www.privatebankerinternational.com Issue 377 / february 2020 PRIVATE BANKER POWER TO THE PEOPLE?

HOW A HYBRID ROBO MODEL COULD BENEFIT BOTH CLIENT AND ADVISER OPINION FEATURE COUNTRY PROFILE

Will the UK take an entirely Coronavirus: how are Regulatory change, new approach to sanctions markets reacting and how negative interest and outside the EU? will financial firms cope? digitisation in Germany

PBI February 377.indd 1 03/03/2020 12:45:09 contents this month

COVER STORY NEWS 06 05 / EDITOR’S LETTER 18 / ROUND-UP 20 / PEOPLE MOVES 21 / TECH AND REGULATION 21

HYBRID ROBO

Editor: Group Editorial Director: Director of Events: Patrick Brusnahan Ana Gyorkos Ray Giddings +44 (0)20 7936 6987 +44 (0)20 7832 4396 +44 (0)20 7936 6512 [email protected] [email protected] [email protected]

Reporter: Sub-editor: Head of Subscriptions: Asena Değirmenci Nick Midgley Sharon Howley +44 (0)20 7936 6969 +44 (0)161 359 5829 +44 (0)20 7936 6587 [email protected] [email protected] [email protected] twitter: Customer Services: +44 (0)207 936 6587, [email protected] @bankerNews Financial News Publishing, 2012. Registered in the UK No 6931627. ISSN 0953-7031 Unauthorised photocopying is illegal. The contents of this publication, either in whole or part, may not be reproduced, stored in a data retrieval system or transmitted by any form or means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publishers. For more information on Verdict, visit our website at www.verdict.co.uk. As a subscriber you are automatically entitled to online access to Private Banker International. For more information, please telephone +44 (0)20 7406 6536 or email [email protected]. London Office: John Carpenter House, John Carpenter Street, London, EC4Y 0AN Asia Office: 1 Finlayson Green, #09-01, Singapore 049246 Tel: +65 6383 4688 Fax: +65 6383 5433 Email: [email protected] linkedin: private banker PRIVATE BANKER international

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PBI February 377.indd 2 03/03/2020 12:45:13 contents february 2020 12 16

FEATURES OPINION 06 / HYBRID ROBO 14 / ONBOARDING 19 / COLLYER BRISTOW Is the hybrid robo model handing power back Every sector has one hurdle: acquiring Is it the case that the UK will take an entirely to advisers and clients alike? Or is it destroying and onboarding customers, and private novel approach to sanctions once it withdraws the personal relationships and human touch banking has a bigger challenge than most. As from the EU? And what impact will this for which private banking is so widely technology gains presence, how are private ‘new’ regime have on HNWIs operating here? regarded? Alison Ebbage finds out banks adapting? Patrick Brusnahan writes Samara Dutton writes 12 / BREXIT 16 / CORONAVIRUS Close to four years after the referendum, the Coronavirus is having an astounding effect 22 day has come, but what will Brexit do to UK on everything, and financial services is no private banking and wealth management? exception. So, how are markets reacting Will the effects be widespread or non-existent? and how will financial firms cope? Patrick Patrick Brusnahan speaks to experts Brusnahan asks the experts COUNTRY PROFILE 09 09 / GERMANY Key trends influencing German banking include regulatory changes, negative interest rates and digitisation. Asena Değirmenci speaks to Julius Baer and Berenberg about the country’s private banking market BUSINESS PROFILE 14 22 / LOMBARD INTERNATIONAL How can you provide a niche service to HNW and UHNW clients across the world? Can you be specific and global at the same time? Patrick Brusnahan speaks with Lombard International global CFO Florent Albert

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PBI February 377.indd 3 03/03/2020 12:45:19 HEAR • NETWORK • DISCOVER • CELEBRATE Retail Banking International Conference and Awards London • 22 April 2020 SHAPE THE FUTURE OF RETAIL BANKING

Following a phenomenally successful 2019 edition, Retail Banking International will return in 2020 for its 35th annual conference and awards. The show will bring together industry leaders to examine how the retail banking sector is embracing digital innovation, enhancing operational efficiency and delivering new, improved services for customers. We will explore the current banking landscape, industry collaboration and how to protect against economic upheaval to thrive in a fast-paced and critical time for creating innovative customer products. The content-driven conference will offer delegates the opportunity to hear the latest developments, and explore new innovation through thought-provoking sessions. We look forward to welcoming you.

Silver Partner Bronze Partner

To register now, or for more information, contact Carlo Mancini on [email protected] or call +44 (0)20 7832 3584

PBI February 377.indd 4 03/03/2020 12:45:20 editor’s letter

HEAR • NETWORK • DISCOVER • CELEBRATE Retail Banking International spending big to get Conference and Awards London • 22 April 2020 ahead of the game SHAPE THE FUTURE Patrick Brusnahan, Editor OF RETAIL BANKING organ Stanley will acquire financial sheet-light business mix, emphasising more durable services company E*TRADE in an all-stock sources of revenue.” Following a phenomenally successful 2019 edition, Retail Banking International will return M transaction valued at $13bn. E*TRADE “Since we created the digital brokerage category nearly in 2020 for its 35th annual conference and awards. The show will bring together industry stockholders will receive 1.0432 Morgan Stanley 40 years ago, E*TRADE has consistently disrupted the shares for each E*TRADE share. status quo and delivered cutting-edge tools and services leaders to examine how the retail banking sector is embracing digital innovation, enhancing The deal boosts Morgan Stanley’s foothold in the wealth to investors, traders, and stock plan administrators,” added operational efficiency and delivering new, improved services for customers. management sector. E*TRADE holds over 5.2 million client Pizzi. “By joining Morgan Stanley, we will be able to take We will explore the current banking landscape, industry collaboration and how to protect accounts, and $360bn in retail client assets. These will be our combined offering to the next level and deliver an against economic upheaval to thrive in a fast-paced and critical time for creating innovative added to Morgan Stanley’s 3 million client relationships even more comprehensive suite of wealth management customer products. The content-driven conference will offer delegates the opportunity to hear and $2.7trn in assets. Shareholders from both companies capabilities. Bringing E*TRADE’s brand and offerings the latest developments, and explore new innovation through thought-provoking sessions. are expected to benefit from cost savings of around under the Morgan Stanley umbrella creates a truly exciting $400m from maximising efficiency in infrastructure. wealth management value proposition and enables our We look forward to welcoming you. Furthermore, there is scope for funding synergies of collective team to serve a far wider spectrum of clients.” $150m by optimising E*TRADE’s $56bn in deposits. The deal is subject to customary closing conditions, E*TRADE CEO Mike Pizzi will join the bank and continue including regulatory approval; it is expected to complete in to run the firm within the Morgan Stanley brand. He will the fourth quarter of this year. report to Morgan Stanley chair and CEO James Gorman. Huge deals such as these are becoming more In addition, he will join the Morgan Stanley operating and common, and it shows that firms are willing to spend management committees. One of E*TRADE’s independent highly to survive. This acquisition, similar to Charles directors will also join the Morgan Stanley board. Schwab splashing $26bn on TD Ameritrade, shows that “E*TRADE represents an extraordinary growth wealth management, often seen as an aging industry, is opportunity for our wealth management business and recognising that technology needs to be brought into the a leap forward in our wealth management strategy. fray quickly. The combination adds an iconic brand in the direct-to- It also shows a willingness to look outside their own consumer channel to our leading adviser-driven model, organisation. Many firms believe that solutions and be while also creating a premier workplace wealth provider made in house. Huge players such as Morgan Stanley can for corporations and their employees,” said Gorman. certainly do that, but not with enough speed to market. “E*TRADE’s products, innovation in technology, and While the deal is expected to close at the end of established brand will help position Morgan Stanley as the year, the process is much faster than building Silver Partner Bronze Partner a top player across all three channels: financial advisory, technological prowess from scratch. Numerous firms will self-directed, and workplace. In addition, this continues see this, if they have not already, and more money will be the decade-long transition of our firm to a more balance spent, and more companies bought, this year. <

