Cherry pick the best wealth manager
How long to stay with a wealth manager has become a pressing question. Many clients have answered it by moving their assets, with wealth preservation – or damage limitation – uppermost in their minds.
Institutions regarded as being weak, susceptible to big losses from investment banking or property activities, or tainted by scandal, have lost clients to rivals perceived as being more stable and secure.
Figures for fund flows into and out of Europe’s top wealth managers last year, compiled by Wealth Bulletin, show Credit Suisse was the most successful in attracting new money, although Basel-based Bank Sarasin, owned by triple A-rated Rabobank, and EFG International registered a faster rate of growth.
Adrift at the bottom of the rankings was UBS, which saw nearly $100bn (€80bn) depart the bank, a sum equivalent to the annual gross domestic product of Slovakia.
Which begs the question: is it right to follow the crowd when it comes to selecting a wealth manager?
The winners last year succeeded by avoiding the bad news or, put another way, by not being UBS.
Choices were often made on negative criteria. The banks least likely to go bust generally did the best, which had little to do with their capabilities in broad wealth management.
They may get the opportunity to prove they can off er more than just a secure deposit account, but their newly acquired clients may also take a pragmatic view and examine what else the market can off er when they start thinking of moving into riskier investments.
More people may seek out specialists to undertake specifi c mandates, rather than simply trusting a large, generalist institution. Less familiar names may look attractive.
Investec Private Bank of South Africa has some of the most innovative – and high interest bearing – cash products around. Canada’s RBC Private Banking has grown its lending to wealthy Europeans while most other banks have been cutting back.
The emergence of wealth networking groups focused on sharing intelligence about service providers, a trend explored in this month’s cover story, suggests clients may be more pro-active in exploring the full range of options.
Behaviour may end up becoming less herd-like when it comes to selecting wealth managers, with more cherry-picking of services and focus on value for money. Arnaud Leclercq, a partner at Swiss wealth manager Lombard Odier, says he knows very wealthy individuals who have closed down their family offices after suffering investment losses as bad as the broader market.
He says: “They are asking why they ever bothered to hire these guys in the first place.” Which is a question every client, regardless of their wealth, should be posing.
Read the digital edition of yesterday's Wealth Bulletin supplement with the Wall Street Journal Europe
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