www.privatebankerinternational.com Issue 378 / march 2020 PRIVATE BANKER HANDLE WITH CARE WHY OUTSOURCING NON-CORE FUNCTIONS COULD REQUIRE GREATER ATTENTION OPINION FEATURE COUNTRY PROFILE How social media posts can 2020 Wealth Report: focus The realms of digital and affect a court’s financial shifts towards wellness, technology have become order for divorce cases health and ESG investment deciding factors in Brazil contents this month COVER STORY NEWS 06 05 / EDITOR’S LETTER 18, 21 / ROUND-UP 20 / PEOPLE MOVES 18 OUTSOURCING 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. 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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 2 | March 2020 | Private Banker International contents march 2020 09 15 FEATURES OPINION 06 / OUTSOURCING 15 / CYBER-RISK 19 / BRYAN CAVE Wealth managers clearly have much to gain Cyber-risk and reputational risk are now LEIGHTON PAISNER from outsourcing non-core functions; however, closer tied than ever. How are the wealthy A recent case is a stark reminder that the court regulatory concerns suggest that – in some and their advisers helping work through this can and will consider all available evidence cases, at least – the process needs to be handled minefield? The key is to be proactive and when considering what financial order to with greater care. Paul Golden writes vigilant. Alison Ebbage writes make on a divorce – and this includes social 09 / 2020 WEALTH REPORT 12 media posts. Elizabeth Hicks writes The main topic of interest in the first Wealth Report, published in 2007, was plutonomy. A 19 decade later, and the focus has shifted towards wellness, health and ESG investment. Asena Değirmenci takes a closer look at the findings COUNTRY PROFILE 12 / BRAZIL As one of the world’s biggest countries, there is plenty of wealth in Brazil. There are also many wealth management firms, so how can they differentiate? The digital realm has become a deciding factor. Patrick Brusnahan writes BUSINESS PROFILE 06 22 / SANDAIRE FAMILY OFFICE Family offices pride themselves on growing in parallel with the families they service. Patrick Brusnahan speaks to Charlotte Filsell, head of client relationship management, about how the business has changed alongside its clients www.privatebankerinternational.com | 3 Banking & Payments at a glance GlobalData’s Banking & Payments Intelligence Center is the leading information service that helps our clients to predict market, competitor, customer and disruptor moves markets competitors How fast will the market What are your competitors evolve? Which segments doing differently? offer the greatest potential? How successful are they? consumers innovation What does tomorrow’s consumer What is the critical innovation in look like? Which products are they your sector? Who are the winners likely to try and adopt? and losers in a disruptive market? editor’s letter digital communication comes to the fore Patrick Brusnahan, Editor t is impossible to avoid talking about, so we will markets is following. But we should not lose sight of the write about it: the coronavirus pandemic is still fact that this crisis will pass; indeed, amid all the negative I here and affecting every industry. Private banking news, the success in containing the coronavirus in China is no different. and other Asian countries is being overlooked. And this is As PBI goes to press, UK Prime Minister Boris Johnson where the coordinated policy response will really matter. has announced that he has contracted the virus. Health Assuming that firms and workers emerge from the crisis secretary Matt Hancock has also admitted to showing relatively unscathed, fiscal and monetary easing should lay symptoms. If the leaders of the country are not safe the foundation for a swift rebound for the economy.” from the disease, then who or what is? Certainly not the So some are predicting high hopes for the future, banking sector. maybe the only thing one can predict following a drastic However, a couple of experts have said rebound and slowdown. recovery are imminent. Stephane Monier, CIO at Lombard One thing that this should inspire is more digital Odier, says: “Our expectation is that, as public health services within the wealth management industry. This is measures taken in Europe and North America start long overdue, with a large number of benefits. According to become effective, the decisive fiscal and monetary to JD Power’s latest investment satisfaction survey, measures put in place by governments and central advisers who utilised digital communication tools were banks will eventually kick in. For this reason, beyond an 50% more likely to see increased investment compared to inevitable recession in corporate earnings in the first half those starved of digital tools. of this year, we expect the second six months of 2020 to Given that self-isolation is not a catalyst for the human see an economic recovery that returns company reporting touch in private banking, digital is the way forward. to positive territory before the year’s end.” In addition, it will not be a stopgap during the time of Dean Turner, UK economist for UBS Wealth Covid-19. Digital communication will continue to be Management, adds: “As the rate of infections continues crucial for firms wanting to keep clients happy; if anything, to rise, the news flow is all one way, and sentiment in the the sector only needs to hurry up. < Get in touch with the editor at: [email protected] www.privatebankerinternational.com | 5 feature | outsourcing outsourcing: a means to A digital end Wealth managers clearly have much to gain from outsourcing non-core functions; however, regulatory concerns suggest that – in some cases, at least – the process needs to be handled with greater care and attention. Paul Golden writes utsourcing trends have been Technology is a major factor in any on the market have come under significant analysed across a number of outsourcing decision, according to pressure,” she says. “The need to update legacy Owealth management reports over Nucoro. The fintech published research last core systems to keep up with regulation, be the last 12 months or so. September suggesting that more one in five scalable and provide a solid source of data for For example, a study released by Fidelity retail investors had stopped using a wealth digital and advanced technology solutions has Clearing & Custody Solutions in February management service because its digital driven this trend.” 2019 reported that 43% of advisory firms offering was too weak. According to Green, many wealth were leveraging external consultants, third- The company said it expected more wealth management firms are blinded by the party providers or individual specialists for managers to outsource this part of their peripheral technology on offer rather than select business functions. proposition to specialist third parties to allow focusing on issues such as the supplier’s The most commonly stated objective of them to focus on their core proposition. cultural match, strategic fit, depth of these engagements was to create more value Gilly Green managing partner for wealth knowledge in the team, and ability to deliver for clients, as advisors felt that successful management and private banking at Sionic, in the timescales they need. outsourcing of functions such as investment “There are many firms that dive into a management and legal and compliance supplier-selection process without setting allowed them to focus on deepening their out their own vision, the principles under client relationships. which they want to operate, or what growth The Fidelity study suggested that advisors opportunities they may explore in the future,” that outsourced two or more of the top three she continues. “It is vitally important to outsourced functions were more likely to many firms dive into consider these factors before contacting any experience higher AuM and client growth, supplier.” manage a greater volume of assets and pay a selection process their employees more. EXPANDED OPPORTUNITIES The Compeer/Objectway report, The without setting out The significant growth of low-cost location Wealth Management Firm of 2025, found resourcing options has expanded the that the majority of large firms would their own vision opportunities for a wider range of functions outsource their back office functions if they and services, particularly in software were starting again, but faced considerable engineering. challenges in replacing existing systems, David Noyce, head of offshore software including technology costs and HR issues says there has been a growing trend towards engineering at Opus Una Financial Services arising from making large numbers of people outsourcing in UK over the last 10 years from Consulting, adds that high-quality and broad redundant.