Get in touch with the editor at: [email protected]

To register now, or for more information, contact Carlo Mancini on [email protected] or call +44 (0)20 7832 3584 www.privatebankerinternational.com | 5

PBI February 377.indd 5 03/03/2020 12:45:21 feature | hybrid robo

power to the people, thanks to new technology

Is the hybrid robo model handing power back to advisers and clients alike? Or is it destroying the personal relationships and human touch for which private banking is regarded? Alison Ebbage finds out

he impetus to reduce costs while to be augmented by improved technology and survey noted. Enter the hybrid robo-advice also improving client service is digital tools. The survey also showed that time model, where the ‘robo’ assists and provides Tperpetual. with a human adviser is still important. automation to enhance what the adviser can Technology in its various forms seems offer, as opposed to replacing the adviser to be an integral part of any solution, but entirely. in particular, being able to harness the best The model is in nascent stages of parts of the robo-advice model and use that development, but has the potential to alongside the adviser in a hybrid way can deliver on lower costs and better service and provide a tangible service enhancement, efficiency for the adviser while retaining the allowing the adviser to make better use of the trend is high-touch client experience in the wealth their time and still retain and enhance the management community where personal personal touch. towards more contact will always be key. A survey by software provider Appway and Thomas Schornstein, head of Europe and the Scorpio Partnership in summer 2019, self-service the Middle East at digitisation specialist Innovate to Succeed: The Client Call to Action additiv, comments: “Our idea is that this for Wealth Management, reflected this. It spoke capabilities should be not talked about in terms of it to over 270 investors from the US, the UK, being a robo-adviser but rather in terms of Germany and India to find out how wealth it being a digital channel that can make the managers can create more value for them by client’s life easier and help the adviser to leveraging technology. “The trend is towards more self-service better service the client.” Nearly four out of five, 78%, thought that capabilities and more communication “Cost-to-income ratios cannot afford to their own wealth management advisers should through digital channels, yet not at the have a very human-intense service in the find new ways to deliver value to them in the expense of dedicated access to a human lower wealth segments, and so digitisation future; 54% thought that advisers would need adviser, which remains a priority,” the and self-service are imperative.”

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PBI February 377.indd 6 03/03/2020 12:45:23 feature | hybrid robo

therefore expect more from their professional services providers, including wealth managers. ONBOARDING The onboarding and information-gathering process is seen by most as the initial area for a robo to best be put to work. Guy Healey, head of private banking at Brown Shipley, comments: “The context around the regulatory environment is so important because the focus on suitability for an individual means that templating is no longer doable. It’s too easy to underestimate the cost and effort of gathering all the information required, and also the cost of getting it wrong.” The robo can also help with the time it takes to gather information to determine suitability, help the adviser to fact-find and, therefore, arrive at advice that is tailored to that individual. This serves to save both the Thomas Schornstein, additiv client and the adviser time by using a digital Guy Healey, Brown Shipley tool rather than spending hours filling out Schornstein continues: “The biggest forms, only for that information to then be “Another next step is allowing clients opportunity is within the mass affluent re-entered manually. It also means the process to play around and set how they want to market, where the investment side can be can be carried out at a time of the client’s see reviews, monitoring and reporting, so grown from just payments and then the choosing. they can see how it relates to other things relationship widens and deepens.” Healey says: “Uptake is good, because it is and how the risk is panning out overall This is amply demonstrated by the launch essentially something that is making life so and from specific angles. This works, say, last year of Rosecu. Founded by Qiaojia much easier for both the adviser and client. during evening hours when the adviser is not Li, who co-headed Coutts’ Asia desk until The regulation is arduous and intense, but it available – that might raise a few questions for last September, the platform aims to attract does address the sins of the past – anything the relationship manager the next day.” middle-market investors with assets between that can now make that whole process £100,000 ($129,591) and £2m by offering of gathering core information easier is to LIFECYCLE PLANNING some of the services of a private bank through be welcomed. Obviously, more complex These same principles of letting the client play the use of AI. Its service is intended to information such as beneficial owners, trust around, supported by the adviser, can also replicate the bespoke adviser sessions offered structures and the like, are less suited to being be readily used within the area of life-cycle by private banks. captured by a robo and will continue to need planning. This is particularly useful when it However, higher up the value chain, the manual input.” comes to presenting things very visually, and story is slightly different, with the robo- adviser being seen as a positive service enhancement, a differentiator, rather than a Uptake is good, because it is essentially means to save money. John McCann, chief revenue officer at something that is making life so much software provider Nucoro, comments: “In Switzerland there is great interest in this easier for both the adviser and client as a tool to hone the offering to the very investment-savvy high net worth community. It is seen as an additional service proposition But if acquiring the client is one thing, adding in or taking away various scenarios for those that would like to experiment and then keeping them is another, so how can the such as charitable giving or leaving money to benefit from this approach. It is seen as a robo be usefully applied on an ongoing basis? relatives. Being able to easily understand this white-glove service, where only the elite get Encouraging the client to play around with sort of thing and then being able to discuss to do this.” the digital tools and take an active role in the with an adviser creates and develop trust. Indeed, bigger banks see this as a portfolio is one way. Healey comments: “Clients and advisers diversification play, and will invest and Schornstein explains: “The client should be alike love this, as it is so visual and easy to deliver this as part of their digital offering – supported to see the benefit of being able to understand – key when it comes to managing especially as a more tech-savvy generation of access and amend a portfolio online in order something as important as to whether HNWs come online, and indeed as current to optimise the portfolio, rather than having they have enough money to last over their clients have higher everyday expectations and paper-based reports and recommendations. lifetime.” 

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PBI February 377.indd 7 03/03/2020 12:45:24 feature | hybrid robo

INVESTMENTS personalisation really does need the human touch.” And while suitability regulation prevents the Another salient point is that clients will elimination of human oversight within the always demand more for less money, and so investment process, the robo certainly has role the digital robo provides a means to both to play here. enhance the service via the complicated The Appway survey found that while things that need adviser input, as well as save “human accountability for investment money on the things can be more automated decisions remains sacred for 86% of investors, or digitised. It is a way of a better experience, our research indicates growing acceptance for and thus engaging a client and subsequent the use of artificial intelligence. For instance, generations. 35% see added value in AI profiling their investment needs, and 43% believe that AI CULTURAL PROGRESS could support their firm’s customer service”. As tools get better, it is easier to see how firms Healey points to the role of the adviser can experiment with this; however, much in making sure that the client understands depends on how keen firms are to invest in fully the risks involved in whatever is being technology and digitisation. recommended. “Retaining the relationship is Happily, there has been significant cultural key to that. The adviser needs to be able to progress; for example, it is now considered a articulate the complexity of an investment – given to have mobile access to a bank account. especially as you move up the wealth ladder The same will soon apply to a robo-advisory and get into alternatives and less-liquid John McCann, Nucoro service. This is not entirely age-dependent investments. The advisers should intuitively either, but more reflective of everyday life and know whether the client has understood the wealth management the brand value is all the services provided by the likes of Netflix risk – that is something that needs doing face around the personal service and the advice and Apple now being demanded as standard. to face,” he says. that comes from that relationship. Clients Older people are as likely to want this as But the scope of the robo when it comes want to be able to use tools and be self- standard as younger people. to choosing investments could be limited directed when they choose, but they also Indeed, client expectations around in terms of clients wanting more esoteric want the option and the availability of a personalisation, for example, point to better investments, particularly those that are relationship and to trust in the advice they are data analytics in order to lead to more illiquid or hard to quantify such as impact getting.” specialist advice and face time, and therefore investments or fine wine. This points to the robo being able to do the legwork, but the client and adviser then sitting down together in wealth management, the brand value is to discuss. Pointing out the need to support self- all around the personal service and the service, Schornstein notes: “The wealth manager needs to make sure the client is advice that comes from that relationship happy with the self-service elements, and there needs to be good support to help them to use it, perhaps initially alongside the Indeed, demand for specialist advice at more contact time with the adviser. The adviser.” critical life moments is never going to fall, Appway survey revealed that older generations Kate Tsoura, CMO at Profile Software, and is often why HNWIs choose to initiate a were aware of the need to access data to get to comments: “The scope of the robo depends relationship with wealth management firms the personalisation aspect. on the individual firm – what investment in the first place. Having the robo in place to “The majority of investors over the age of types and classes should be included. What take care of the day-to-day means more time 67 want to receive ongoing data analytics and level of functionality should be afforded to to deal with the complex. content that is personalised to their interests the individual? There is a huge gap between Schornstein comments: “Once the client and goals; 80% believe that data analytics the possible and the desirable at this point in gets used to the robo conceptually, and should be at the core of a better customer time.” is comfortable with it, then there is less experience,” it said. reliance on the manager, and that frees up McCann concludes: “This is a digital FUTURE the manager to do the complex stuff like opportunity and a good thing. It is about Indeed this last point is especially important simulation, risk management, financial taking the relationship to the next level. in determining the future of the robo-advice planning and so on. “The devil is in the detail – of deciding model. Just because something is possible, “In particular, a liquidity event or a what the right level of human interaction is it does not follow that it should be done significant life change, such as the move and meeting the digital desires of the next automatically. from accumulation to decumulation, would generation. For now it is all around baby Healey comments: “In the end you have certainly need adviser input and could never steps, where what is possible, desirable and to be true to your brand values, and within really be managed by a robo. This sort of workable is worked out.” <

