER OFFER in the subject line

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PBI 320.indd 2 03/07/2015 10:21:26 DBCad draft 2.indd 1 30/05/2014 11:22:43 Private Banker International

EDITOR’S LETTER ANALYSIS

Intelligent Environments in association with Retail Banker International, CONTENTS Wake up and smell the competition Cards International and Electronic Payments International NEWS e it while attending any industry event tile grounds for these firms, as there is a large 2,10: NEWS DIGEST or interviewing senior private banking mass-affluent population that traditional pri- 3: NEWS BRIEFS executives – the one topic of conversa- vate won’t service. There is a gap in the Join thousands of financial services professionals who have joined The Digital Banking 9: PBI AWARDS: LONDON 2015 - WINNERS tion that continues to dominate is the market that robo-advisors seem to be filling. B However, these automated advisory services importance of digitisation in wealth manage- Club to understand and discuss the future of mobile and online financial services 9: PBI GREATER CHINA AWARDS 2015 - WINNERS ment. The importance of real-time customer cannot be ignored in Europe either, with the servicing, access to granular data and a range UK itself having witnessed the rise of players 16: TECHNOLOGY UPDATE of effective digital tools that empower both such as Nutmeg over the last three years. The 17: REGULATION ROUND-UP relationship managers as well as clients is WWR findings also show that Asia Pacific 19: PEOPLE MOVES paramount. HNWIs (excluding Japan) actually had the At the PBI Conference: London 2015 earlier highest propensity to use automated services ANALYSIS in June (pgs 4-8) the technology and digital at 76.3%, while only 19.3% of the wealth trends focus prevailed the entire day and came managers in the region assessed so. 3: WEALTHINSIGHT up in one way or another during all four ses- It is also clear that it is not simply the mil- 18: LIQUIDITY PROFILES sions. lennials who want to use these digital entrants Conversations about digitisation and auto- and HNWIs who have existing private - FEATURE mation do lead to talks about the rise of the ing relationships are also keen to try them out. automated advisory services or robo-advisors. EY's recent report, Advice goes virtual: how 4-8: PBI CONFERENCE: LONDON 2015 The private banking and wealth management new digital investment services are changing The 2nd annual PBI Conference: London community is experiencing the growth of these the wealth management landscape, also reiter- 2015 saw some of the leading experts in the private banking and wealth management alternative players that allow wealthy individ- ates that digital entrants cannot be ignored by industry come together on 3 June. uals a fast, low-cost, DIY approach towards traditional players. Distinguished industry experts discussed investing and managing their portfolios. The WWR recommends a hybrid approach a wide range of pivotal topics, including UK’s position as a global wealth hub and Despite their increasing popularity, the in the future to allow both digitised servicing the integration of digital services in the standard answer one hears from traditional opportunities while having a wealth manager industry. John Schaffer provides an overview wealth managers is that these services are good at the core of the relationship. Some firms are options for wealthy clients, but they pose as paying attention. Hargreaves Lansdown, for 12-13: WORLD WEALTH REPORT 2015 ‘no real competition’, and that there is no sub- instance, plans to launch its own online advi- Join now and receive* The year 2014 has been a modest one for growth, globally, in the number of high net stitute to human contact. Fair enough. sory service and move towards a hybrid busi- 10% discount on delegate passes for Europe’s leading conferences and awards: worth individuals and their wealth. The latest However, the recent World Wealth Report ness model. World Wealth Report 2015, by Capgemini 2015 (pgs 12,13) by Capgemini and Royal However, the robo-advisory community and , provides details Bank of Canada reveals some interesting should motivate wealth managers to stay 10% discount on subscriptions to leading global briefing services: around geographical performances, behavioural shifts as well as investment insights about the rise of automated advisory on top of their game. The stark differences Retail Banker International inclinations and trends. Meghna Mukerjee solutions and how they are being perceived between HNWIs’ propensity to use auto - explores the findings Cards International by both wealth managers and high net worth mated advisory services and wealth managers’ individuals (HNWIs). assessment of the same – as shown through the Electronic Payments International COUNTRY SURVEY Clearly, wealth managers across the world WWR findings – should come as a wakeup call are grossly underestimating the lure of auto- for wealth managers across the globe, espe- Private Banker International 15: UK mated advisory solutions as well as HNWIs’ cially those that have been brushing digital Leasing Life The number of HNWIs continues to grow in the UK, providing a captive market for the inclinations towards using them. entrants off with that familiar ‘no real compe- private banking and wealth management Companies such as Wealthfront and SigFig tition’ statement. 10% discount on subscriptions to intelligence Join the club for free industry. Amidst tighter regulatory in the US have made big headways. The robo- controls, the UK is still amongst the most advisory concept mainly emerged out of Sili- Meghna Mukerjee services: favourable locations for the wealthy to seek [email protected] www.thedigitalbankingclub.com management of their assets. John Schaffer con Valley entrepreneurship and the US is fer- Cards & Payments Intelligence Center looks further into statistics provided by the Retail Banking Intelligence Center WealthInsight database WealthInsight COMMENT For more information please email PLUS 10% discount on expert research reports and 20: WITHERS CONSULTING GROUP Ken McCracken, founder and consultant at research consultancy Withers Consulting Group, comments on [email protected] succession planning Follow Private Banker International mentioning MEMBER OFFER in the subject line

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PBI 320.indd 1 03/07/2015 10:21:28 DBCad draft 2.indd 1 30/05/2014 11:22:43 Private Banker International NEWS DIGEST

STRATEGY the FOX Business Network has adding advice around the recent region who might not cross the Swiss bank Reyl & reported. pension changes.” Victoria Harbor to invest. Cie looking to double Had the deal materialised, UBS Wealth Management assets by 2020 it would have lead to the PRODUCTS AND SERVICES regional market manager for addition of over 7,000 brokers New British private , Jean-Claude Swiss private lender Reyl & to , creating a bank Hampden & Co Humair, said: "For us it's more Cie is planning to expand its wealth management firm larger opens for business of a strategic decision to go international footprint and than Bank of America's to to focus on the increase in its assets under Lynch. Hampden & Co, the UK's first entrepreneur and to show this management by 50-100% over UBS has not declared that its new in 30 years, important group of prospective the next five years, according to brokerage division is for sale, has formally commenced busi- clients that we want to come Reuters. but talks have been going on ness in Edinburgh and London. your way." "We are working on a 2016- as the Swiss bank is looking The private bank was The bank will look to hire 2020 plan which involves to overhaul and trim its US established in 2010 by former new client advisers besides getting our assets under operations. chairman of Adam & Company to re-locating existing staff management significantly Ray Entwistle, under the name to support its presence in north of 15bn, so we still have STRATEGY Scoban in 2010. It was renamed Kowloon. strong ambitions," Reyl & Cie Former Brewin in April following specialist UBS will also hire around CEO Francois Reyl said in Dolphin and Barclays insurer Hampden Group's four wealth planners for the an interview for the Reuters Wealth executives acquisition of a substantial new office to advice clients on Wealth Management Summit. stake. long term needs such as life "Hopefully we can grow the launch new wealth Hampden & Co received insurance, succession planning business north of 15bn or 20bn firm final regulatory approvals at and philanthropy. maybe." the beginning of June 2015 Humair said: "Our intention The bank now is planning to 's three former after being granted a banking is to move 50 people to expand in Asia and the US, and directors and Barclays Wealth's licence in March 2015. Kowloon when we open in the is gearing up to launch in Dubai former head of strategy and The new venture has first quarter next year, of which soon. proposition have opened a new obtained a launch capital about 30 [are] client advisers.” At the end of 2014, the bank investment boutique, called worth £50m from over 250 of managed CHF10.7 billion Brighton Capital Management. its shareholders. PRODUCTS AND SERVICES ($11.5bn), but that slipped The firm has been launched Hampden, which will employ New service launches by 9% on 15 January 2015, by David Pegler, Ewen more than 50 bankers and in Singapore when the Swiss National Bank Emmerson, and Francis Jarman, support staff, will be run by announced a huge surge in the who were earlier with Brewin Graeme Hartop, ex-CEO of findaWEALTHMANAGER. value of the currency. However, Dolphin, and Tim O'Connor Scottish Widows Bank. com, an online matching it has since recovered and from Barclays Wealth, fundweb. "The timing for launch is ideal service that helps high net grown again. co.uk has reported. as we continue to experience worth individuals (HNWIs) The move comes as the bank The boutique will an improved economic find wealth managers, has looks to diversify further away offer bespoke investment environment, strong client opened its doors to clients in from its super-wealthy advisory management as well as demand and a favourable Singapore. business. financial planning services to competitive landscape, as a findaWEALTHMANAGER. According to Reyl, the bank's private clients and institutions large number of the existing com, which was launched target private banking client is a in the south of England. banks continue to deal with in 2012 in UK, will provide first or second generation cross- Regulatory and compliance significant legacy issues," investors with a free method border entrepreneur still in the functions, along with an Hartop remarked. of finding the right wealth "wealth creation phase". administration platform, will manager for their profile be offered by Raymond James STRATEGY and needs besides offering M&A Investment Services. UBS plas to expand institutions an effective way to Morgan Stanley rules The new firm will allow presence in Hong reach out to the investors. out acquisition of UBS investments across a range of Kong Wealth managers joining brokerage arm products such as direct equities, will have to complete a detailed fixed income, investment UBS is planning to expand questionnaire regarding their Morgan Stanley has dropped trusts, funds, exchange traded its presence in Hong Kong by offering. the idea of buying UBS Group's products as well as structured extending the footprint of its The website will match brokerage arm, concluding that notes. wealth management business clients with the wealth the wealth management arm Pegler said: "Our main in Kowloon and the New managers based on a would be too costly. focus at Brighton Capital Territories. proprietary algorithm that After a series of internal Management is to offer a UBS's private bank has signed will generate two-way matches discussions, Morgan Stanley boutique choice of family office a lease agreement to open a new between the high net worth CEO James Gorman has solutions, investment and office at One in the individuals using the service ruled out a purchase as the fiduciary services. But we will neighborhood and the wealth managers that group doesn't feel need to add also be able to offer broader of Kowloon in order to attract comprise the panel of available significant numbers of brokers, services for our clients such as wealthy entrepreneurs in the institutions. <

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PBI 320.indd 2 03/07/2015 10:21:28 Private Banker International BRIEFS NEWS

RESEARCH Investment banks’ ROE declining due to regulation, fines and litigation: EY

