Themes in wealth management in 2009
To mark the start of 2009, Wealth-Bulletin will be running a series of insights from leading wealth practitioners on their thoughts of the likely big trends in wealth management during the course of the year.
We start with Alexander Hoare, managing partner of the London-based private bank C.Hoare & Co.
I think the big theme in 2009 wealth management will be the loss of trust in the marketplace. Many clients have suffered, and wealth managers will have to work hard to restore and retain client trust. Expectations of service and performance will need to be carefully managed.
Balancing these client expectations with shareholder expectations for increasing profit in a declining marketplace will be particularly challenging.
The challenge will no doubt be compounded by further expensive and unhelpful incursions from government and regulators.
The broader picture
As the full reality of the unacceptable face of capitalism dawns on us, we will have to examine where we went wrong, what we can learn from it all, and to try to plot a better course ahead. Fritz Schumacher foresaw it all in "Small is Beautiful" – for the capitalism to work, there has to be destruction as well as creativity.
I believe that some bankers acted illegitimately or immorally, but most were maximizing their profits within the system created by the authorities. We need to review the role of the authorities responsible for:
•Basle2, which overlooked liquidity risks and overlooked special investment vehicles as well as outrageous gearing levels;
•Accounting standards boards, which gave rise to perverse and imprudent outcomes;
•The central bankers who allowed the politicians to pursue unbridled economic growth and seemingly ignored asset bubbles and market abuses; and
•The regulators who were so busy with the minutiae, they missed some blindingly obvious bad practice – such as 100%-plus self-certified mortgages – and completely forgot the basic canons of banking;
•The government which has a rapacious need for economic growth to balance its spending habits and its failure to educate the public in financial history, appreciating and accepting financial risk; and
•The government whose attempts to legislate to protect consumers has had the unanticipated consequence of creating a protected cartel of few very large uncompetitive banks.
del.icio.us
Digg
Newsvine
reddit
StumbleUpon