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PBI February 377.indd 8 03/03/2020 12:45:25 country profile | germany

the way forward: plotting a route for german private banking

Key trends that are influencing the German banking landscape include regulatory changes, negative interest rates and digitisation. Asena Değirmenci speaks to both Julius Baer and Berenberg on the country’s private banking market

he financial crisis has led to a peak private banks from public-sector and and opportunity. The challenge is that with in concern over German private cooperative banks is that they compete with increased public interest, private banks need Tbanking, and has put banks at the themselves, and not only with banks from to establish more regulation. The opportunity forefront of public attention. other sectors. is that private banks now have a chance to Banks are now seen as a high priority, as the In the past several years following the prevent a replication of the past, and to create need for regulation becomes increasingly vital financial crisis, the industry has greater levels a wider public understanding of the industry for managing the German economy. of expertise due to increased regulation. One and what it can do. Private commercial banks are a key pillar of the main objectives is a more pronounced Patrick Prinz, sub-region head for Germany of the German economy. According to the need for regulation, and to ensure that and Austria at Swiss private bank Julius Baer, European Banking Federation (EBF), private nobody repeats the mistakes that resulted in says: “German private banks are currently commercial banks account for 40% of total the financial crisis. facing challenges on both the cost and the assets in the banking system – one of the profitability side of the business. largest segments by assets. CHALLENGES “Costs are being driven by the high density These banks also play a role in the A country with a large export-based economy of regulations, the very rigid labour market, German export economy, making up 88% needs strong banks, and with the industry and the growing need for investments in of German exports and nearly three-quarters now in the public spotlight and facing IT and digitisation. At the same time, the of the industry’s foreign networks. Another a need for increased regulation, private relatively passive investment behaviour of significant element that separates German banks are presented with both challenge German clients, as well as negative interest

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PBI February 377.indd 9 03/03/2020 12:45:27 country profile | germany

rates, are affecting revenues – and as a result we are well placed to explore the substantial Outlining the steps that Berenberg is taking profitability. All these factors are resulting in untapped potential that exists to deliver value to increase profits, and comparing these to its growing margin pressure, and thus in ongoing to our targeted client segments.” previous methods, Naeve says: “We will retain industry consolidation.” He continues: “As the architects of our our proven, diversified business model with Klaus Naeve, head of wealth management clients’ wealth, we tailor highly individual, the wealth and asset management, investment at Hamburg-based investment bank personalised solutions in a client-centric, bank and corporate banking divisions. Berenberg, believes the current challenge for integral way – yet powered by the best that “In wealth management, we will focus on the German private banking market comes technology has to offer to increase process providing services for sophisticated wealth from a constant need for regulatory change. efficiency.” structures. This division is closely integrated Speaking to PBI, Naeve says: “Banks According to Prinz, the main drivers for with asset management to provide our clients continue to operate in a difficult Julius Baer to further build profits in the with an even broader and superior range of environment. Not only do they cope with German private banking market are its focus products. To this end, we also make use of the constantly changing regulatory requirements on clients, its independence as a pure wealth bank’s outstanding equity expertise, which and historically low or even negative interest manager free of any conflicts of interest, and will be a key driver of asset performance for rates, but they also have to overcome the its experienced relationship managers and the foreseeable future. challenges of digital transformation. the client proximity and service they offer “We expect the forward-looking “Berenberg will continue to make every through a network of locations across the positioning of the division to generate above- effort to master the challenges in a timely and country. average growth compared with the market. proactive manner. As a medium-sized bank, we Interest in the German private banking Further investments in personnel, technology are very well equipped in this respect. We are of market is increasingly significant, leading and processes, as well as automation, will help sufficient size while maintaining the flexibility many banks to make preparations for us to convince even more customers of the to react quickly and in a targeted way.” development and improvement. advantages of professional asset management. Naeve continues: “In recent years, we have repeatedly adjusted our business model wealth overview to meet the respective requirements and to expand Berenberg into an advisory firm with international operations. Beyond Hamburg, German HNWI population by wealth band

we have become established at the major Thousands financial hubs of Frankfurt, London and New 150 York. “Thanks to our advisory services aligned 120 to client requirements, we have been able to $1-1.5 90 $1.5-3 acquire numerous new clients in recent years. $3-10 We are, therefore, optimistic about the future, $10+ 60 and plan to further expand our business and

continue to grow in our core markets of 30 Germany, the UK, continental Europe and

the US.” 0 MARKETING STRATEGIES 2015 2016 2017 2018 2019f 2020f 2021f 2022f German banks bear a great responsibility, and are a key element of sustaining the country’s market economy. Banks here are a leading trade association, and for that reason Retail balances by investment product (2018) they work toward shaping economic policy decisions to make Germany an ideal business $bn location. 3,000 Explaining what Julius Baer is doing to 2,500 build profits in the industry, and how this 2,000 compares to its previous marketing strategies, Prinz says: “After having built up a profitable 1,500

market share in the German private banking 1,000 market over the last 10 years, Julius Baer will now focus going forward on further 500 enhancing client focus, enabling fast decision- 0 making, and thus substantially increasing the Deposits Mutual funds Equities Bonds bottom line potential of our franchise. “As one of the very few pure wealth managers for private clients and family offices, Source: GlobalData

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PBI February 377.indd 10 03/03/2020 12:45:27 country profile | germany

