Asia’s rich mixEveryone wants todo business withrising numbersof billionairesPage 2

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Opportunity forprivate equityNew regulationsprompt deals forwealth managersPage 2

London callingA central timezoneand influx offoreign money arebig attractionsPage 3

Sector playsdigital catch-upThe web now seenas an opportunity,not a threatPage 4

Brands hatchRich petrolheadsfuel benefits fromthe sponsorshipof motorsportPage 4

FT SPECIAL REPORT

Private BankingTuesday June 10 2014 www.ft.com/reports | @ftreports

At first glance, wealth manag-ers and their clients appearto be living in a much betterworld. Last year, global pri-vate financial wealth grew

14.6 per cent to $152tn, according todata from the Boston ConsultingGroup. This inflation of riches wasdriven by a rise in equity markets andother asset classes. As a result, wealthmanagers’ assets under managementare up 11 per cent.

But despite such positive news, pri-vate bankers continue to be wary.They point to an environment thatcontinues to be characterised by cli-ent inertia, low interest rates, lacklus-tre economic growth and a wave ofregulation that increases costs andcomplexity.

Bankers say their clients still seehigher risks on the downside than onthe upside, as they are worried aboutdiminishing growth prospects inChina and other emerging markets,and the Federal Reserve’s decision tostart tapering its bond purchases.

“In the first quarter, we saw lowtransaction revenues, as people werenot engaging in the market,” saysJürg Zeltner, chief executive of thewealth management arm at UBS, theSwiss banking group. “They alreadyhave their allocation plans in place.”

One clear sign for this trend is WallStreet’s famous “fear index”, the Vix.The index measures the implied vola-tility of S&P 500 equities. While itsurged to more than 80 during the

financial crisis, it is now just above11, a level not seen since 2007.

Yet there is one notable exceptionto this inactivity: the richest clients –called ultra-high net worth individu-als in wealth management jargon –who are much more willing to makelonger term bets amid a search fordouble-digit returns. They buy prod-ucts in areas such as private equity,direct investments, hedge funds andproperty.

Banks such as UBS and its rivalCredit Suisse – which are both con-centrating their growth efforts on thewealthiest clients – have adapted tothis change with a structure thatresembles an institutionally focusedasset manager rather than a tradi-tional private banking business.

For UBS, this included setting up achief investment office and reinvest-ing into the business, its people, tech-nology and new markets.

“We are transforming ourselves intoan investment firm. We want to havemore discretionary mandates,” saysMr Zeltner.

It comes as the wealth managementsector is facing one of the biggestupheavals in a long time.

Private bankers say positive factorssuch as a prospect of rising interestrates, a shift from bond markets intoequities and a small reduction in cli-ents’ cash positions cannot counter

severe headwinds from tightened reg-ulation, relentless pressure on costs,and sluggish growth.

In the past three years, the overallrise in global wealth managers’ costshas, at 15 per cent, been only margin-ally lower than the revenue growthof 19 per cent, according to BCG. Byfar the largest contributors to thishave been legal, compliance and risk

Continued on Page 2

Wealth managers learn to wing itThe ultra-rich areproviding a counter toclient inertia and thecosts of regulation,writesDaniel Schäfer

For five years since the USforced Switzerland’s biggestbank, UBS, to pay a $780mfine for helping Americanclients evade taxes, thespectre of further punish-ments has hung over theSwiss private banking sec-tor.

There are now signs thatthis limbo may be easing.Last summer, the USDepartment of Justice setup a programme allowingSwiss banks that had unde-clared American customers,but were not already underinvestigation, to put thepast behind them inexchange for paying heftyfines and handing overinformation about theiractivities in the US. Morethan 100 financial institu-tions have signed up.

Then last month, CreditSuisse, one of 14 banksunder investigation by theDoJ, reached a $2.6bn settle-ment that should allow it todraw a line under its pastsins in the US.

Switzerland’s financeminister, Eveline Widmer-Schlumpf, believes theCredit Suisse deal – as partof which the Swiss lenderbecame the first large bankto admit to criminalcharges for two decades –could pave the way forother Swiss banks to settlewith the US within “thenext few months”.

Although the guilty pleaand the size of CreditSuisse’s payment shockedthe sector, the belatedprogress is broadly wel-comed by most bankers.

Not only should it removethe uncertainty that hasbeen weighing on the sec-tor; it should also allowmanagers who have spentyears on regulatory prob-lems to refocus on runningtheir businesses.