Return on equity (ROE) for ment banks have found them- EY Americas Capital Mar- price and manage risk more key investment banks has seen selves in protect-and-survive kets operations leader Roy effectively. a drop from 20% in 2006 to mode for the past several years, Choudhury remarked: "To deal This has led to competition below 8% in 2014, making it making incremental changes to with a challenging ROE envi- intensifying, with boutiques important for firms to imple - fix issues around profitability, ronment, investment banks will advising on 22% of global ment changes that can help productivity, culture, controls need to reassess their customer, M&A deals in 2014, as against them return to low double-digit and trust. product and service profitabil- 16% in 2007. profitability and offset impacts These piecemeal reforms ity, factoring in a range of mar- To cope in this competitive of higher costs, control failures have done little to rebuild ket and regulatory constraints. landscape, EY says banks need and increasing competition, the industry, and only a com - Cost-optimization in Capital to identify their core clients and according to a report by EY. prehensive, transformative Markets - Operations likely their needs, upgrade systems The report, titled Transform- approach will help investment will be an area of heightened to monitor client satisfaction, ing investment banks 2015, banks thrive again." focus for banks, and firms are and improve client experience, finds that aggregate costs for According to estimates by EY, in the early stages of assess - upgrade and integrate legacy major investment banks surged a legal entity costs a bank up to ing utility-type solutions to systems, and increase invest- 25% to $185bn in 2014 from $600,000 per year. improve cost efficiency in secu- ment in enhancing data. $148bn in 2005, driven by reg- The report says that simplify- rities operations. According to EY, banks ulatory constraints, litigation, ing business, rebalancing focus "Taken together, these chang- also need to implement salary fines and trading losses due to across portfolios, exiting busi- es will help enhance efficiency, model optimisation, operating control failures. nesses that are non-core or low productivity and profitability." model efficiency and supply EY Banking & Capital Mar- performance, and legal entity EY also finds that clients are chain enhancements to free kets global lead analyst, direc- rationalization could help now spreading business across up staff expenses to reinvest in tor Steven Lewis said: "Invest- banks reap significant savings. various firms to get the best technology. <

RESEARCH Global compliance market spend to reach $2.592bn in 2015: TABB

Global compliance market spend and compliance (GRC) data. tighter timeframes. Many firms for best-of-breed solutions as will rise 7.5% to 8% in 2015, "Dodd Frank, the Volcker rule unfortunately lack systems or required, and does not force the reaching $2.592bn and grow- and the Consolidated Audit Trail control over their data to make institution into one platform ing at a similar pace for 2016, (CAT) in the US and EMIR and complex analytics an integral that tries to fulfil all needs. according to a report by TABB MiFID2 in Europe are giving part of workflow or enable infor- "But no single IT tool has all Group. sleepless nights to senior execu- mation to pass back and forth the answers, which is why firms The rise in global compliance tives," writes Shagun Bali, TABB within different functions, incor- need to create cohesive business market spend will be driven by technology analyst and author porating functionality for both processes to manage various global regulations that require of "The Data Tsunami: Combat- internally generated structured functions and technologies in institutions to expand coverage, ing the Overwhelming Supply of data and unstructured data gen- sync." enhance existing capabilities and GRC Data," which examines the erated by third parties. Compliance analytics is no standardize compliance solu- deeper GRC issues, challenges "The idea of a single GRC longer a nice-to-have tool - it's tions and processes. and trends; describes forward- Platform to meet all of an insti- a must-have tool, says Bali, Because of this heightened looking solutions; and highlights tution's needs is a myth," says "but enterprise-wide compliance regulatory scrutiny, TABB Group five leading providers of GRC Bali, "there's no one-stop shop requires a push from top man- sees an increase in compliance- tools: AxiomXL, Bloomberg for GRC spreading across busi- agement to introduce a new, and surveillance-related projects Vault, Nasdaq BWise, NICE ness functions, asset classes and efficient architectural paradigm within the buy- and sell-side Actimize and SunGard. geographies." that enables a holistic and uni- communities in North America These mandates, Bali says, are The best practice for insti - fied view of internal and exter- (41%), Europe (43%) and Asia- forcing firms to increase report- tutions, she points out, is to nal data, working with vendors Pacific (16%) to keep pace with ing frequency, increasing data approach GRC as a feder - and automating parts of the a "tsunami" of governance, risk capture and management within ated architecture that allows compliance process." <

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PBI 320.indd 3 03/07/2015 10:21:28 Private Banker International FEATURE PRIVATE BANKER INTERNATIONAL CONFERENCE: LONDON 2015

London Calling The 2nd annual PBI Conference: London 2015 saw some of the leading experts in the private banking and wealth management industry come together on 3 June. Distinguished industry experts discussed a wide range of pivotal topics, including UK’s position as a global wealth hub and the integration of digital services in the industry. John Schaffer provides an overview

n its second year, the Private Banker International Conference: challenges and pitfalls. London gave bankers and industry experts a forum to discuss the In particular, the growth of robo-advise was assessed as a challenger issues that are currently facing the private banking and wealth to the private banking and wealth management business model. She Imanagement industry. The conference took place on 3 June 2015 said the industry must be aware of the appeal of robo-advisors to at the Waldorf Astoria. Being one of the most significant global wealth clients and wealth managers must not be “complacent”, even if the hubs, London was a fitting location for these discussions. robo-advise is a $20bn industry in comparison to the “mammoth” The conference was divided into four sessions that discussed the $17bn business of the traditional wealth management and private key themes of the day. Following presentations by leading industry banking market. experts, each session also hosted a panel discussion and Q&A session Reddings said the private banking industry has to concentrate on cli- with the audience. ent centricity and servicing clients on all the issues surrounding wealth such as succession planning, protecting businesses and philanthropy. Reddings suggested that UK’s regulatory environment provides a Session 1 – The UK Private Banking Landscape in 2015 “layer of comfort” for clients, with the country being perceived as one of the most respected and robust financial centres in the world. In the following presentation, Ton Kentgens of Ortec Finance con- tinued the theme around the importance of a client-centric business model, where the strategy should be more goals-based rather than product-based. He also highlighted the significance of digital services being integrated into the business model, where there was a significant demand from clients especially if they were under 40 years. The panel discussion during this first session further assessed the trends in the UK wealth market. The resounding opinion from the panel was that one of the key rea- sons why the UK provides a favourable environment for the private banking industry is its regulatory climate. Christian Berchem of Barclays Wealth and Investment Management said: “One advantage that we take for granted in the UK is our legal system”. Tracey Reddings, JP Morgan Private Bank Annamaria Koerling, head of wealth management at C. Hoare & Co. commented on the extra regulatory requirements that are imposed on Keynote speaker the private banking industry, saying that “the extra reporting required Tracey Reddings, head of UK private wealth management, J.P. Morgan can actually enhance the client experience”, suggesting that it would Private Bank allow clients to engage further via digital channels. However, Eric Barnett, CEO at Societe Generale Private Banking Speaker Hambros, said that “ is still the strongest brand in the Ton Kentgens, global business development, Ortec Finance wealth management and private banking industry.” Berchem highlighted the differences between high net worth individ- Panellists uals’ (HNWIs) and ultra high net worth individuals’ (UHNWIs) needs. Annamaria Koerling, head of wealth management, C. Hoare & Co. “UHNW clients don’t just want access to the private bank; they want Christian Berchem, managing director, Barclays Wealth and Invest- access to the overall services. That could be the corporate bank for ment Management an entrepreneur or the investment bank for a very complex lending Eric Barnett, CEO, Societe Generale Private Banking Hambros transaction,” he said. Ton Kentgens, global business development, Ortec Finance The discussion examined the issue of client centricity in the private banking industry and Kentgens spoke about the advantages and chal- Chairperson lenges of adopting a goal-based approach over a product-based focus. Meghna Mukerjee, editor, Private Banker International However he noted that advisors would have to be re-educated in order for banks to become truly client centric. Tracey Reddings of JP Morgan Private Bank opened the PBI confer- An interesting Q&A session with the audience followed. One of the ence with a concise overview of the UK private banking industry, cit- questions asked was around how regulation had impacted the brand ing the key issues that surround the UK market. She detailed the key image of banks since 2008. trends and opportunities in the wealth market in 2015 alongside the Koerling felt that, even with increased regulation, the banking indus-

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PBI 320.indd 4 03/07/2015 10:21:32 Private Banker International PRIVATE BANKER INTERNATIONAL CONFERENCE: LONDON 2015 FEATURE

try still needs to shed its “negative image”. She said: “Four out of ten purchasing art is passion, not speculation. of the world’s most hated brands are banks and 70% of people would Hewitt’s talk drew comparisons between Christie’s business model rather go to their dentist than their bank.” and the inherent issues that the private banking industry faces, where the growth of HNWIs put similar demands on a “solutions and advice oriented type of business”. He also talked about how digital channels Session 2 - Where is the wealth? European investment trends – much like they have done in the wealth management industry –have in 2015 created a new market and a myriad of opportunities for Christie’s. The next presenter, David Wilson of Objectway, spoke about how client interaction is changing through digital channels. Wilson said that although the majority of private banking engagement is through face to face contact, leading to a “stickiness” with clients, digital channels are set to become far more commonplace and feature-rich with the inclusion of video services. He said: “The use of video for client reporting as well as client ser- vicing can be expected to be standard for private banks in two years.” Wilson highlighted the issue of consistency across channels, however, as he mentioned that there could be discrepancies between the interac- tion with an advisor and the information given by a digital channel. On the basis of a survey conducted by Objectway, 44% of private bankers were having problems receiving consistent information across channels, he added. Wilson also highlighted the importance of user experience for clients, Speakers where there was the expectation of a slick channel experience that Charles Hoffman, managing director, HSBC Private Bank (UK) clients had been used to from the likes of Amazon and Apple. Paul Hewitt, managing director growth markets, Christie’s The panel session discussed the challenges and opportunities faced David Wilson, sales & marketing director, Objectway by private banks entering new markets. Hoffmann HSBC private bank largely focussed on markets where the bank already had a corporate Panellists presence. Hewitt said that Christie’s business model was more focussed Charles Hoffman, managing director, HSBC Private Bank (UK) on individuals rather than new markets per se, but in general, there Paul Hewitt, managing director growth markets, Christie’s were “huge inherent risks” in entering into emerging markets, due to Paul Aitken, founder and CEO, Borro an unpredictable climate. Shaun Crowley, UK sales director, Objectway Shaun Crowley, Objectway, said that it is often difficult for software companies to enter new markets when the majority of regions already Chairperson have incumbents. However, he said, the benefits can be significant. Oliver Williams, head, WealthInsight During the audience Q&A session, Hewitt and Aitken were asked if the wealthy ever invested dispassionately, to which Hewitt answered The second session of the day took a deeper look into the demographics that there was some speculative activity in the form of art funds, which of wealth management clients as well as European investment and cli- represent investors who “purely do it with their heads rather than ent engagement trends. hearts”. However, this was in the minority, Hewitt said. The first presenter, Charles Hoffman of HSBC Private Bank, spoke Borro's Paul Aitken added: “We have clients with a trading mental- about how the profile of wealthy clients was forecast to change in the ity and they are buying to flip and make a quick dollar. However there coming years. He noted that an aging population and low birth rates in developed countries were significant contributing factors to the private banking client base. Hoffmann said: He added that emerging markets will fare much better over the next 10 to 20 years, and predicted that there will be an influx of new clients from Africa, due to consistent population growth. The ageing population aspect influences the succession planning strategy of HNWIs and Hoffman said that clients are “looking to hand over the wealth in their lifetimes”. In terms of client engagement, Hoffman said that “the hero RM is dead,” suggesting that clients now expect consultation with a team of advisors rather than focus on getting sole concentration from one RM. He also highlighted the importance of giving clear advice to clients, saying: “A really good advisor can make the most complex idea clear and intelligible.” Hoffman was followed by Paul Hewitt of Christie’s. His presen- tation was about the art collection market and its relationship with HNW investors. Hewitt highlighted the scarcity of old art and that sales of single Charles Hoffman, Oliver Williams, works of art for $100m were not unheard of. However, he said what HSBC Private Bank (UK) WealthInsight differentiates art from other asset classes is that the motivation behind