At the same time, we will press ahead with which innovations can generate added value retain clients and bring in new ones. With the intermeshing with other business areas for our clients, directly or indirectly, and regulatory updates, technological advances in order to make the Berenberg platform which positioning or income sources can and new business models, the types of even more intensively available to our wealth be integrated into our business model as a consumer and how they purchase products management clients in the form of innovative result.” are changing. Managers increasingly need to product and advisory solutions.” focus on consumer needs and preferences – be He continues: “Despite rapid growth ECONOMIC DEVELOPMENTS that through a digital landscape or demand during the last years, Berenberg is still small As mentioned previously, German banks have for more investment products and better- enough to implement very fast new solutions played a pivotal role in shaping the economic value providers. and – even more important – to deliver them marketplace. In the last few years, various Speaking about the wealth management by using different channels and departments economic developments have helped to shape industry, Prinz says: “The bank’s local and throughout the bank. In wealth management, and influence the German private banking international investment expertise, combined we named this approach WM Plus. market. with our proven performance track record, “Accountability is a guiding principle for According to Prinz: “The German private result in a high penetration of discretionary us, as a dynamically growing house with 430 banking market has grown faster than the mandates in Germany. A very high percentage years of tradition. Therefore, in addition European private banking market as a whole, of our German clients also make use of our to our social commitment, the application thanks to Germany’s higher-than-average holistic services and solutions, where our of sustainability and governance criteria rates of economic growth. This economic wealth planning experts play a major role. has a high priority in investment processes. development has further strengthened “A number of our wealth planners who This is valued by wealthy individuals and Germany’s position as the second-largest focus on the German market assist our clients institutional investors.” private banking market in Europe. and our relationship managers in finding “Potentially, the German economy may the most suitable solution for their personal DIGITAL SPEED slow down due to structural changes in some wealth in terms of protection, growth and the Digitisation has become a key feature in the key industries – automotive, steel and energy, transition to the next generation.” development of the German private banking for example; however, with a constant growth market. Speed is also a fundamental factor in rate in the UHNWI population, a strong OUTLOOK transforming the industry, due to increasing SME sector – what we in Germany call the Although the road ahead is still unclear, it is competition and change. New technological mittelstand – and more than 22,000 active undeniable that significant emerging trends advances can help banks to improve foundations, the German private banking are shaping the future of the banking industry productivity through the creation of new test market will maintain its attractiveness.” in Germany. products and faster solutions. In contrast, Berenberg’s head of wealth Looking at the German private banking In recent years, digitisation has also management says the last few years have market in particular, Prinz predicts: become an important factor in optimising been testing for German banks, noting that “Germany will remain one of the most sales, and allowing banks to provide more there have been numerous calls to reform attractive wealth management markets in Europe. Despite being fragmented and mature, the German private banking market Despite being fragmented and mature, will continue to show sustainable growth rates. the German private banking market will “Based on this positive market assessment and outlook, Germany is among Julius Baer’s continue to show sustainable growth defined core markets. Therefore, Julius Baer will continue to invest in its strong and profitable German market. What’s more, the innovative and interactive experiences for the German private banking sector due to ongoing consolidation within the German their customers. Numerous new digital increasing threats. private banking market may offer additional players are piquing the interest of customers “The last few years have been challenging growth opportunities for strong and and their expectations, resulting in increased for German banks. At the same time established players like Julius Baer.” competition to serve a growing client base. as implementing extensive regulatory Naeve adds: “As a result of regulation, Negative interest rates, regulatory changes requirements and dealing with the low interest rates and increasing investment and a rise in digital platforms have put the consequences of the financial crisis, market pressure due to ongoing digitisation, German banking landscape in a leading conditions have fundamentally changed: by we expect the industry to be exposed to position to reconsider new business models. low interest rates and the challenge of digital permanent and strong consolidation pressure; Although many banks have already increased transformation,” says Naeve. however, we believe we are very well prepared their digital presence with new self-service German banking must make structural with a robust business model, and intend to functionalities, there remains potential for changes if it wants to secure a stable future use this phase to gain additional market share. the industry to further expand its online and and restore profitability. One of the first steps He concludes: “We will focus in particular mobile offerings. in paving the way for a strong economic on making our processes as efficient and Naeve says: “In the field of digitisation, future is expanding strategic measures. The cost-effective as possible, and on consistently we will continue to analyse very closely main priority for wealth managers is to ensuring outstanding product quality.” <

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PBI February 377.indd 11 03/03/2020 12:45:28 feature | brexit

brexit is here: what next for wealth management and private banking?

Close to three years after the referendum, the day has finally come: the UK left the EU on the night of 31 January 2020. What will Brexit do to private banking and wealth management in the UK? Are effects set to be widespread or non-existent?Patrick Brusnahan speaks to experts

dean turner, ubs wealth management The UK left the EU at 11pm on 31 January; Brexit, however, will be prevented by the government’s desire to resist the remains far from being ‘done’. Focus will merely shift EU’s wish to ensure a so-called ‘level playing field’ to the transition period and what progress the for businesses, and longer-term solutions will be government can make by December. Whether saved for after the transition period. or not there will be friction in trade agreements No one is under false impressions that is no longer the question, but rather, just how economic growth in the UK will be a highlight much the government will accept. in 2020, but in our view, a recession is unlikely. Time is short and ambition on both sides While sterling’s stability could be subject to seems constrained. As such, we expect the UK potential setbacks in negotiations, we expect the and EU to come to a minimal, bare-bones trade pound to embark on an upward trajectory against deal covering goods-based sectors. Anything deeper the US dollar over the course of the year. <

Fahad Kamal, Kleinwort Hambros In 2019, nearly all markets performed positively. Equities post-election surge in sterling having dissipated rather were the most buoyant, with global markets up by more than quickly; it hit $1.35 in the immediate aftermath of the +20% in the aggregate in sterling terms, led by the results, but fell back to $1.30 the following week. US. Other risky assets such as high-yield credit The realisation rapidly dawned that the election and emerging market debt also performed well. merely signalled the beginning of negotiations However, contrary to intuition in a ‘risk-on’ surrounding the future relationship with the environment, safe-haven assets also produced EU, not the end. However, the Prime Minister positive returns, with UK gilts driven lower has pledged to open the fiscal taps, which by Brexit uncertainty and generally anaemic should help boost aggregate spending and economic conditions. Gold was a notable unblock pent-up corporate capital expenditure. performer, up 15% over the year in Sterling terms. This may well raise real growth prospects, which in In the UK, expectations are for another choppy year of turn should push still undervalued Sterling to between $1.35 negotiations between it and the EU. This is clear from the and $1.40. <

12 | February 2020 | Private Banker International

PBI February 377.indd 12 03/03/2020 12:45:29 feature | brexit

Robert MacIntyre, Lombard International Assurance Brexit has arrived, but its lasting impact on the wealth However, with the Brexit process now in motion and five management industry remains to be seen. The coming year years of relative political stability forecast for the UK, many will be a defining moment for many in the industry as the firms and their clients are more confident about the prospect UK’s future relationship with the EU becomes more clear. of life in the UK than they were this time last year. Assurance What is inevitable in the coming months is increased that internationally recognised wealth structuring regulatory complexity for companies operating solutions will be left unchanged will be crucial if this between the UK and the EU, with firms that confidence is to remain. have focused on mitigating the risk of all Brexit Ultimately, Brexit poses a significant challenge outcomes benefiting from their investment and for wealth management businesses. Companies foresight. that can quickly adapt, innovate and ensure Front of mind for all wealth managers will be they solve for their clients’ most pressing the issue of passporting rights. We have already concerns will turn this into an opportunity. At seen UK-based firms with EU clients move some Lombard International Assurance this is why we of their operations to the continent, and vice versa. took steps last year to open an FCA-approved UK Our HNW clients are increasingly internationally mobile and financial advisory firm, ensuring we can continue to service they will expect their cross-border wealth solutions to be our clients and partners wherever they are based. We unchanged, regardless of regulatory change. Firms will need welcome any opportunity to show our dedication to service to invest significant time and resource to ensure that the excellence, regardless of the challenges we and our clients impact of Brexit on their client services is muted. face. <