However, those busi-nesses are likely to berather different in future. Incombination with Europeanmoves to clamp down on

tax evaders, the protracteddispute with the US hasgreatly eroded the onceuntouchable Swiss traditionof keeping details of clients’accounts secret from for-eign authorities.

Last year, Switzerlandagreed to sign up to Fatca,a piece of US legislationthat requires foreign banksautomatically to provideinformation on the offshoreassets of American citizens.And in May, Switzerlandagreed to sign up toa new global standard onautomatic informationexchange.

The tearing of this veil ofsecrecy – long a source ofcompetitive advantage forSwiss banks – has put pres-sure on the fees that lend-ers can charge their clients.

At the same time, the costof ensuring customers arecompliant with the taxrules of their home jurisdic-tions has risen sharply,meaning that banks’ mar-gins have been squeezed.

As a result of this, manyobservers expect furtherconsolidation of the Swissprivate banking sector, par-ticularly once banks havesettled their problems withthe US.

“There is a very signifi-cant benefit and operationalleverage in scaling up, andputting more assets onexisting platforms,” saysFX (François-Xavier) deMallmann, partner at Gold-man Sachs.

He expects the Swiss pri-vate banking market to con-

tinue to consolidate with atleast “a few” transactionseach year.

Others go further. ZenoStaub, chief executive ofVontobel, said last yearthat he thought that abouta third of Switzerland’s 300-odd banks could eithercease to exist, or stop oper-ating as banks in the wakeof the DoJ’s programme.

The Swiss banks that sur-vive will still have anumber of residual advan-tages, such as high levels ofcapitalisation by interna-tional standards, Switzer-land’s political and legal

stability, and the strengthof the franc. But it will notbe enough to rely on thesealone, says Boris Collardi,chief executive of JuliusBaer.

“I think this is going tobecome a much more globalbusiness than in the past,”he says. “You need toexpand, you need to gobeyond Europe, because thenew pools of client wealthare beyond Europe. Youneed to go from a passiveregional client model to aproactive global one.”

In the absence of secrecy,

Swiss banks will also haveto be able to offer clientsbetter investment perform-ance and advice than in thepast.

UBS and Credit Suissehave both set up unitswhose job is to systematisehow the banks invest cli-ents’ assets, as well as pro-vide clients with a unifiedview across asset classesand markets.

“There has been a shifttowards outcome-orientedstrategies,” says MichaelStrobaek, Credit Suisse’sglobal chief investmentofficer. “The single-assetclass orientation that yousaw in the 1980s and 1990shas moved to the back-ground. Clients are nowlooking for a specificreturn. They are not saying‘Buy me a bond portfolioand I will take whatevercomes out of it.’”

Another important sourceof differentiation will beimproved technologicalcapabilities, says FrédéricRochat, a partner at Lom-bard Odier. Banks withcomputer systems that ena-ble them to deal flexiblyand efficiently with wealthyclients whose lives and fam-ilies often sprawl across arange of jurisdictions willoutperform those that can-not, he believes.

“Technology is crucial toenable you to service yourclient at a lower marginalcost for you as a bank, andtherefore be able to remaincompetitive on the feeside,” says Mr Rochat.

“Those banks that cannotcount on a strong techno-logical platform typicallyend up with a relativelyhigh cost base and limitedability to expand interna-tionally. For them, it canbecome very tricky whenthe revenue margin comesdown.”

Not all Switzerland’sbanks will be able to copewith this range of chal-lenges. But for those thatsurvive, the prospects areappealing, Mr Collardi says.

“If you have a pool ofwealthy individuals that isgrowing, and there arefewer market participants,and markets are efficient –then you can return togrowth and make moneyagain,” he says.

Spectre of post-UBS sanctionsgives way to settlement hopesSwitzerland

A dispute with theUS may be nearingan end, saysJames Shotter

Boris Collardi (left) of Julius Baer and Vontobel’s Zeno Staub

‘I think this is goingto become a muchmore globalbusiness thanin the past’

Illustration:DanielM

itchell

2 ★ FINANCIAL TIMES TUESDAY JUNE 10 2014

Private equity groups havedeveloped a taste for theUK’s wealth managementindustry.

In November last year,Permira, the London-basedbuyout house, bought Brit-ish private client groupBestinvest from 3i. A fewmonths later, the investoracquired the regional busi-nesses of Tilney in Birming-ham, Edinburgh, Glasgowand Liverpool from Deut-sche Bank, bringing thecombined group’s assetsunder management (AUM)to about £9bn.