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PBI 320.indd 5 03/07/2015 10:21:41 PBI 320.indd 6 03/07/2015 10:21:42 Private Banker International PRIVATE BANKER INTERNATIONAL CONFERENCE: LONDON 2015 FEATURE

is more of a scew towards passion when it comes to art. Passion equals been destroyed rapidly with the introduction of a technology innova- collector, whereas the trading mentality is more of the opposite.” tion. He cited examples of video rental business, Blockbuster, being eradicated by Netflix and the music industry being morphed by the success of the iTunes store. Session 3 - Future Focus: Digital Distribution in the Private However Fernandez said that digital disruption should not only be Banking Industry viewed in a negative context. “The internet can create longer value chains in an extremely efficient mode, allowing the participants of the value chain to specialise more and not lose when changing from one vendor to the next. “The opposite is also a speciality of the internet. It can cut down or shorten value chains by leaving out one or two chain members that are overpriced or inefficient,” he said. Fernandez added that in terms of the banking value chain, the tradi- tional financial market architecture was open to “serious competition”. Renata Stein of Dorsum also looked at how the industry was being affected by the digital wave. She said: “Clients want to be able to look at their portfolio perfor- mance at any point in time.” Stein added that investing in good qual- ity user experience provisions was imperative, and that it “improves ROI”. The panel discussion delved further into the issues presented by digital in the private banking sphere. The industry’s adoption of social media was also discussed. Graham Aikin of HNW Social Media Solu- Speakers tions said that private banking was “one of the slowest industries to Tim Tate, director of client experience and innovation, Citi Private Bank get to grips with social media, due to issues surrounding compliance Francisco Fernandez, group CEO, Avaloq and confidentiality.” Renata Stein, business development consultant, Dorsum Aikin also promoted the use of YouTube as an educational tool for clients, providing information that would improve the relationship Panellists with clients. Graham Aikin, CEO, HNW Social Media Solutions René Hürlimann, Appway, commented that digital was not only Simon Cadbury, head of strategy & innovation, Intelligent Environ- significant when it comes to client experience but “if you want to have ments better processing times and efficiency, you need to have digital”. René Hürlimann, director, EMEA & APAC, Appway The discussion moved on to how smaller ‘boutique’ banks could Francisco Fernandez, group CEO, Avaloq implement digital strategies. Simon Cadbury of Intelligent Environ- Tim Tate, director of client experience and innovation, Citi Private Bank ments said the smaller banks had a tougher challenge than the larger institutions. He emphasised that the wealth division at a large bank Chairperson can leverage the wider banking infrastructure. Whereas a smaller, bou- Douglas Blakey, group editor consumer finance titles, Timetric tique private wealth institution needs to define its path much more carefully, “and the room for error is higher as well”. The third session of the day concentrated on the digital trends in pri- However, chairperson Douglas Blakey said that although the smaller vate banking. institutions do not have“deep pockets” like their larger counterparts, Tim Tate of Citi private bank discussed some of the digital themes they can move quickly and do not have the issues of operating in mul- that had been resonating throughout the day in his presentation. Tate’s tiple regions. talk concentrated on the importance of user experience, saying that During the Q&A session, questions around how private banks are private banks have to “simplify as much as possible” when providing digital services. He said that clients expect the ease of use from digital channels: “The days of looking at a spinning wheel of death is unac- ceptable on a tablet.” Tate’s talk focused on how the private banking industry could learn from companies such as AirBnB where “design is key”. He illustrated how companies from other industries had significantly improved their client engagement by changing a few select design elements, resulting in an increased profit margin. The following talk of the session was by Francisco Fernandez of Avaloq. Fernandez spoke about technology being the most significant factor for driving change in the banking industry and that the sector must set aside capital for innovation to survive. “Approximately 53% of CEOs made it absolutely clear that imple- menting a digital strategy for banks and wealth managers is their num- ber one priority above improving customer segmentation, cutting costs and responding to regulatory requirements,” he said. Fernandez focused his presentation on digital disruption and gave Tim Tate, Citi Private Bank examples from other industries where a traditional business model had

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PBI 320.indd 7 03/07/2015 10:21:56 Private Banker International FEATURE PRIVATE BANKER INTERNATIONAL CONFERENCE: LONDON 2015

approaching data and analytics came up, to which Fernandez said the process of succession planning and how it can impart a sense of that “private banks are absolutely nowhere when it comes to big data”. responsibility and a way of leaving behind a legacy. She said that, for her clients, “wealth is more than money” and that they are concerned about having a significant social impact with their wealth. Session 4 - Building a Roadmap for 2015 and Beyond Prabhu said the Coutts Million Dollar Donors Report results indi- cated that there was a significant trend for clients to use philanthropy as a part of the inter-generational transfer of wealth. Prabhu added that wealth is a taboo subject in many cultures, including the UK. Families often want to withhold the details of their wealth and philanthropy provides a forum to introduce the topic to their children in a balanced manner. The final panel discussion provided a roundup of the issues that face the UK as a private banking and wealth management centre. Join- ing the panel were James Fleming of Arbuthnot Latham and Akshaya Bhargava of Barclays Wealth and Investment Management. Fleming echoed previous comments from the day, as he felt the UK is a strong player in the wealth management industry across the globe, saying: “I do think London has got stronger post the financial crisis and I think the core reasons for that remain the same as they always do. We have a very strong and transparent legal system, we have a very good regulatory system, and we have a good positioning geographically, the language issues are very easy for international clients to adapt to. “There is a further inflow of international wealth managers coming into the UK to position their businesses, not least the family office community where family offices seem to be almost setting up weekly in London.” Speakers Bhargava expanded upon this point saying that the wealthy private Russell Prior, head of philanthropy, HSBC Private Bank (UK) banking client base ultimately had limitless choices as they could go Maya Prabhu, managing director, Coutts Institute “anywhere in the world”. He said: “If the UK was just a good place to live, clients would live here but the money would go somewhere Panellists else. A good regulatory environment provides the essential ingredients Akshaya Bhargava, CEO, Barclays Wealth and Investment Manage- that allow an industry to grow faster and I think London is benefiting ment from that.” James Fleming, CEO, Arbuthnot Latham Fleming raised the issue of servicing the mass affluent segment and Russell Prior, head of philanthropy, HSBC Private Bank (UK) part of the HNW section, from a wealth management standpoint. Maya Prabhu, managing director, Coutts Institute While technology companies are attempting to capitalise on these seg- ments, Fleming said that these client groups were “almost too expen- Chairperson sive to serve”. However, he added that although some clients will move Meghna Mukerjee, editor, Private Banker International over to purely technology-based solutions, there is still no substitute for human interaction. The final session started with discussions around philanthropy and the The discussion moved to improving the cost income ratio of the opportunities that it provides the private banking industry. wealth management industry on the whole. Bhargava felt that there Russell Prior of HSBC Private Bank illustrated how philanthropy was a large scope for improvement here. He added: “This is a business was different from consultations with advisors based upon financial that has negligible risk assets, it has a wide portfolio of products and expectations. Philanthropy, rather, is an aspect of clients’ wider goal services accompanied by sticky client relationships. Wealth manage- planning strategy and an extension of their beliefs, he said. ment should be a high return business for any institution to own and Prior said that, although families that had under $5m in wealth gave manage.” on average between 1-3% percent of their wealth to philanthropic Bhargava said that too much focus on the front-end of the business causes, wealthy families above the $50m level could give “anything as opposed to the back-end engineering is the source of the problem. up to 40%”. However, Fleming said, “if it was that easy to drive down the cost Prior added that there is a significant demand from clients for advise income ratio, we’d all be doing it”. on philanthropy: "Research with clients suggests that 90% of clients Fleming said that one strategy that would solve some of the indus- feel that a discussion about philanthropy should take place within the try’s problems was consolidation. The panel discussion drew to a close first three meetings, and a third of them say this should be upfront in with a conversation around trust in the industry. Everyone agreed that the first meeting.” a closing of the trust deficit was the need of the hour for the successful The interest in philanthropy from the next generation of clients was future of the private banking industry. also highlighted. Prior said that the next generation “care much more During the audience Q&A session, a question came up around about society; they have a totally different view of the world and what how private banks are servicing wealthy clients outside of London, can be done in the world through philanthropy.” and whether or not they were looking to be less “London centric”. Continuing on the same theme, Maya Prabhu of Coutts Institute Both Fleming and Bhargava said their respective banks are concen- spoke about the impact of philanthropy on wealthy families. trating on regions in the UK beyond London to support prospering Prabhu’s talk included a focus on philanthropy as a key element in local wealth. <

8 y June 2015 www.privatebankerinternational.com

PBI 320.indd 8 03/07/2015 10:22:00 Private Banker International PRIVATE BANKER INTERNATIONAL AWARDS: LONDON 2015 NEWS