Ritam Gandhi, Studio Graphene The day has finally arrived. For some, Brexit day will herald Various plans of action can offer partial peace of mind in new-found certainty, while for others it will raise the post-Brexit frenzy. Opening a new office abroad apprehensions about the coming months and years. or upskilling existing employees, for example, Either way, we have reached the point of no are viable options – so it is worth doing your return. research. But what next? This will be the question on the The UK tech sector is robust; this has been minds of many business leaders, particularly demonstrated time and time again. We must those in the tech sector. After all, 69% of tech only look to record-breaking levels of venture start-ups fear that Brexit will hinder their ability capital investment being poured into the sector to hire the staff they need to help their business to realise its promise. However, the next few grow, according to Studio Graphene. So, as the UK years will not be plain sailing. Businesses should take and EU try to make sense of their new relationship, tech heed of any, and all, advice on offer to ensure they remain businesses must take steps to future-proof their strategies. competitive and adaptable. <

Jonathan Sparks, HSBC UK Bank For much of the last three and a half years, sterling has weakened whenever the risk of a no-deal Brexit rose. Since the election, investors have paid more attention to the cyclical outlook now the political backdrop is more stable. Although the UK should only grow modestly this year, we expect a relative improvement versus the US and eurozone. Given that sterling trades well below our estimate of its fair value, this improving outlook should lead to a steady appreciation through the year. This should help the buying power of the consumer and equities with a domestic focus. International investors are returning to the UK market, no doubt attracted to the discount in equity valuations and impressive dividends. With this in mind, we see the UK equity market as a good opportunity and are tactically overweight. <

www.privatebankerinternational.com | 13

PBI February 377.indd 13 03/03/2020 12:45:31 feature | onboarding

new ways to get your client on board

Every sector has one hurdle: acquiring and onboarding customers. Private banking has a bigger challenge than most, with regulation and customer relationship development. As technology gains presence in the industry, how are private banks adapting? Patrick Brusnahan writes

t is easier than ever before to be a is a relationship business. Having said that, a single global onboarding platform that customer in many sectors. With clients now expect a minimum standard of seamlessly blends diverse components such IAmazon, you can make a purchase in digitisation in opening their accounts. Digital as internal policies, regulatory requirements, one click; with banking, it has never been signatures, personalised services through core banking system technology and a this easy, but technology hopes to make a hand-held devices and automated alerts on documentary repository tool into a single difference in that regard. account opening are all examples of these experience. As a result of this work and To remain competitive, changes must be expectations. investment, we believe we have succeeded in made. According to a report from Appway, “Clients are also looking to reduce time making the onboarding journey shorter and Innovate to Succeed: The Client Call to Action spent on the onboarding process and they are more pleasant for our clients.” for Wealth Management: “The industry seeking transparency in this process.” Turrian says: “When you talk about is facing an innovation gap, with firms onboarding to me, there are really two struggling to serve HNWIs effectively even IMPROVING THE EXPERIENCE sides. One is everything which is related while the client opportunity arises.” So how are private banks meeting the needs to the regulatory requirements, or the Onboarding is key to this, especially as of consumers? Demands are obviously documentation which is necessary to open an it is the first part of the customer journey. changing and consumers are unwilling to wait account and profile the clients with regards Appway has been in the market for close to unnecessarily. to the regulations. The second one, which 17 years, and in wealth management and “You want to make sure that the is maybe a bit more bank-centric, is getting private banking for 10 of those, working on onboarding process is working as smoothly insights on who the client actually is and what onboarding solutions. as possible, as quickly as possible, for people he wants in order to best serve him in the Jürg Truniger, product marketing lead at who are waiting to invest or waiting for future. These are building, I would say, the Appway, tells PBI: “If you look at onboarding, money come,” notes Truniger. two sides of onboarding at the moment and it is the first moment of truth that embodies Venuturupalli adds: “HSBC Private Bank the way we look at it is a bit different from you, then you really reach an agreement.” is continuously working to optimise the these two sides.” Speaking to PBI, Philippe Turrian, COO at Pictet Wealth Management, adds: “Clients are experiencing, through other most people expect the same for touch-points with other industries, much more convenience and digital experience most industries: they expect a digital overall. When you look at, for example, the way we deal with the airline industry, it has experience and much more convenience dramatically changed over the last 10 years. We’re all used to doing our self check-in and we actually like that. So I think gradually, onboarding journey to make it as personalised According to Turrian, the “regulatory basically, most of the people expect the same and seamless as possible by eliminating burden is increasing”. Regulation is often for most industries: they expect to have a friction points and increasing digital cited as a barrier or hindrance to innovation digital experience and they expect to have functionality. As a global private bank with a and evolution, a long reel of red tape to much more convenience.” focus on the UHNW segment, we understand defeat. However, there are upsides for both Anil Venuturupalli, COO at HSBC that a global relationship means the ability to institutions and consumers. Global Private Banking, continues: “Our passport a client’s information across borders “Regulation forces you to actually do a clients understand that opening a private in a seamless way. profiling of the clients, which some clients banking account requires a certain amount “HSBC is delivering this capability would even reluctant to do at some point,” he of precision and structure, especially as this with a sustained investment in building explains. “It actually opens a door and opens

14 | February 2020 | Private Banker International

PBI February 377.indd 14 03/03/2020 12:45:33 feature | onboarding

an opportunity to enter into a discussion with outside of Switzerland, we go with a lighter a client, which is insightful. I wouldn’t say it process, which is may be more oriented actually makes our life more complicated. toward the first objective – so the customer “Where it makes our life more complicated experience, having something digital for them is the development of tools because to have a better experience with us, but not regulations almost constantly change. Some necessarily do all the embedded compliance rules which can be internal with regards to and all the system integration behind it.” legal or compliance, then it ends up in a While the process is ongoing, what process where, at the very end, the output is challenges or hurdles are left with still that the client has to sign several different onboarding? Private banks need to move documents, which makes the client experience quickly, as customers can change their wants not so nice. even quicker. “So for me, that would be the key challenge On the challenges, Venuturupalli says: with regards to regulation: it would be the “Although one cannot generalise, clients from fact that ultimately, we cannot have a client Asia and next generation private banking experience which is as smooth as possible. clients are often likely to be digital natives, But if you look at it from the positive side, it and will therefore look for greater digital forces a discussion with a client which is very functionality from HSBC. Nonetheless, all insightful, and which is necessary as you want Anil Venuturupalli, HSBC clients are looking for an onboarding process to serve in their best interest.” which is efficient, eliminates duplicate data “The first one is obviously have a better requirements and provides a personalised and TECHNOLOGY customer experience so [clients] don’t work compelling client experience.” The Appway report states: “The with sheets of paper that they have to read Turrian concludes: “What is one of our transformation that clients are most likely to and sign. The second one is within this tool; challenges, actually, is the regulation and the desire is that their advisors should have better we have embedded compliance in the sense complexity linked to the local specificities. access to improved technology and tools – that we have integrated a rule engine. Because depending on where the client no doubt, to fulfil some of their mounting “The third thing that the solution allows resides, we have potentially different types expectations around using their data to make us to do is also to improve the operational of documents or processes to follow. One of more personalized product suggestions.” efficiency, because the system is integrated the challenges is to make sure that you always Is technology the answer, then? Can it solve then with the CRM and with the with the keep the rules up to date. all the teething problems with onboarding in client register systems. So that’s been one of “And the last thing is that, at the moment, the private banking sector? the key project that has kept us busy over the there’s still no standard when it comes to “Some of the tasks can be automated, but last three years – quite a big project, I have to digital signature. We have not found a there are still many that cannot,” Truniger say, because running these three objectives in solution when it comes to full authorised explains. “Where you need to have some parallel is very, very complicated.” signature, which would have the same legal reviews, approvals and so on, obviously, you He continues: “In terms of timing, power as an actual manual signature with can use these technologies to help do that, of delivery, in terms of complication of regards to some of the account opening, so and that is exactly what we are doing.” understanding all the rules with regards to the it’s a bit of a frustration that I think all of the Venuturupalli adds: “Technology is an documents which is required, it might be that banks go through.” < essential factor in meeting client demand and optimising the onboarding journey. It onboarding challenges cannot replace face-to-face interactions with the client, but needs to supplement these – Future challenges for wealth managers to address for example, by helping to reduce the time spent on opening the account, simplifying the process and making the journey more Most important (top 3) Also important Less important digital. The balance between the personal engagement and the digital onboarding Dedicated time with a human adviser journey continues to evolve rapidly in line with client requirements.” More tailored approach to fees Pictet Wealth Management is undergoing a transformation project with onboarding, but Self-service capabilities has found there is no one-size-fits-all solution for different regions. Fully digitally enabled account opening “In Switzerland, where we have most of our clients booked and served, we have 0 20 40 60 80 100 implemented a digital solution,” Turrian % says. “We’ve tried to do three things with the digital solution for onboarding. Source: AppWay