Permira is following pri-vate equity rival Bridge-point, which in 2012 pur-chased Quilter & Co fromMorgan Stanley for about£175m, and merged it withfellow investment firm Che-viot Asset Management.The deal boosted AUM by50 per cent, making QuilterCheviot the second-largestindependent UK wealthmanager.

Deal activity will con-tinue, bankers and privateequity dealmakers say.Towry Group, backed byPalamon Capital Partnerssince 2003, is expected to bethe next sizeable companyon the block and to attractinterest from financialinvestors such as NewYork-based Warburg Pin-cus, which owns the MutualFund Store in the US. SincePalamon’s investment 11years ago, Towry has made10 acquisitions, expandingits AUM from £250m to£4.6bn.

A big reason for this boutof deal activity has been theregulatory shake-upbrought by the UK’s RetailDistribution Review (RDR)and its new set of rules forwealth managers, whichcame into force from thebeginning of 2013. “TheRDR has created a new par-adigm where there are los-ers and winners, and pri-vate equity groups are try-ing to figure out how toback the winners,” saysDaniel Zilberman, a Lon-don-based partner at War-burg Pincus, who special-ises in financial servicesinvestments.

The regulator hasensured wealth managershave the qualifications toadvise their clients, and hasradically changed theircompensation. UK wealthmanagers used to earn a bigchunk of their livingthrough commissions ontrades made by their cli-ents. They are now paid onthe amount of assets theymanage. Similar rules areexpected to be implementedthroughout Europe.

Those who used to makemoney by having their cli-ents trade a lot and receivecommissions out of thosetrades are the most affectedby the reform. The lesssophisticated, smaller advis-ers are finding it hard tosurvive and are either goingout of business or selling tolarger platforms. “It’s a sec-tor that’s highly fragmentedand private equity sees apotential roll-up opportu-nity,” Mr Zilberman says.

Wealth management is an

industry that has beengrowing steadily and whichis expected to grow furtheras the economy and stockmarkets recover in Europe.Assets are increasing bymore than 10 per cent ayear, estimates James Fra-ser, a partner at Permira,who led the Bestinvestacquisition.

“Underlying growth hasbeen strong, even duringthe financial crisis,” MrFraser says. “There aremore wealthy people andthe industry is managingmore assets because of theageing of the population.”

The recovery in stockmarkets’ has automaticallyboosted fees generated bywealth managers as theyare based on a percentageof assets under advice.

Private equity groups alsosee an opportunity to fillthe void left by some of thetraditional players in thewake of the financial crisis.

“Some retail banks havepulled back while the inter-national investment bankshave moved upmarket, leav-ing a gap in the segmenttargeting the middle class,”says Mr Fraser.

The UK government’s lat-est budget, which removedthe obligation to buy anannuity at retirement withpension funds, has alsobeen a “game changer”,says Graham Marchant, amanaging director at Fen-church Advisory, a bou-tique advising on financialservices. “Without therequirement to buy anannuity, private clientwealth managers are nowmore likely to retain clientassets through the accumu-lation and decumulationphase,” he says.

The changes mean wealthmanagement assets areexpensive. But in the pastfew years, private equitygroups, which have replen-ished their funds and arehungry for deals in Europe,have been able to compete“on a level playing field

with strategic buyers” eventhough the latter have syn-ergies, says Mr Marchant.

While buyout groupshave snapped up wealthmanagers, they havelargely stayed away fromfull-service private banks,which not only offer invest-ment advice but also creditlines and tax solutions. Thisindustry is more heavilyregulated and has beenmore vulnerable to westerngovernments’ post-financialcrisis tax clampdown. Ital-ian insurer Generali is intalks to sell its privatebank, BSI, to BTG Pactual,a Brazilian bank backed bybillionaire financier AndréEsteves.

But wealth managers,which are fragile organisa-tions heavily reliant onstaff, are no easy invest-ment either, private equitydealmakers say. 3i lost 40per cent of its investment inBestinvest after buying itfor £165m in a competitiveauction on the eve of thefinancial crisis, with highlevels of debt.

Regulatoryshake-up startsa flurry of dealsPrivate equity

UK wealth managersattract buyoutgroups, says Anne-Sylvaine Chassany

management, which shotup by almost a third duringthat period, thanks tostricter rules affecting areasfrom money laundering toinvestment advice.