Best of the best: Private Banker International London Awards On 3 June, Private Banker International (PBI) revealed the winners for the 2nd annual PBI Awards: London 2015. The awards were presented at a glittering ceremony and a gala dinner- following the day conference – at London's Waldorf Astoria Hotel

rivate Banker International (PBI) revealed the winners for the 2nd annual Private Banker International Awards: London 2015 on 3 June. The award winners were announced and felici- P tated at the Awards Gala Dinner at London's Waldorf Astoria Hotel, following the PBI day conference. The PBI London Awards, dedicated mainly to the UK and European markets, have been created to identify leading institutions that are setting new standards in the private banking and wealth management industry. The winners across seven categories were carefully selected by an independent judging panel and honoured at the awards ceremony. An Editors Special Award for the Most Innovative Business Model was Team from HSBC Private Bank (UK) also given out. Meghna Mukerjee, Editor of Private Banker International, says: "We are delighted with the impressive number of nominations we received this year and the high quality of these submissions exhibited a clear direction in private banks' improved strategies. "The UK, and Europe on the whole, are traditional, fast-moving and crucial wealth hubs, and these awards celebrate the best-of-breed play- ers who are shaping this industry. This year's winners underline the importance of innovation and keeping up and ahead of clients' inter- ests, to remain relevant and successful." The Private Banker International Awards: London 2015 was attend- ed by senior private bankers, wealth managers and other industry leaders who are currently shaping the industry in the UK and across Team from Coutts Europe. <

The PBI London Awards 2015 winners

Outstanding Private Bank London - Domestic Clients Coutts Outstanding Private Bank London - International Clients HSBC Private Bank (UK) Outstanding Private Bank - Europe Société Générale Private Banking Team from Société Générale Private Banking Outstanding Customer Relationship Service & Engagement C. Hoare & Co Best Wealth Management Technology Provider Joint winners: Avaloq & Objectway Financial Software Best Next Gen Proposition ING Private Banking – Belgium Outstanding Philanthropy proposition BNP Paribas Wealth Management Most Innovative Business Model - Editors Special Award ABN AMRO Private Banking Team from BNP Paribas Wealth Management

www.privatebankerinternational.com June 2015 y 9

PBI 320.indd 9 03/07/2015 10:22:19 Private Banker International NEWS DIGEST

currency, the wide use of the ucts and services." national tax havens as part of PRODUCTS AND SERVICES Westpac adviser sets RMB, the opening up of the cap- Headquartered in Missouri, its action plan for fair and effi- ital account, the flow of North- US, is a financial services cient corporate taxation. The full up wealth manage- South-South North, to me it's all holding company that conducts list is: Andorra, Liechtenstein, ment firm in Sydney very exciting and it represents its banking, securities, and finan- Guernsey, , Mauritius, what is the single biggest trend cial services business through sev- Liberia, Seychelles, Brunei, Hong Westpac financial adviser David for us in Asia," Reuters quoted eral wholly owned subsidiaries. Kong, Maldives, Cook Islands, Simon has exited the group to set her as saying. In February 2015, Stifel agreed Nauru, Niue, Marshall Islands, up his own private wealth firm DBS, which manages SGD- to acquire Alabama-based Sterne Vanuatu, Anguilla, Antigua and in Sydney. 96bn ($71bn) at its private bank, Agee Group for nearly $150m. Barbuda, Bahamas, Barbados, The new firm, Integral Private is considering alliances with Sterne Agee comprises around Belize, Bermuda, British Virgin Wealth, will be licensed under companies in the technology 730 brokers. Islands, Cayman Islands, Grena- Westpac/BT's dealer group Secu- space, travel companies, luxury da, Montserrat, Panama, St Vin- ritor. The firm will offer wealth retailers in China to gain a bet- STRATEGY cent and the Grenadines, St Kitts management services to estab- ter foothold in the market. Shan Charles Stanley to and Nevis, Turks and Caicos, US lished business owners, execu- said: "The old style of wealth align wealth managers' Virgin Islands. tives, professionals, families as management and sales - create pay with profitability Six of the listed tax havens well as self-funded retirees. the product, get the relationship include British overseas territo- Simon, who served in the role manager to sell, sell, sell - doesn't Charles Stanley has reportedly ries -- Anguilla, Bermuda, British of a financial adviser at Westpac work anymore." decided to move its wealth man- Virgin Islands, Cayman Islands, for 15 years, said: "Integral Pri- agers over to new contracts that Montserrat, and the Turks and vate Wealth will have an inde- M&A align their pay with profitability Caicos Islands. Guernsey is the pendent focus and will remain Barclays to sell off rather than revenue. The amend- only crown dependency to fea- institutionally connected with wealth & investment ment in contract will affect all ture in the list. The EU has also access to the latest research and management Americas staff with revenue-based variable proposed reforms to phase out intelligence. "Australians seeking remuneration and will be phased sweetheart tax deals after probe financial advice are seeking more unit to Stifel in over three years from January into arrangements between EU transparent relationships, superi- Barclays has signed an agreement 2015, Citywire has reported. countries and firms such as Ama- or service and outcomes that are to sell its wealth and investment The aim is to better align its zon, Apple and Starbucks. in their best interests. Integral management franchise in the investment managers' interests Private Wealth is founded on Americas to Stifel Financial Corp. with improving the company's TAX these values." This confirms weeks of specu- profitability, Citywire quoted Seven countries join lation around the sale. Charles Stanley CEO Paul OECD agreement to STRATEGY Barclays' wealth and invest- Abberley as saying: "In most fight offshore tax eva- DBS aiming for 40% ment management franchise cur- financial services firms, compen- sion surge in private bank- rently has 12 offices in the US. sation is aligned with broader ing assets in next three As of May 31, 2015, Barclays stakeholder value and profitabil- Seven new countries have joined had approximately 180 financial ity is a key metric within that," the Multilateral Competent years advisors in the region, managing Abberley said: "You need to look Authority Agreement (MCAA) Singapore's DBS Group is aim- approximately $56bn in total cli- at aligning with profit rather that enables exchange of infor- ing to surge its private banking ent assets. than simply gross revenues." mation automatically under assets by 40% to $100bn in less The acquisition includes The company will hand over the Organisation for Economic than three years by targeting mil- Barclays Wealth Trustees (US) its control of wealth managers' Co-operation and Development lionaires in its home market and and all associated accounts. individual profit and loss (P&L) (OECD) standard, to bolster the Greater China region. The transaction is set to be accounts. "Our starting position international efforts to fight DBS Group is generating completed in mid November, is that we want to lose absolutely against offshore tax evasion. strong asset growth in its home subject to regulatory approvals none of our investment manag- The new countries, which market, where there are more and customary conditions. ers," Abberley said. The decision joined include Australia, Canada, than 100,000 millionaires, and As part of this agreement, is part of the Abberley's strat- Chile, Costa Rica, India, Indone- in China, where sectors such as investment bank Stifel will be the egy to overhaul the business and sia and New Zealand, bringing technology and real estate are US private wealth distribution improve its operating margin to the total number of jurisdic - adding to the millionaire popula- partner for a certain portion of over 15% by 2018. tions to 61. By joining the agree- tion, the group's head of wealth Barclays' equities and will credit As part of this strategy, the ment, the countries will commit management Tan Su Shan told new issue securities in the US. company is preparing to dispose to the Standard for Automatic the Reuters Wealth Management Barclays' chief executive of its non-core corporate broking Exchange of Financial Informa- Summit. global wealth and investment and employee benefits divisions.. tion in Tax Matters, developed "For both onshore and offshore management, Akshaya Bharga- by the OECD and G20 countries in China, we're seeing very good, va, said: "We are pleased to have TAX in 2014. Together, 94 jurisdic- double-digit growth," she said. been able to find in Stifel a buyer EU publishes tax haven tions have committed to imple- "China now wants to do wealth that is committed to helping the blacklist ment the standard, agreeing to management in a big way. The franchise to grow over the long launch the first automatic infor- speed of change, the recognition term, and providing for our cli- The European Union (EU) has mation exchanges in 2017 or that the RMB is an international ents an expanded range of prod- published its first list of inter- 2018.

10 y June 2015 www.privatebankerinternational.com

PBI 320.indd 10 03/07/2015 10:22:19 Private Banker International PBI GREATER CHINA AWARDS 2015 NEWS

PBI Greater China Awards 2015: winners revealed Private Banker International (PBI) announced the winners for the 2015 Private Banker International Greater China Awards on 4 June in Hong Kong

ow in its 7th year, the annual Private Banker International (PBI) Greater China Awards 2015 took place at the Grand Hyatt in Hong Kong on 4 June. The Awards luncheon was N attended by several senior executives from the private bank- ing and wealth management sector in the region. The PBI Greater China Awards are regarded as the most credible in the industry, voted by the industry for the industry. These awards mark an important extension of the annual Private Banker International Global Wealth Awards, held in Singapore, which recognises excellence by banks and other wealth managers in various geographies. China, Hong Kong and Taiwan represent an immense pool of high net worth assets and are at the centre of increasing efforts by banks Andy Chai, BNP Paribas Wealth Management and other participants, both foreign and domestic, to grow top-flight wealth management businesses. Ruben Kempeneer, regional director of Timetric said: "China's unstoppable rise as a source of wealth and wealthy clients contin- ues, with this year seeing a marked rise in product development and sophistication with private banks enhancing their service model not only for local clientele but also for foreign investors."