www.privatebankerinternational.com | 15

PBI February 377.indd 15 03/03/2020 12:45:34 feature | coronavirus

coronavirus continues to impact investment

Coronavirus is having an astounding effect on everything, and financial services is no exception. Major banking groups including Goldman Sachs, UBS and Credit Suisse have asked workers in Hong Kong to work from home if they have recently travelled from China. So, how are markets reacting and how will financial firms cope?Patrick Brusnahan asks the experts

Cyrique Bourbon, Brown Shipley Trying to gauge the precise impact of coronavirus on China and the world economy is still, at present, an impossible task. There remains enormous uncertainty around the potency of the virus, how effective control methods will prove, and ultimately how long or short-lived the outbreak will be. The immediate impacts are, of course, clear. There is evidently a direct impact on the affected region; Wuhan is a major transportation hub in the region and an important production centre for the already battered automobile industry. The psychological impact on consumer confidence could, meanwhile, further undermine the already weakening overall consumption in China, as witnessed during the SARS outbreak. It is also very clear that travel, tourism and leisure industries worldwide could take a severe direct hit. Knock-on effects of the crisis on other sectors are also already visible. For example, the sharp drop in the oil price is a direct consequence of the expected onslaught on air travel. adjustment in risk premia after the very strong performance However, while markets logically discounted the increased over the last few months. A correction could open up new risk premium into the most directly exposed travel and and more interesting investment possibilities. leisure sectors, they also concluded pharma and health care stocks should profit from the crisis. And safe-haven assets At present, we maintain our existing allocation views, such as German government bonds, treasuries, gold, the recommending diversified portfolios where our favoured Swiss franc and Japanese yen have also profited. Investors safe-haven assets remain gold, US treasuries as well as the holding on to a well-managed diversified portfolio have thus Japanese yen. Investors should remember not to panic and largely been shielded from the crisis. hold on to their defensive positions as part of a diversified strategy, and closely monitor the situation for signs that the Moreover, many see the Corona-story as just the spark that outbreak gets under control. < capital markets needed for a healthy and arguably overdue

16 | February 2020 | Private Banker International

PBI February 377.indd 16 03/03/2020 12:45:36 feature | coronavirus

Rupert Thompson, Kingswood Global equities had started to looked vulnerable to a global economy. The Chinese authorities have also imposed correction following their gain of close to 14% since early much more draconian measures to try and halt the virus. October, and the coronavirus has provided the catalyst for The short-term impact on the Chinese economy is therefore just such a setback. The US market was down on Friday and likely to be considerable – not that there will be any hard the UK and European equity markets have fallen 2% or so data released to measure this for a good couple of months. this morning. The coronavirus has provoked comparisons As far as the global economy is concerned, we don’t with the SARS virus back in 2003 which ended up at this stage believe this hit is large enough to with close to 800 people losing their lives. merit altering our base case. We continue However, while there are clear parallels, to expect global growth to recover a there are also significant differences. little over the coming year on the Mortality rates from the new virus back of the relaxation of monetary are lower than with SARS, but the policy and easing in trade tensions. coronavirus (unlike with SARS) is As for global equities, the risk infectious before symptoms show is clearly that the news gets up, substantially increasing the worse before it gets better and danger of it spreading rapidly. the market correction could well Even so, there is still a great deal have further to run as a result. of uncertainty over how serious Indeed, corrections of 5-10% are the crisis will turn out to be and the surprisingly common. In the past, World Health Organisation has so however, even when global health far held off from calling a global health scares have impacted markets, the effect emergency. has been short-lived. At the peak of Ebola fears in 2014, global equities fell back 9% over In assessing the potential economic and market the course of a month but had recouped these losses impact – rather than the very evident human cost – the within weeks. SARS outbreak is as good a starting point as any. That outbreak hit Chinese growth and the Chinese equity market If we do see a 5-10% correction, we are currently minded significantly but the impact was short-lived with both to use the opportunity to add to our equity holdings and rebounding within a matter of months. As for global equities, move overweight from neutral. That said, we would only there was minimal impact at all. This time round, the Chinese implement such a move following a careful reassessment of economy is much larger and much more connected with the the situation. <

CHRIS TOWNER, As the spread of this contagion accelerates, authorities, has seen huge inflows. CHATHAM FINANCIAL so too does the economic damage. While On the other hand, the Australian dollar, the initial outbreak was during the Chinese probably the most sensitive currency to With every outbreak of a deadly virus, the Lunar New Year celebrations, and so had a this crisis outside of China, has weakened. global economy is dealing with the unknown. limited impact on economic output, The Australian economy has become The scale of the pandemic and the economic the question now is how quickly increasingly reliant in feeding damage it might cause remain unknown China will be able to resume rampant Chinese growth over until the spread is contained. At the time of full production. Today the last 10 years. Australia writing, the novel strain of coronavirus is far S&P lowered its forecast is still reeling from from contained. Today’s death toll was the for Chinese GDP wildfire damage and highest yet, with 97 reported and for those in growth from 5.7% now it must deal with the UK, things are now closer to home: the to 5% in 2020; by Chinese economic number of confirmed cases has doubled from contrast, a decade ago growth slowing down. four to eight. the world expected With interest rates Nevertheless, there is a limited sense China to grow by 10% already set at historical of panic in Europe. Previous – and more every year. lows of 0.75%, Australia deadly – viruses such as SARS were contained The coronavirus also is fast running out of road eventually. However, despite the coronavirus impacts global currencies. The for further stimulus. Just like having a lower mortality rate than SARS, two safe haven currencies other the presumed 10% GDP growth with less than 2.5% of infections leading to than the US dollar are the Swiss franc and from China 10 years ago, the Australian fatalities, it is certainly more infectious. Some the Japanese yen. Given Japan’s proximity to dollar used to be considered a high yielding 8,000 people contracted SARS globally, and China, it can hardly be perceived as safe from commodity play. Now it looks set to join so far, more than 40,000 people have been a potential pandemic. Therefore, the Swiss the ever-growing group of low-interest-rate infected by the coronavirus. franc, much to the annoyance of the Swiss currencies. <