“The cost levels of privatebanks remained high in2013, with only a few able toachieve a reduction. Ifequity markets lose theirmomentum for any lengthof time, pressure will riseagain – putting some banksunder duress,” BCGwarned.

Such structural issueshave already triggered anextensive shakeout in thesector. In the past fewyears, a number of largebanks have restructuredtheir wealth managementbusinesses and reducedtheir global footprint.

Continued from Page 1 Rapidly rising expendi-ture to ensure banks do notbreak anti-money launder-ing rules are making it par-ticularly uneconomic for allbut the leading globalwealth managers to remainactive in smaller markets.

Barclays last year said itwould pull out of more than100 markets and cut staff inits wealth managementbusiness to boost the unit’sprofitability.

Also in 2013, Credit Suissesaid its private bank wouldexit or withdraw fromabout 50 markets worldwideby this year to bolster prof-itability.

And HSBC wound downits Irish private bankingarm in October 2012.

Some US banks suchas Bank of America andMorgan Stanley, mean-while, have sold most oftheir European wealth man-

agement operations to focuson their vast home market.

Bankers point out that ithas become much moreexpensive to do businesslocally in every region, asyou have to be accustomedto a regulatory environ-ment that not only is muchstricter but also much moreinternationally fragmentedthan before the financialcrisis.

“If you do cross-borderbusiness today, you have toknow and respect localrules – unlike in the pastwhen frankly many banksdid not care much aboutthem,” a London-based pri-vate banker says.

So unless a bank hasenough scale, it has becomeuneconomic to serve manymarkets. Analysts thus pre-dict that truly global insti-tutions will soon be few andfar between while many

wealth managers willbecome niche players.

A global crackdown ontax evasion is anothercostly issue, particularly inSwitzerland, where US fineshave already helped forcetwo private banks – Wege-lin & Co and Frey & Co –out of business.

An agreement last yearbetween the two countriesis set to trigger a wave ofpenalties, with CreditSuisse’s recent $2.6bn fineand guilty plea for helpingUS citizens evade tax beingseen as a harbinger ofthings to come.

To tap growth remains achallenge for all, and manyprivate banks continue tolook towards Asia in thehope of catching a share ofa wealth market that is ontrack to unseat NorthAmerica as the largest inthe world in a few years.

Tim Monger, financialinstitutions partner at BCG,says: “In developed mar-kets, the challenge is whereto go to find growth. If youare in the emerging mar-kets, you just stay at homeand capture the growth.”

Profitability also remainsa big challenge. Consultants

at Roland Berger, a Germanmanagement consultancy,estimate that margins havefallen 20 basis points in fiveyears, thanks to lower cli-ent activity, less complexproducts and a focus on thesuper-rich – a clientelenotorious for demandinglow fees.

In the past few years, cli-ents’ large relative cashholdings have caused zeroto negative returns formany banks, as they hadto invest the cash in low-margin repo markets andwith central banks.

This is unlikely to changein the near future. “Unless

you see a rise in interestrates, you will probably nothave a substantial increaseof the gross margin,” saysMr Zeltner at UBS.

Yet all is not doom andgloom in a sector, which –compared with other areasof banking – has fared rea-sonably well in recentyears.

With overcapacity beingreduced thanks to restruc-turing efforts of a numberof banks, hiring talent hasbecome easier and lessexpensive.

And some private bankersare confident that theirmost savvy clients will beable to grab pockets ofhigher returns.

“It is actually a good timeto invest. There are a lot ofopportunities. You need tobe invested if you want tocompound returns,” MrZeltner says.

Wealth managers learn to wing it as ultra-rich buck the trend

Mention private banking inAsia to anyone outside theregion and the industry,and a stereotype of the clas-sic Asian client emerges: aself-made tycoon, stillactively managing his busi-ness but financially con-servative in the extreme –to the frustration of hischildren and grandchildrenwho want to broaden thefamily’s investments.

Couple that with a regionnow experiencing greatereconomic pressure than ithas for many years, andthe outlook could appeargrim.

But nothing, say theregion’s private bankers,could be further from thetruth and trends back themup. Assets under manage-ment at the top 10 banksgrew by an average of11 per cent last year –

helped by greater portfoliodiversity.

While clients vary, farmore typical are self-madeentrepreneurs – first or pos-sibly second-generationbusiness owners – who areconstantly looking forinvestment opportunities.This presents great feepotential but it comes witha catch: these clients wantmore and more from theirbanks.