PBI GREATER CHINA AWARDS 2015 WINNERS Institutional Awards Best Private Bank China China Merchants Bank Ruben Kempeneer, Timetric Best Private Bank China (Foreign) UBS China Best Private Bank Taiwan Taishin Bank Best Private Bank Taiwan (Foreign) A.G. Best Private Bank Hong Kong HSBC Private Bank Best Private Bank Hong Kong (Foreign) BNP Paribas Wealth Management Service Proposition Awards Best Family Office Proposition in Greater China HSBC Private Bank PBI Greater China Awards luncheon Best Offshore Renminbi Offering in Greater China HSBC Private Bank Best Ultra-High-Net-Worth Offering in Greater China Citi Private Bank Best Next-Generation Offering in Greater China Credit Suisse A.G. Individual Awards Outstanding Young Private Banker (Greater China-North Asia) Jessica Ng, Senior Vice President and Deputy Head - Private Bank- ing Department, Bank of East Asia Outstanding Private Banker (Greater China-North Asia): Dennis Lim, Managing Director and Co-Head of North Asia, Singapore, DBS Private Bank Francis Liu, UBS China

www.privatebankerinternational.com June 2015 y 11

PBI 320.indd 11 03/07/2015 10:22:22 Private Banker International FEATURE WORLD WEALTH REPORT 2015

Modest growth and robust outlook: WWR 2015 The year 2014 has been a modest one for growth, globally, in the number of high net worth individuals and their wealth. The latest World Wealth Report 2015, by Capgemini and Royal Bank of Canada, provides details around geographical performances, behavioural shifts as well as investment inclinations and trends. Meghna Mukerjee explores the findings

n 2014, the global high net worth n TOP 10 HNWI POPULATIONS, 2014 (BY MARKET) individuals (HNWIs) population and wealth expanded at a modest pace, at Number of HNWI (in thousands) Country Annual Growth (%) 2013-2014 I 6.7% and 7.2% respectively, particu- 2013 2014 larly in comparison to the growth numbers United States 4,006 4,351 9 in 2013 (14.7% and 13.8% respectively), the Capgemini and Royal Bank of Canada Japan 2,327 2,452 5 (RBC) World Wealth Report (WWR) 2015 1,130 1,141 1 has revealed. China 758 890 17 Globally, HNWI wealth expanded to United Kingdom 527 550 4 $56.4trn. HNWI population grew to 14.6 million in 2014 and 920,000 new million- 472 494 5 aires were created, due to strong economic Switzerland 330 343 4 and equity market performance. This, how- Canada 320 331 4 ever, reflects an increase of about 7%, rough- Australia 219 226 4 ly half the growth rate of the previous year. The WWR released mid-June and sur - 203 219 8 veyed more than 5,000 HNWIs across 23 Source: World Wealth Report 2015 major wealth markets in early 2015. The reasons behind the restrained growth of n HNWI SATISFACTION WITH WEALTH MANAGERS (BY REGION) HNWIs and their wealth in 2014 have been % cited as Eurozone concerns, decelerating 100 emerging markets' economic performance, and geo-political strife in the Middle East 80 and Ukraine. Latin America also slowed the pace of global wealth growth – being the 60 only region to report decline in HNWI popu- lation (-2.1%) and wealth (-0.5%) – in 2014 40 - largely due to a commodity prices crash and a related decline in the LatAm MSCI Index. 20

Regions of growth 0 Glbal Latin “The modest growth is primarily to do with North Europe Japan America America normalising economic growth in 2014. The Ascia Pacific Middleand EastAfrica (Excl. Japan) key financial markets performed fairly well – Source: World Wealth Report 2015 bonds managed to rally, most stock markets managed gains, and housing-markets man- aged increases,” said Eric Lascelles, chief gest wealth gains at 11.4% (North America: lation and wealth. The UK’s HNWI popula- economist RBC Global Asset Management. 9.1%), according to the WWR. tion, in particular, grew by 4.2% to reach North America and Asia Pacific (APAC) India emerged as a key driver for APAC’s 550,000 and its wealth by 5.7% to $2.0trn. led the growth rates and outpaced their five- growth in 2014, recording highest growth The HNWI population became more con- year (2009-2014) annualised growth num- rates, globally, in HNWI population centrated in 2014. The US, Japan, Germany bers of HNWI wealth, the WWR noted. (26.3%) and wealth (28.2%) – a massive and China accounted for 67% of HNWI APAC, in fact, overtook North America jump from 2013 rates (HNWI population: population growth in 2014, according to the to become the region with the world’s larg- 2.0% and HNWI wealth: 4.0%). Being the WWR. The ultra high net worth individuals est HNWI population at 4.69 million (North fastest growing market, it climbed five plac- (UHNWI) – who account for 35% of HNWI America: 4.68 million) at a growth rate of es to rank 11th among countries. China was wealth but only make up 1.0% of the HNWI 8.5%. It is expected to retain and extend another growth engine, adding to the HNWI population – continued to outperform. This this position. North America continued to population by 17.5% and wealth by 19.3%. segment was a significant driver of growth have the most amount of wealth at $16.2trn Europe maintained a steady growth rate for HNWI wealth and population globally. (APAC: $15.8trn), but APAC registered big- of approximately 4% for both HNWI popu- UHNWI numbers in APAC experienced the

12 y June 2015 www.privatebankerinternational.com

PBI 320.indd 12 03/07/2015 10:22:22 Private Banker International WORLD WEALTH REPORT 2015 FEATURE

strongest growth. Social impact inclination some investments,” added Wilson. The WWR also highlights that while HNWIs The young and the restless are interested in driving social impact, they Equities and cash dominate portfolios The WWR 2015 reveals that wealth man- don’t have a single preferred source to help Equities were the preferred asset class in agers are overestimating how much they them navigate its complexities. “HNWIs 2014, representing 27% of portfolios. But understand the needs of younger HNWIs. currently get advice around social impact HNWIs still hold over 26% of their wealth The report noted a 15 percentage point gap from family (27%), friends (22%), and a in cash “to maintain their lifestyle (36%) or between how well younger HNWIs believe wealth manager (30%). HNWIs are seeking for security against market volatility (31%)”, their needs are understood by wealth manag- more advice, with the wealth manager espe- said Daniel Ellis, head of investments, Brit- ers and the perceptions of wealth managers cially well positioned. Particularly when it ish Isles, RBC Wealth Management. themselves (76% wealth managers say they comes to the mechanisms to execute social Allocations to real estate (20%), fixed understand the needs of younger HNWIs, impact investments, the wealth manager is income (16%) and alternative investments while only 61% of younger HNWIs agree). very much in the lead,” said Wilson. (10%) make up the rest of their portfolios. Globally, 73% of HNWIs are satisfied However, HNWIs and wealth manag - The WWR found that the use of credit in with their wealth managers. HNWIs in ers face key challenges at every stage of the HNWI portfolios is widespread, with 18% North America recorded the highest overall social impact process. Approximately 54% of assets being financed through borrowed satisfaction rates (82%) while Japan record- of HNWIs want more help in setting clear money. Credit is used largely as leverage for ed the lowest (56%). social impact goals, understanding and investments, followed by real estate. A higher percentage of younger HNWIs structuring their investments, and measuring Global HNWI wealth is projected to grow expressed levels of concern about all aspects the impact of their efforts. “There has to be by almost 8% annually from end-2014 to of their financial lives (59%) than older a common definition of social impact. There 2017, to reach $70.5trn, led by APAC HNWIs (51%). In contrast, less than half of are challenges around quality of advice as (anticipated growth rate: 10.3%). Europe wealth managers (48%) expressed concern well. There is also a lack of social impact is expected to be a wealth expansion engine over key financial aspects of their clients’ investment vehicles and documentation, hin- with 8.4% annually, while North America’s lives. According to WWR, younger HNWIs dering the measurement of effectiveness of wealth is anticipated to grow by 7%. < also expressed a greater need for support and professional advice from wealth managers n (54% vs 49% for older HNWIs), lower sat- UNDERSTANDING OF HWNI WEALTH NEEDS FROM HNWI AND WEALTH MANAGER PERSPECTIVES (BY REGION) isfaction levels (70% vs 73%), and a higher % propensity to leave firms/wealth managers 100 if their needs are not fulfilled (83% vs 79%). 80 WMs underestimating competition 60 The WWR notes that increasing competition

and commoditisation of traditional core ser- 40 vices by non-traditional players are key dis- ruptors for the wealth management industry. 20 Younger HNWIs are nearly twice as inclined as older HNWIs (67% vs 38%) to 0 use automated advisory services. However, Older Older Younger Wealth Younger Wealth wealth managers are underestimating this Manager Manager HNWI (< 45) HNWI (45+) HNWI (< 45) HNWI (45+) interest. Only 20% of wealth managers believe their clients are keen on automated Global North America advisory services, while 49% of HNWIs Source: World Wealth Report 2015 would consider using them. There is strong interest for these services in APAC (76%) n HNWI AND WEALTH MANAGER ASSESSMENT OF HNWI PROPENSITY TO USE AUTOMATED ADVISORY SERVICES and LatAm (70%). North American HNWIs registered the lowest interest at 34%. % The WWR also highlights that the wealth 80 manager's value proposition is evolving 70 across multiple areas, and wealth manage- 60 ment firms have a big role to play in setting 50 strategic directions and empowering wealth 40 managers by investing in key capabilities. 30 “We think the future will have a hybrid 20 approach, where the wealth manager remains the cornerstone of the relation - 10 ship but with the ability to use judgement 0 HNWI on whether the client can be serviced more Wealth HNWI Wealth HNWI Wealth cost effectively, according to their demands, Manager Manager Manager through an automated digital channel,” said Global Asia Pacific (Excl. Japan) Europe David Wilson, head of Strategic Analysis Group, Capgemini Financial Services. Source: World Wealth Report 2015

www.privatebankerinternational.com June 2015 y 13

PBI 320.indd 13 03/07/2015 10:22:23

Private Banker International

ANALYSIS ANALYSIS WEALTHINSIGHT

Welcome to the monthly instalment of news and views from PBI’s sister company, WealthInsight – the leading provider of business intelligence for the wealth sector

New Investment Opportunities: Impact Investments Impact Investments have emerged as a new investment option among millionaires and multimillionaires worldwide. Despite its development in 2007, JP Morgan and Global Impact Investing Network estimated the market size of impact investments to be worth approximately $46bn in 2014. However, different investment types make the asset complex and difficult to value, writesDr Roselyn Lekdee, economist, WealthInsight