www.privatebankerinternational.com | 17

PBI February 377.indd 17 03/03/2020 12:45:37 news | round-up

round-up

ICE Bonds combines with Black- Planning in 2019 and the Charles Derby The All China Evolving Trends vehicle Rock’s Aladdin platform Group became Quilter Financial Advisers in invests in A-shares through the Hong Kong January 2020. Stock Connect as well as Hong Kong-listed Intercontinental Exchange has integrated The moves follow Quilter’s separation from H-shares. The strategy invests in globally its fixed-income trading platform, ICE Old Mutual in June 2018. The two businesses listed Chinese firms based on five themes: Bonds, with BlackRock’s Aladdin risk are now listed separately on the London and aging and lifestyle, connected consumer, management platform. Johannesburg stock exchanges. automation, clean technology, and Investment managers can now access transitioning societies. the ICE Bonds’ Portfolio Auction feature – an execution protocol designed to support Jupiter confirms talks to acquire portfolio trading. It enables the auctioning Merian Global Investors Sandringham unveils buy-out of a bonds portfolio on an “all-or-nothing programme for advisers basis” to one or many participants. Sandringham Financial Partners, an advisory firm based in the UK, has introduced a ION recapitalises provider partner acquisition programme for advisers Broadway Technology looking to retire. ION Investment Group, which offers The service aims to minimise the impact trading and workflow automation solutions to clients when their advisers retire. Advisers and analytics to financial institutions, has have a two-year window to join Sandringham recapitalised Broadway Technology, which prior to retirement, in order to facilitate a offers capital markets solutions. smooth transition. As part of the deal, ION will take a controlling interest stake in Broadway and its Jupiter Fund Management, a fund manager STP Investment Services buys founder and private investment firm, Long based in the UK, has confirmed that it is investment operations firm in advanced negotiations to buy UK peer Ridge Equity Partners. STP Investment Services, which focuses on Merian Global Investors from private ION CEO Andrea Pignataro said: investment operations outsourcing, fund equity firm TA Associates Management. “Broadway’s client-first approach and strong services, reporting and data management, The possible deal was first reported by cloud expertise are an excellent complement has acquired Accusource, an investment Bloomberg, which said that a potential to our business, and its leading offering in FX operations firm that focuses on the deal could be a cash-stock transaction further augments our recent acquisition of FX investment management sector. worth below £500m ($652m). According to low-latency specialist MarketFactory.” The deal is said to strengthen the Jupiter, its own board as well as the Merian acquirer’s investment operations and board are positive about the consolidation, Frenkel Topping extends DFM cloud-based technology solutions, and feel that it would offer “meaningful services to external IFAs particularly its business process benefits” for their stakeholders. Wealth manager Frenkel Topping, through outsourcing capabilities. Financial terms its discretionary fund management (DFM) were not divulged. unit Ascencia Investment Management, Advisor Group and Ladenburg has formed an equal-stake joint venture form $450bn wealth manager Smartlands revision leads to with IFA firm Truly Independent. The Advisor Group, a network of independent adoption of Liechtenstein law business will operate under the Truly Asset wealth management firms, has completed the Blockchain-based investment and banking Management brand. acquisition of Ladenburg Thalmann Financial ecosystem Smartlands is expanding its legal The move expands Ascencia’s DFM Services, creating a wealth manager with more framework, with an aim to create a broader services to external IFAs for the first time, than $450bn in assets. set of options for HNWIs. benefiting 50 Truly advisers. Under the $1.3bn deal, announced last Smartlands will utilise the investment November, Ladenburg Thalmann merged structure based on Liechtenstein legislation, Old Mutual rebrands as with Advisor Group. The amalgamated group under EU regulatory directives, to align itself Quilter Internationals incorporates a multi-brand network model. primarily with the needs of HNWIs, family Quilter has announced that Old Mutual offices and institutional investors. International will be renamed Quilter Axa Investment Managers rolls Smartlands plans to tokenise the first International. out thematic China fund investment fund with £50m ($64.5m) in The cross-border wealth management Axa Investment Managers has introduced a assets during the first two quarters of 2020. solutions business has rebranded following new strategy that adds to its thematic fund It has already received offers from investment the renaming of other arms of the Quilter suite and offers exposure to companies in funds interested in using the firm’s blockchain Group. Intrinsic became Quilter Financial China. technology. <

18 | February 2020 | Private Banker International

PBI February 377.indd 18 03/03/2020 12:45:39 opinion | Collyer Bristow

opinion: post-brexit sanctions and the uk-based hNWI

Dominic Raab’s vision for a post-Brexit ‘global Britain’ includes the promotion of UK values through what the press repeatedly refers to as a ‘new British sanctions regime’. But is it the case, as this would suggest, that the UK will take an entirely novel approach to sanctions once it withdraws from the EU? And what impact will this ‘new’ regime have on HNWIs operating here? Samara Dutton, partner at Collyer Bristow, writes

he short answer to the first of those and those associated with them to be frozen entity with links to the DP is, therefore, also questions is no. and prohibit any dealing with such funds or at risk of having its assets frozen. T At its core, the Sanctions and resources, as well as any activity that would The net effect on a DP is the effective Money Laundering Act 2018 (SAMLA), circumvent the freezing measures. paralysis of financial functioning within the under which the British regime will operate Most of the key terms will be widely UK. And there are limited avenues of redress. once the UK has left the EU, is a restatement defined to act against the interests of the One key difference to the ‘new’ regime is that of the existing position, and specific sanctions DP. The potential for assets of people post-Brexit, any challenge to a DP’s listing regulations – which have already been drawn associated with the DP to also be frozen puts as a sanctions target will be through the UK, up under SAMLA but are not yet in force – family members, close friends and business rather than EU, courts. closely mirror the EU ones currently in place. partners at risk of the full impact of financial SAMLA, however, prevents application That said, SAMLA permits the UK sanctions, despite not being expressly listed as to court unless the DP has first requested government to impose sanctions in a DPs themselves. revocation of their designation from the broader set of circumstances than previously, including on people who commit gross human rights violations – the ‘Magnitsky’ SAMLA permits the UK government to amendment – as well as somewhat controversially, for “discretionary purposes”, impose sanctions in a broader set of effectively where the minister in question believes, and can justify, that there are “good circumstances than previously reasons to do so”. In practice, although this extended scope may mean more HNWIs may find Nor is it just assets held in the DP’s name Secretary of State. That request invokes an themselves expressly subject to UK sanctions, that will be affected. Freezes extend to assets administrative process for which there are no the impact on them will be largely the same held by entities under the DP’s ownership or prescribed time limits for the government as before. For most targets – or ‘designated control. The UK’s ‘new’ regulations provide to respond, and no obligation for the persons’ (DPs) – this means UK assets will a fuller definition of ‘ownership and control’ government to give reasons for its decisions. be frozen, and their travel to and from the than was available previously. Since sanctions are likely to continue UK monitored or limited. It may also mean Again, the result is to cast the net wider. unabated in the meantime, there is potential restricted access to our financial markets and It is no longer just a question of beneficial for considerable prejudice to the DP here. services. ownership; instead, wherever it is reasonable Nor is the DP likely to recover damages The impact of such measures on individuals to expect that the DP can ensure the affairs of for losses suffered even if their designation is should not be underestimated: they are the entity are conducted in accordance with subsequently overturned, since those are only completely debilitating. Asset freezes provide their wishes, the UK assets of that entity will available where the UK government is found for all funds and economic resources of DPs also be frozen. Any company, trust or other to have acted negligently or in bad faith. <

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PBI February 377.indd 19 03/03/2020 12:45:39 news | people moves

personNel briefing: people moves

PBI lists the month’s key career developments by the movers and shakers in private banking and wealth management

country name moved from old position moved to new position

USA Greg Carr Wells Fargo Private Bank Senior MD – Southeast region Comerica EVP – wealth management

Wells Fargo Wealth and Corporate and USA Jonathan Weiss CEO CEO Management Investment Banking

Singapore Joanna Ho HSBC Private Banking Head – wealth planning Bank of Singapore Head – wealth planning

CFO – global wealth Group controller; chief Switzerland Todd Tickner UBS UBS management and EMEA accounting officer business

Switzerland Tidjane Thiam Credit Suisse CEO

UK Michelle Coulson Coutts Director; wealth manager Brown Shipley Client director

Isabelle Jacob- Head – development and Head – Swiss wealth Switzerland BNP Paribas Indosuez Nebout innovation management business MD – investment solutions UK Robin Beer Brewin Dolphin Brewin Dolphin CEO and distribution

UK Robin Eggar Brooks Macdonald MD/co-head – UKIM Brooks Macdonald MD/head – UKIM

Lombard International UK Stuart Parkinson HSBC Private Banking Global CIO CEO Group

UK Mark Thomson Scottish Building Society CEO Hampden & Co Head – credit

Chief – South Asia FX Singapore Christian Schuwey UBS Private Bank MD Citi Private Bank advisory

20 | February 2020 | Private Banker International

PBI February 377.indd 20 03/03/2020 12:45:41 news | tech and regulation

GAM taps SimCorp for operating plat- form consolidation news round-up: GAM Investments has entered into a long- term licence agreement with Danish software firm SimCorp to consolidate its operating platform. TECH AND Regulation GAM will consolidate its external front- and middle-office systems using the SimCorp The latest technology and regulation news to impact platform. It will utilise SimCorp Dimension as its core front-office platform, and the private banking and wealth managament. Read the Investment Book of Record platform. stories in full at privatebankerinternational.com AMP receives fine for failing to prevent ‘churning’ by planners AnaCap to purchase UK wealthtech Investment platform Moonfare has exceeded Australian investment manager AMP has platform Wealthtime €250m ($275m) in AuM. According to the been handed a fine of $5.17m by the Federal Private equity firm AnaCap Financial fintech, Moonfare is now in the top five Court for its failure to prevent the unlawful Partners has agreed to buy Wealthtime, a UK German fintechs by AuM. behaviour by some of its financial planners of wealthtech platform with assets under advice Founded in 2017, it now has market ‘churning’ customers into new policies to earn of over €2bn ($2.17bn). presences in Germany, Switzerland, the UK, more commissions. The deal marks the entry of Anacap into Luxembourg and Hong Kong. The court alleged that AMP lacked the the UK wealth management market. Based in “corporate will” to reprimand financial Salisbury, Wealthtime combines investment Citi joins forces with Jemstep to roll planners who were involved in ‘rewriting’ to portfolios and financial assets into a single out new robo-adviser online platform. gain higher commissions. Citi has launched a robo-adviser that The process, which involves cancelling UBS redesigns iPhone wealth can be accessed by personal wealth a customer’s insurance policy and then management app management clients with an arranging a new application, instead of UBS Wealth Management investment of at least $1,500. transferring the current policy, makes USA has redesigned its UBS The Citi Wealth Builder customers more vulnerable to risk. Financial Services iPhone app platform can be used free to enable customers to receive of charge by Citi Priority BDO Canada fined for lapses in a more holistic view of their customers with a minimum Crystal Wealth audits investments. balance of $50,000 at the bank, BDO Canada, which offers accounting, The bank carried out the redesign and Citigold customers for their initial tax and advisory services, has agreed to in partnership with professional services portfolio. Others will be charged a fee of pay an administrative penalty of $3.5m firm Deloitte, the customers themselves, and 0.55%. to the Ontario Securities Commission for financial advisers. Jemstep, an adviser-focused digital advice substandard auditing of Crystal Wealth. The redesigned app focuses on offering platform acquired by Invesco four years The accounting firm admitted to having a customised experience by asking real-life ago, will power the new platform. failed in the effective auditing of questions, including what clients plan to do the “2014 and 2015 financial Banque Cramer extends with their assets and life, the people that statements of two privately matter to them the most, and their passions. partnership with Avaloq’s offered investment funds”. BPaaS solution BDO has also been ordered Moonfare reaches €250m in AUM Banque Cramer & Cie SA has to pay $500,000 for expenses selected the Business Process related to the watchdog’s probe. as a Service (BPaaS) solution from Avaloq for an additional 10- Probe finds Deutsche Bank year term, after a competitive tender bribing Saudi royal adviser to process. win business Founded in the 18th century, Banque An internal investigation has revealed that Cramer caters to select private and German banking group Deutsche Bank professional clients through personalised made $1.1m in payments to gain the wealth portfolio management, advisory and wealth management business of an unnamed senior management services. Saudi royal. The partnership between Banque Cramer The Project Dastan probe by the Financial and Avaloq will see additional tools and Times was conducted between 2014 and functionalities, including Front Workplace, 2016. It found that fund transfers were made as a way of enhancing the bank’s market to the wife of the royal’s financial adviser in proposition and competitive positioning. four tranches. <

www.privatebankerinternational.com | 21

PBI February 377.indd 21 03/03/2020 12:45:42 business profile | lombard international

business profile: lombard international

How can you provide a specialised niche service to high net worth and ultra-high net worth clients across the world? Can you be specific and global at the same time?Patrick Brusnahan speaks with Florent th Albert, global chief financial officer at Lombard 11 Annual Retail Banker International Group, to find out the challenges

Florent Albert, Lombard International Group International Asia Trailblazer Patrick Brusnahan: You have been with PB: Is it difficult to do something niche on a and years of development, and not every Summit & Awards 2020 Lombard International Group for nearly global scale? company is willing to invest the time to get five years now, as European CFO before FA: You cannot just decide to build this there. 9 October 2020 becoming group CFO. What trends have you business because there are so many Singapore seen take more prominence recently? barriers to entry. There’s so much PB: Would you say most your clients are Florent Albert: At Lombard, we’ve expertise, there’s so much regulation. ultra-high net worth or high net worth? continued to grow. We’re reasonably It was actually two regions [Lombard FA: We have quite a span. If you look at excited about where the industry is. International Assurance and Lombard the average ticket size of a client in Europe, Equally importantly is the growth of International US] that grew separately and it’s about a couple of million. ultra-high and high net worth individuals then realised at some point that it really It starts in the hundreds of thousands; in the world, and that population has made sense to combine. I mean the hard floor is €250,000 in Share experiences, challenges and continued to grow over the last few years. Europe, but it’s really just a floor to not go It’s a long-term trend, and we’re going to anywhere near retail banking. And it can go opportunities with an unrivalled selection be continuing to see this in the foreseeable up to hundreds of millions; we have single future. policies that are eight or nine digits. of peers from the private banking and What’s interesting as well is regulation In the US, the ticket size is a little bit continues to become more complex, higher; you’re probably looking at around convoluted and expensive. Because of ESG is becoming $15-20m. wealth management global community. that, it’s become more complicated for individual investors to really navigate that top of mind. It’s PB: Have you seen any investment trends environment. We have the capabilities and from your clients become more prolific? the expertise to support those individuals becoming more and FA: ESG is becoming top of mind. It’s as they think about the future, particularly becoming more and more relevant for estate planning and wealth management more relevant ultra-high when they make investment planning. decisions. We are seeing a clear trend towards PB: What does Lombard do differently to end clients being very mindful of where navigate regulation? PB: Who are your competitors? their money’s going to be invested. We’re Register now on FA: We’re a pure player, we’re unit-linked FA: If we look at our competitors in starting to help and educate them, when focused. Europe, I would mention Swiss Life which it comes to the asset managers that are rbiasiatrailbalzer.verdict.co.uk We do something which is very niche in has some scale. Cardif, the insurance arm better positioned. itself, which is catering to ultra-high net of BNP Paribas, has capability as well. Asset managers or bankers in general worth and a high net worth individuals It’s a limited field, for the reasons that are quite good at self-promoting how good within a space that we control well. So that I described, which is that if you want to they are at ESG. They need a lot of help focus really allows us to build expertise. be meaningful, if you want if you want to from us, but it’s been a very interesting What is unique to us is that we are the have the right size and if you want to have trend, and it has dramatically accelerated only global player in that space. the right capabilities, it takes time, effort over the last year. <

22 | February 2020 | Private Banker International

PBI February 377.indd 22 03/03/2020 12:45:44 11th Annual Retail Banker International Asia Trailblazer Summit & Awards 2020 9 October 2020 Singapore

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PBI February 377.indd 23 03/03/2020 12:45:44 PRIVATE BANKER

HEAR • NETWORK • DISCOVER • CELEBRATE Private Banking and Wealth Management: London 2020 Conference and Awards London • 11 June 2020

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PBI February 377.indd 24 03/03/2020 12:45:44