In the UK alone, impact investments valued GBP200m in n GLOBAL BREAKDOWN OF IMPACT INVESTMENTS BY SECTOR (%), 2014 2014 and are set to grow to GBP1bn by 2016, according to the UK government research in 2014. Most private banks % in Europe – including Barclays, Lloyds, RBS, Deutsche 25 Bank and Credit Suisse – have established a separate divi- 20 sion to target impact investors and enhance their involve-

ment in helping social change. 15 This division is often known as ‘sustainable invest - ing division’, ‘responsible investing division’, or ‘social 10 finance division’. Regardless of the term, the objectives are the same: to 5 generate financial returns and to bring about long-term 0 social change. Others Energy Housing WealthInsight findings suggest that ultra high net Healthcare Education Micro Finance worth individuals (UHNWIs) are more likely to be the ini- Financial Services ICT Technologies Food and Agriculture Water and Sanitation tial target audience of impact investments because of the sheer wealth they possess. Private banks in the UK have Source: WealthInsight recognised the importance of impact investments. But more could be done in the private sector to accommodate the growing demand of potential for green bonds is growing rapidly in Europe, as a vast number of issuers, impact investments in the UK and abroad. Before that happens the issue of ‘impact notably Bank of America Merrill Lynch and JPMorgan Chase and Co., focused on measurement’ – needs to be addressed carefully. the products in recent years. It is evident from WealthInsight’s study that demand for socio-economic related Subsequently, Wealthinsight anticipates that clean energy, environmental pro- impact investments is growing rapidly in Asia-Pacific, Africa and Latin America but tection products and green bonds will become more recognized as impact invest- market expansion among private banks still remains a challenge. ment services among private banks in Europe over the next five years. The study also finds that while the demand is there, local investors might not have adopted an attitude whereby they want to give back to the community or Global Breakdown of Impact Investments invest in social change. As new HNWIs – especially lower-tier and mid-tier mil- In terms of sector distribution, microfinance and financial services combined lionaires in the emerging markets – are still in the early stage of showing off their accounted for 42% of global impact investment funds in 2014. financial status by purchasing luxury goods, they might not necessarily have the This was followed by energy at 11%, housing at 8% food and agriculture at 8%, time or inclination to invest in socially responsible projects. In addition, weak and healthcare at 6%. market regulations, economic and political risks in Africa, Latin America and Asia- Information and communication technology, education, and water and sanita- Pacific also deter private banks and wealth management firms from expanding. tion accounted for less than 4% in the same year. By contrast, an increasing number of private banks in Europe are offering clean High demand for microfinance and financial services is largely driven by the energy, environmental protection projects and green bonds as part of their impact development of small and medium-sized enterprises (SMEs) and entrepreneurship investment services. in emerging markets such as Latin America, Asia-Pacific and Africa. By contrast, As the eurozone has gained momentum in 2015, increasing number of private the high demand for energy – in particular clean technology – is being driven banks in Europe are including clean energy, environmental protection and green bonds as part of their impact investment services. by demand in developed countries such as the US, Canada, the UK, Germany and For instance, Barclays and ABN Amro offer opportunities for millionaires and France. multimillionaires to invest in social enterprises that focus on clean energy. Wealth- Over the next decade, impact investments are expected to grow at a faster rate Insight research shows that the green bonds market grew from $14bn in 2013 to and expected to emerge as one of the key asset class for HNWI investors, pos - $40bn in 2014. The market potential for the products became more established ing opportunities for private banks, social enterprises and institutional investors after 13 major banks, including Barclays, , JP Morgan and HSBC, worldwide to capture the market. signed up to the Green Bond Principles in January 2014. According to Status of the Social Impact Investing Market: A Primer, a report An interview with a director of one of London’s top 15 private bank by AuM published for the UK Cabinet Office in 2013 by Impact Economy, the market size of working for the Debt Capital Markets division confirms the view that the market impact investments is expected to be worth $400bn – 1trn by 2020

14 y June 2015 www.privatebankerinternational.com

PBI 320.indd 14 03/07/2015 10:22:23 Private Banker International SURVEY UK COUNTRY

Fields of gold The number of HNWIs continues to grow in the UK, providing a captive market for the private banking and wealth management industry. Amidst tighter regulatory controls, the UK is still amongst the most favourable locations for the wealthy to seek management of their assets. John Schaffer looks further into statistics provided by the WealthInsight database

he UK’s capital, London, is a famed However, the prospect n LEADING DOMESTIC PRIVATE BANKS IN THE UK BY AUM (US$), 2014 centre for financial services, with the of the UK leaving the private banking and wealth manage- European single market Local Private Bank Local AuM (US$ m) Global AuM (US$ m) ment industry being no exception. It is, could create another set RBS Wealth Management NA 44,239 T of obstacles. The prime thus, no surprise that there is a high concen- NA 60,000 tration of wealthy individuals in the city and minister has promised a Barclays 77,497 309,989 across the rest of the UK. referendum by 2017 to Data from WealthInsight indicates that leave the EU. However, a Wealth Management 39,583 68,292 in 2014, there were approximately 699,180 vote for a potential Brexit Cazenove Capital Management 37,305 48,567 high net worth individuals (HNWIs) in the could take place as early HSBC Private Bank 34,009 365,000 UK holding $2.7trn in wealth. as 2016. Fears of a Brexit, Lloyds Private Banking 20,802 20,802 In terms of population growth, UK HNWI though, appear to be numbers rose by 3.6% in 2014, following an muted across the private Coutts 20,322 NA increase of 2.7% in 2013. The WealthInsight banking industry. Klienwort Benson Bank Ltd 9,215 9,215 database forecasts that the wealth of HNWIs The largest popula - Rothschild Private Banking 8,761 30,884 will grow by 34.7% to reach $3.8trn by 2019. tion density of HNWIs is Brown, Shipley & Co Ltd 6,566 6,566 The ultra high net worth (UHNW) seg- centred around London, ment experienced particularly significant accounting for 34.1% of Arbuthnot Latham 885 885 growth rates, highlighting the UK’s position all UK HNWIs, equiva- Source: WealthInsight as a top destination for the world’s wealthiest lent to approximately individuals. 238,574 individuals. n LEADING FOREIGN PRIVATE BANKS IN THE UK Between 2010 and 2014, WealthInsight Areas surrounding London in the south BY AUM (US$), 2014 reported that the UHNW population grew east of England, with an easy commut - from 9,636 to 10,547. This segment is lucra- able distance to the capital, have significant Foreign Private Bank Local AuM (US$ m) tive and important to UK private banks. numbers of wealthy individuals. Surrey, for Goldman Sachs 49,898 WealthInsight expects the UHNWIs number instance, is home to 22,800 HNWIs and is UBS 43,302 to increase by 16.6% to reach 12,554 in 2019. famed for its population of wealthy bankers, JP Morgan 28,763 A recent report from Knight Frank, The celebrities and multi-generational families. Wealth Report 2015, cites London as “the Wealthy individuals are present in other EFG Private Bank 21,278 world’s most important city” for wealthy major UK cities, such as Edinburgh and Glas- Credit Suisse 20,905 individuals, with London having the highest gow in Scotland and Manchester in the North Societe Generale 13,756 global concentration of ultra high net worth of England. However, their wealth concentra- Source: WealthInsigh individuals (UHNWIs) at 4,364 individuals. tion is dwarfed by the population in London. The UK has historically been an interna- Despite unfavourable market conditions tional wealth hub. Wealthy individuals from globally, the wealth management market in tives (5.8%). around the world flock to London as interna- the UK is seen to be one of the best in the The high allocation towards real estate is tionally, the UK is seen to have a stable politi- world and competes with heavy-weight mar- predominately centred on residential prop- cal climate and a clear regulatory framework. kets in the US, Asia and the traditional hub of erty at 8.2% of total assets. London property, There are also social factors that attract inter- private banking, Switzerland. where growth rates have been particularly national wealth, such as highly acclaimed After the 2008 financial crisis, strict regu- high at 18.2% in Q 1 of 2014, has seen the schools and a rich cultural environment. lations were placed upon banks in the UK. majority of the investment in contrast to The international popularity of London is However, the private banking industry has modest growth rates elsewhere in the country. reflected in the consistent growth of the city’s been able to recover significantly. The indus- However, WealthInsight forecast that allo- property market. HNWIs from across the try’s recovery has aided the UK economy to cations to residential property will decrease globe have bought into real estate, both for achieve growth rates of 2.4% in 2014, one of to 7.8% by 2019. Total allocations towards living and speculation purposes. the highest GDP growth rates within the EU. alternative investments stood at 8.8% in The future looks markedly brighter for pri- In 2014, equities were the largest asset 2014 and are expected to grow to 6.1% by vate banks and their wealthy client bases as class for HNWIs in the UK with 29.5% being 2019. The shift towards equity and alterna- a certain amount of political uncertainly will allocated. This was followed by business tives comes as allocations to commodities are have been alleviated after May’s UK general interests (25.9%), real estate (16.1%), fixed expected to shrink, due to the scaling back in election with a win for the Conservative party. income (15.9%), cash (6.7%) and alterna- demand for raw materials in China. <

www.privatebankerinternational.com June 2015 y 15

PBI 320.indd 15 03/07/2015 10:22:24 Private Banker International NEWS TECHNOLOGY

Let’s talk technology Objectway rolls out new digital wealth experience platform Objectway, a provider of software and ser- that can implement a resilient and digitally experience. vices to the EMEA investment management empowered engagement for investors – that • Prospect & Client Engagement Expe- industry, has launched Conectus, its new is absolutely the architectural aim towards rience - implements prospect engage- digital wealth platform. the future.” ment, client onboarding, investor Conectus is a digitally enabled user expe- Objectway chief product officer, Alberto self-profiling of risk and investment rience and collaboration platform designed Cuccu, said: "Conectus is a direct response attitude, and client-advisor collabo- specifically for wealth and investment man- to the challenge that investment firms face ration scenarios agement firms. It provides a portal focused to attract and retain clients in an increas- • Hybrid Advisory Experience – sup- on front-end user interaction, with the aim ingly digital market. Conectus allows firms ports using a digital channel in con- of enhancing the user experience. to appeal to today's digital investors, who junction with an advisor With Conectus, firms can tailor their want online services that improve the user Key features of Conectus include: online services to a range of investor styles- experience, reduce costs, and allow them • Personalised user experience with from self-directed to hybrid to full discre - to engage and collaborate with advisors on navigation of customisable pages, tionary. Conectus was first introduced in their own terms." search, collaboration and context- April 2015 as a module within Objectway's The omni-channel Conectus enables a awareness powered by big data ana- Wealth in One solution and is now avail- white-labelled, differentiated experience on lytics. able to the market as a stand-alone channel smartphones, tablets and PCs. Conectus is • Client-advisor collaboration sup- proposition. available in four experience versions: ported by video chat, document Peter Schramme, chief business develop- • Communications & Reporting sharing, comment exchange, and ment officer at Objectway, spoke to PBI Experience - providing an integrated co-browsing tools. about Objectway’s business model on the view of client investments, enabling • Adaptive HTML-5 user interface whole, where all of the company’s technol- better informed interactions between with widgets that automate key ogy propositions where modular, prompt- the client and firm. activities. ing a “loosely coupled” strategy. • Self-Directed Investor Experience - Schramme feels a loosely coupled archi- “If you build an architecture that is com- aimed at self directed investors, this tectural approach is essential for technology posed of great performing operationally service adds incremental self-service innovations in the future, avoiding some excellent engines in the back, combined transaction functionality to the Cli- inherent issues that have arisen out of legacy with a loosely coupled channel proposition ent Communications & Reporting systems. <

Tech round-up

Avaloq implements wealth man- tegic partner and we look forward to drive business going forward." users with alerts on mood changes in agement platform for Canaccord ongoing collaboration, as we service Pruzan added that the US firm has the market toward a company's value Genuity growing numbers of discerning wealth launched digital platforms following before any price movement takes Avaloq, a provider of wealth manage- management clients in a changing the integration of its wealth manage- place. ment and banking solutions, has market and regulatory environment." ment arm with Smith Barney. It also features RepRisk Index (RRI), implemented its first fully-integrated Canaccord Genuity Wealth Manage- Following this integration, Morgan which captures and quantifies the rep- UK wealth management platform for ment's investment professionals Stanley has unveiled a wealth manage- utational risk exposure of companies Canaccord Genuity Wealth Manage- manage and administer over £11bn in ment app for clients, which enables across sectors and countries related to ment. assets for over 12,000 clients. It oper- clients to view all savings and invest- environmental, social and governance The group has already transitioned ates with offices in London, Guernsey, ment products on one screen, broken (ESG) issues. a fully integrated modular software Jersey and the Isle of Man. out by asset class. SunGard's Astec Analytics Borrower solution to Canaccord Genuity Wealth Morgan Stanley banking on digi- Moreover, the company has rede- Activity Rating, which identifies the Management in the UK and its offshore tal wealth management tools to signed its digital platform for financial most actively borrowed stocks in the locations to support the firm's back, usher growth advisors. The redesigned platform fea- market through an indicator of short- middle and front office functions. For Morgan Stanley, digital wealth tures internal and external data feeds, interest , is now also available through Avaloq claims that the transition management tools are the next growth helping advisors to customise recom- the MarketMap terminal. will offer Canaccord the flexibility to engines, and new cash management mendations for clients more easily. The BATS One Feed, which provides provide investment solutions and cli- and payments tools are the enablers SunGard adds 'unique' market a comprehensive view of reference ent service, along with the necessary for improving customer relationships, data content to MarketMap for quotes and trade data from all four infrastructure to support its growth said the bank's CFO Jonathan Pruzan. wealth managers BATS U.S. equities exchanges, has plans. "As far as the next engine for growth SunGard has added additional 'unique' also been added to the solution, the Canaccord Genuity Wealth Manage- for the bank, I think it's going to be content to its MarketMap platform, company said. ment (UK) CEO David Esfandi said: about the digital payment and cash which according to the company will "SunGard's investment in unique "The successful implementation of the management products," FierceFinan- help wealth managers, advisors and content helps provide more advanced Avaloq platform allows us to focus on ceIT quoted Pruzan as saying. traders find new investment opportu- tools to make the data more relevant delivering innovative wealth manage- "We think the next development nities and differentiate their offerings. to meet more sophisticated client ment solutions and creating long term of wealth management will help us The MarketMap market data solu- demands," said Harald Bina, head value for our clients. deepen relationships with our clients, tion now offers social sentiment from of product management, SunGard's "Avaloq has become a trusted stra- capture more wallet share, and help Heckyl, which tracks and provides global trading business.

16 y June 2015 www.privatebankerinternational.com

PBI 320.indd 16 03/07/2015 10:22:24 Private Banker International REGULATION NEWS

The latest in regulation A monthly round-up of the big regulatory announcements that impacted the private banking and wealth management industry across the globe

Julius Baer to take $350m charge and VCT structures across Europe. be protected by tax secrecy regime opportunities and minimise risk for to settle US tax probe Phoenix Fund Services will retain and may not be used for tests or for our cross border clients. Swiss wealth manager Julius Baer its Essex-based offices and staff. opening a criminal probe. Fintech firm AxiomSL expands has decided to take a preliminary The existing Phoenix Fund Services The amnesty law was first proposed partnership with major Swiss provision of $350m to settle a senior management team will remain by Putin last December, and approved private bank US Department of Justice (DOJ) as directors and will continue to fulfil by him on 25 March 2015 AxiomSL, a provider of regulatory investigation of the bank's alleged key management roles within the Julius Baer probes its reporting and risk management role in helping wealthy Americans combined organisation which will involvement in FIFA corruption solutions, has revealed that a major evade taxes. adopt the Maitland brand name. case Swiss private bank has decided to "These settlement discussions have Guernsey regulator signs MoU Swiss banking group Julius Baer has extend the deployment of AxiomSL's now sufficiently advanced to enable with Gibraltar counterpart launched an internal probe of money platform to include reporting to the Julius Baer to make a preliminary The Guernsey Financial Services transfers related to a FIFA corruption Central Bank of Ireland, including assessment of a probable and Commission (GFSC) has signed a case. new monetary and interest rate approximate amount required to memorandum of understanding The Swiss lender is one of the banks disclosures mandated by the reach a settlement with the DOJ," the (MoU) with the Financial Services involved in money transfers in a European Central Bank (ECB). bank said in a statement. Commission in Gibraltar (FSC). US indictment of 14 FIFA as well as AxiomSL claims that its platform The preliminary provision will be The MoU is part of an ongoing regional soccer officials in May 2015. will help the Swiss private bank to charged to Julius Baer's 2015 half- programme of expanding coverage However, it has not been accused of automate other reporting to the year results, which are expected to be of the GFSC's network of supervisory any wrongdoing yet. Central Bank of Ireland, including reported on 20 July 2015. and regulatory cooperation "We have launched an internal the preparation and submission If the amount had been booked at agreements. investigation. We are fully of Resident Offices Returns (RS2), the end of April 2015, the group's BIS This latest agreement provides a cooperating with the authorities," a total capital ratio would have been Survey of Credit Institutions Returns framework for enhanced cooperation Julius Baer spokesman said. 20.9% and its BIS tier 1 capital ratio (CRS2), Maturity and Sectoral Returns between the two supervisory The bank is already under 19.6%, the private bank said. (MTS), Revaluation Adjustment authorities and has been signed the scanner by the US Justice Returns (RV2), Reclassification Maitland receives FCA approval in the spirit of mutual cooperation Department over its involvement Adjustments Returns (RC2) and for Phoenix Fund Services and information exchange seen as in aiding offshore tax evasion for Analysis of Lending and Deposits acquisition crucial by the G20 countries and American taxpayers. Returns (SQ2). Maitland, an advisory, fund international standard setters for Settlement of that dispute is AxiomSL added that its platform administration and fiduciary services financial services supervisors. expected to offer certainty over supports traditional and taxonomy- firm, has received approval from The Guernsey regulator ensures the capital the firm might return based reporting requirements in the Financial Conduct Authority the Bailiwick's regulatory framework to shareholders, use to make multiple jurisdictions. for its 100% acquisition of and practice meets international acquisitions or invest in current AxiomSL chief operating officer for Phoenix Fund Services, a UK based standards and is a committed businesses." EMEA Ed Royan said: "We are seeing company offering outsourced fund participant in discussions of strong demand for an infrastructure administration services to investment CBA receives Chinese currency international standards. managers in the UK and offshore. license to trade in Shanghai that simplifies the management The transaction is now complete Russian President signs law on China Banking Regulatory of regulatory reporting. AxiomSL with effect from 1 June 2015. offshore capital amnesty Commission (CBRC) has granted delivers this by providing a single The combined entity has gotten Russian President Vladimir Putin a renminbi (RMB) license to platform that can be used for off to a strong start, with significant has signed a law on offshore assets Commonwealth Bank of Australia multiple requirements - including new mandates increasing its assets amnesty allowing Russians to (CBA) for its Shanghai branch. both traditional and taxonomy- under administration to £9.2 billion voluntarily declare foreign assets and The RMB license will enable CBA to based reporting - and by ensuring (USD $14.2 billion). bank deposits. broaden its institutional offering to clients always have up-to-date This boosts Maitland's overall The amnesty, which aims to help incorporate all aspects of trade and templates." assets under administration to people avoid criminal, administrative investment for clients in Australia The Swiss private bank, which over £140 billion (USD $210 billion), and tax liability, will be offered if and China. has been using AxiomSL for almost and heralds its entry into the fund the violation was made before this The license will also facilitate the a decade, first implemented the administration sector in the UK January. bank to enhance its branch offering AxiomSL platform in the UK for where it has an established private Russians who disclose previously at Beijing and Shanghai branches reporting to the Bank of England and client and corporate services concealed assets including property, besides complementing its presence Financial Services Authority. business. shares or foreign bank accounts this in the Shanghai Free Trade Zone (FTZ). Following the success of this Maitland CEO, Steve Georgala, year, will be offered immunity from CBA Institutional Banking & project, the bank decided to also says the FCA approval means that criminal prosecution. Markets executive general manager deploy the AxiomSL platform in the Maitland is now in a position to offer To receive an amnesty, individuals international James Rickward US and then in Asia-Pacific. fund oversight and administration to have to submit a special declaration said: "The RMB license increases our The bank also leverages AxiomSL investment trusts, UCITS, NURS, QIS, unveiling the assets to the tax ability to deliver holistic tailored for headquarters reporting in Hedge, Private Equity, Real Estate authorities. The information will solutions that maximise business Switzerland, according to AxiomSL.

www.privatebankerinternational.com June 2015 y 17

PBI 320.indd 17 03/07/2015 10:22:24 / Private Banker International

ANALYSIS LIQUIDITY PROFILES: ORTEGA WILSON

Liquidity profiles PBI has teamed up with sister company WealthInsight to provide monthly liquidity events that have piqued the interest of its analysts. This month, CEO of Douglas Holding AG, Henning Kreke, and co-founder, chief technical officer and chairman of Broadcom Corporation,Henry Samueli

Dr. Henning R Kreke CVC Capital Partners Ltd., a private equity firm based in the UK, has

agreed to acquire Douglas Holding AG, a German retailer of perfumes,

books, jewellery and confections, from Advent International Corpora-

tion, a private equity firm based in the US and the Kreke family.

Following the transaction, Kreke family will hold a 15% stake in Douglas.

Henning Kreke will continue to serve as CEO of Douglas.

Douglas operates 1,700 stores across 19 countries. It has reported revenue

of EUR2.5bn ($3.03bn) for the financial year 2014.

Profile: Henning Kreke serves as a chief executive officer and chairman of the executive board Douglas Holding AG. He is married to Jane A Blankenship and has four children of Douglas Holding AG since 2001. He joined the group in 1993 as assistant to the Full Name: Dr. Henning R Kreke director of the fashion/sports division. Also he serves as a member of supervisory Known As: Henning Kreke board of Deutsche EuroShop AG. Previously he served as the vice chairman of executive board of Borussia Dortmund GmbH & Co KGaA. Gender: Male Mr Kreke obtained Bachelor of Business Administration and Master of Business Citizenship: Germany Administration from University of Texas at Austin and also holds doctorate in Political Languages: German, English Science from Christian Albrechts University. Liquidity Event: 1 June 2015, CVC Capital Partners Ltd. has agreed to acquire Born in April 1965, Mr Kreke is the grandson of Herbert Eklöh, who is the founder of Douglas Holding AG

Henry Samueli Profile: Avago Technologies Limited, a Sin - Henry Samueli (Samueli) is the co-founder, chief gaporean designer, developer and technical officer and chairman of Broadcom supplier of a broad range of analog Corporation, a semiconductor company, based in the semiconductor devices, has entered US. He was born on September 20, 1954, in Buffalo, into a definitive agreement to acquire New York, the US. He is also the owner of Anaheim Broadcom Corporation, a provider of Ducks, and a prominent philanthropist in the California semiconductor solutions for wired and community. Dr Samueli completed his schooling wireless communications based in the from Fairfax High School, Los Angeles, obtained a US, for a combined consideration of Bachelor of Science in Electrical Engineering from $37bn in cash and stock. University of California, Los Angeles in 1975. In 1976, Under the terms of the agreement, he obtained master’s degree in Electrical Engineering Avago will acquire Broadcom for from University of California, Los Angeles, and received $17bn in cash consideration and the doctorate degree in Electrical Engineering in 1980. economic equivalent of approximately 140 million Avago ordinary shares, Full Name: Dr. Henry Samueli valued at $20bn as of May 27, 2015, Known As: Henry Samueli resulting in Broadcom shareholders Gender: Male owning approximately 32% of the combined company. Based on Avago's Citizenship: United States of America closing share price as of May 27, 2015, Languages: English the implied value of the total transac- Liquidity Event: 17 Apr 2015, sale of 18,760 shares, tion consideration for Broadcom is representing a 0.0182% stake in Varian Medical $37bn. Systems Inc.

18 y June 2015 www.privatebankerinternational.com

PBI 320.indd 18 03/07/2015 10:22:25 Private Banker International PEOPLE MOVES NEWS

People moves This month, Barclays W&IM announced that Citi Private Bank's current global chief operating officer, Dena Brumpton, will take up the head of UK private bank role at Barclays W&IM, starting 1 September 2015. Here are all the major people moves that recently made the news

n PEOPLE MOVES

Name Moved from Moved to Old position New position

UK Mike Fullalove Alliance Bernstein Barclays W&IM head of product development for EMEA head of fund products

Switzerland Mary Rozell Sotheby's UBS director of Art Business programme global head of Art Collection

UK Helen Watson Morgan Stanley Rothschild private client portfolio manager managing director for UK wealth unit

head of UK Private Bank (starting role on UK Dena Brumpton Citi Private Bank Barclays W&IM global chief operating officer 1 September 2015)

UK Ben Money-Coutts Saltus Charles Stanley partner CFO

UK Stuart Layzell LDC Tilney Bestinvest private equity CFO

Union Bancaire global emerging markets portfolio Switzerland Mathieu Nègre Royal Bank of Canada head of emerging market equities Privée manager

global head of product management for Ireland Alan Flanagan BNY Mellon BNY Mellon global head of private equity and real estate alternative investment Services

head of product development for ETF USA Tony Kelly BlackRock Goldman Sachs iShares ETF business

JP Morgan Private Singapore Harjeet Singh BNP Paribas executive director managing director, team head, senior banker Bank

Switzerland Richard McNamara Henderson Group GAM managing director for finance CFO

head of private wealth management USA Vince Lumia Morgan Stanley Morgan Stanley head of capital markets business

Vontobel Wealth Vontobel Wealth Hong Kong Michael Haupt direct advisory of UHNWI clients COO Management Management

head of retail banking and wealth USA Pablo Sanchez JP Morgan Chase HSBC national director of consumer banking management, US and Canada

China head for UBS China Di HE UBS UBS chairman of the Board of UBS Securities Division

www.privatebankerinternational.com June 2015 y 19

PBI 320.indd 19 03/07/2015 10:22:25 Private Banker International COMMENT KEN MCCRACKEN, WITHERS CONSULTING GROUP

Succession planning: Learning from PRIVATE BANKER

the Murdochs Editor: Meghna Mukerjee Email: [email protected] Ken McCracken, founder and consultant at Withers Consulting Group, Tel: +44 (0)20 7406 6713 Correspondent: John Schaffer comments on succession planning Email: [email protected] Tel: +44 (0)20 7406 6703 Delivering innovative Group Publisher: Ameet Phadnis Tel: +44 (0)207 406 6561 Email: [email protected] hen things are going well in a fam- will not be any change until they let go. Rupert mobile & online financial services ily business there will be a unsurprisingly hasn't quite let go and might Sub-editors: Kev Walsh, Nick Midgley balance of interests never until the decision is taken for Subscription Enquiries: Sharon Howley Tel: +44 (0)20 7406 6615 solutions to organisations that among the owners, him, but James is probably used Email: [email protected] W to this level of parental scrutiny. the wider family and those who run the business. Suc- But who will James be Director of Events: Ray Giddings cession planning tends to accountable to after his Tel: +44 (0) 203 096 2585 need to provide secure access Email: [email protected] make everyone feel off father is no longer here?

balance and there is an He has 5 siblings and half- Business Development Manager: Alex Aubrey understandable desire siblings and one wonders if Tel: +44 (0)20 3096 2603 to regain equilibrium as they are going to be passive Email: [email protected] easily as possible. and accept being led, even WealthInsight Account Director: Matt Dowsett Take the Murdochs for parented, by their brother. Tel: +44 (0)20 3096 2592 example. For decades, eve- What happens with owner- Email: [email protected] To find out more about us please visit: ryone accepted Rupert being ship is vital in succession. One Customer Service in charge of an empire wearing hopes that ownership governance Tel: 020 3096 2636 or 020 3096 2622 different hats as major investor, busi- among the Murdoch clan is as well organ- Email: [email protected] www.intelligentenvironments.com ness chief and family leader. The recently ized as everything else in their empire, because For more information on accessing Private Banker revealed succession plan in 21st Century Fox if not.... International content online, or to subscribe, please There are many things that enterprising telephone +44 (0)20 7406 6579 or email customer. is more of the same, with James being appoint- [email protected] ed CEO. families can learn from this unfolding succes- He is not quite stepping into his father's sion: London Office 5th Floor, shoes, and will be 'first among equals' in a Farringdon Place, sibling partnership of sorts. His father remains 1. Make sure the family want to continue. 20 Farringdon Road, executive co-chairman with brother Lachlan. Don't assume that the next generation London, EC1M 3AP

So in place of one Murdoch there are now 3, want to preserve their ancestors' legacy. If Asia Office for the moment. they want something else, it is better to 1 Finlayson Green This decision followed a period of test - face up to this rather bind them into a life #09-01 ing different family candidates, Prudence of relatively affluent misery that will be Singapore, 049246 Tel: +65 6383 4688 from Rupert's first marriage then Elizabeth, bad for the family and the business. Fax: +65 6383 5433 Lachlan and James from his second. That is Email: [email protected] wise, as entrepreneurial talent is not geneti- 2. Prepare both generations for the handover. Financial News Publishing Ltd, 2015 cally inherited. The seniors need as much help with this as Registered in the UK No 6931627 One wonders if outside candidates were the next generation. ISSN 0265-0223 Unauthorised photocopying is illegal.

considered or was it always going to be a fam- The contents of this publication, either in whole or part, ily member in control? Families differ about 3. Do the planning when both generations may not be reproduced, stored in a data retrieval system or this. Some cannot entrust their family fortune are able to work together and help each transmitted by any form or means, electronic, mechanical, photocopying, recording or otherwise, without the prior to an outsider, while others find it easier to other. permission of the publishers. trust them and the family are happy to govern their enterprise rather than manage it. 4. Be honest when making tough choices For information on additional copies or syndicated online We are an international provider of innovative mobile and online solutions for financial service access to this newsletter, please contact Customer Services. There is no right answer and families need such as whether to appoint family or out- organisations. Our mission is to enable our clients always to stay close to their customers. to be honest when making choices. Favouring siders. family is understandable but if it means a less We do this through Interact®, our single software platform, which enables secure financial applications, able person is in charge don't complain later We will find out in due course if every about the dividends or share price. And always stakeholder feels that this appointment is an engagement, transaction and servicing across all digital channels. Today these are predominantly be watchful for the personal consequences of acceptable balance of interests. We can won- focused on mobile, PCs & tablets. However Interact® can and will support other form factors, as and putting family in roles that they are not up to. der which role mattered most to this 84 year However, it is the seniors who matter more old when it came to making decisions; father, when they proliferate (as seen by our work to develop digital banking for the Smartwatch). in succession than the next generation. Fami- owner or business leader? lies should consider helping them how to cope Whatever happened you can easily imagine We provide a ready alternative to internally developed solutions, enabling our clients with a faster with the next stage of their life because there him saying, "succession ain't for sissies." route to market, expertise in managing the complexity of multiple devices and operating systems, and a

20 y June 2015 www.privatebankerinternational.com constantly evolving solution.

PBI 320.indd 20 03/07/2015 10:22:27 IE-Advert-Dec-2014.indd 1 16/12/2014 12:25:21 Delivering innovative mobile & online financial services solutions to organisations that need to provide secure access

To find out more about us please visit: www.intelligentenvironments.com

We are an international provider of innovative mobile and online solutions for financial service organisations. Our mission is to enable our clients always to stay close to their customers.

We do this through Interact®, our single software platform, which enables secure financial applications, engagement, transaction and servicing across all digital channels. Today these are predominantly focused on mobile, PCs & tablets. However Interact® can and will support other form factors, as and when they proliferate (as seen by our work to develop digital banking for the Smartwatch).

We provide a ready alternative to internally developed solutions, enabling our clients with a faster route to market, expertise in managing the complexity of multiple devices and operating systems, and a constantly evolving solution.

PBI 320.indd 29 03/07/2015 10:22:28 IE-Advert-Dec-2014.indd 1 16/12/2014 12:25:21 SOCIETE GENERALE PRIVATE BANKING HAMBROS

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