“Private banking has notbeen very well defined inemerging markets,” saysOlivier Pacton, co-head ofHSBC’s private bank invest-ment group in the region.“It can be brand more thancontent in some cases.Retail clients now want pri-vate banking while privatebanking ones want invest-ment banking services. Ithas become more and moredemanding and compli-cated.”

There is no single modelfor private banking in theregion. Family office-styleoperators do indeed favourAsia’s tycoons, of whomthere are many. Others actmostly as a product distrib-utor for their banks’ other

businesses. Increasingly thebiggest are, however, takinga broader advisoryapproach, offering privatebanking as a gateway totheir other operations.

“The banks that can mar-ket themselves as oneorganisation will be win-ners,” says Chris Harvey,global head of Deloitte’sfinancial services team. Hewarns, however, that thiswill not be straightforward.“There’s a lot of opportu-nity there, but current sys-tems don’t necessarilyallow them to link, say,Chris Harvey the individualwith Chris Harvey the MDof ABC Industries. Thisthey need to work on.”

Overcoming technologicalbarriers is tough. But MrHarvey thinks improve-ments can be made throughfar simpler changes, too,such as moving investmentbankers to sit with theirprivate banking colleaguesand vice versa. Self-madeentrepreneurs often wantto take their businessespublic at some point, mean-ing they could appreciatean introduction to invest-ment bankers. In turn, the

owners of newly publicbusinesses have cash toinvest.

The biggest change in theindustry is to the well-es-tablished role of relation-ship managers. These areexpensive and often takeclients with them if theymove. Banks are working tocreate systems that do notrely on single points of con-tact.

“The relationship manag-ers of tomorrow will haveto be much better trainedand equipped. It is nolonger about being the nicechap who’ll walk the dogs.It will be the well-readbanker who can’t know eve-rything, but is very wellinformed about their clientsand what their bank cando,” says Mr Harvey.

UBS, the largest privatebank in the region, is, forexample, positioning itselfmore as an adviser. “We arehere to provide investmentadvice for clients and we’removing away from beingbased only around the rela-tionship manager,” saysKathryn Shih, chief execu-tive of wealth managementin Asia Pacific for UBS.

The unit’s assets undermanagement rose 18 percent last year, to $245bn,according to Asian PrivateBanker, beating its parent’sglobal 12 per cent AUMgrowth and pushing it tothe top of the magazine’sleague table, ahead ofCiti Private Bank with$218bn, up 4 per cent, andCredit Suisse with $131bn,up 7 per cent.

Relying less on invest-ment managers, however,does not mean costs arefree of pressure elsewherein the business.

More demanding clientsrequire more – and better –research and a wider rangeof products to meet thisgrowing interest in newinvestments.

“The vast majority of

portfolios in emerging mar-kets do still tend to have astrong home bias,” says MrPacton, who estimates up to70 per cent of a client’sportfolio will typically beallocated to local invest-ments and within that,mostly to local stocks. “Butthere is interest and grow-ing allocation elsewhere –to the developed world, forinstance. They are lookingat property and the finan-cial sector first becausethey know those areas.”

Advisers urging diversifi-cation have been aided bythe region’s poorly perform-ing stock markets. Trackingthe US S&P 500 last yearwould have produced a 30per cent return, comparedwith just 3 per cent for HongKong’s Hang Seng and aneven weaker 1 per cent fromSingaporean blue-chips.

“Business people typicallywant to be more active withtheir wealth,” says Ms Shih.“Since the financial crisis ithasn’t paid for them to sitin cash, either. Our houseview has been for clients toget invested and a lot ofthem have been taking ouradvice.”

Self-made entrepreneurs stoke growth in assetsAsia

As the number ofclients rises, so dotheir demands, saysJennifer Hughes

How do you meet a billion-aire?

For the many banks andwealth managers chasingbusiness from Asia’s ultra-

wealthy, finding the answer to thatquestion makes the differencebetween managing money for theregion’s biggest business tycoons andmerely aspiring to do so.

While the global population of bil-lionaires – or ultra-high net worthindividuals, in wealth managers’ jar-gon – has risen 60 per cent since 2009,say Singapore-based consultancyWealth-X and UBS, the Swiss bank,the number in Asia has grown fasterthan anywhere else.

The region was home to 508 billion-aires in 2013, marking a 3.6 per centrise from the previous year, accordingto a survey by the two companies.China now has the world’s second-largest billionaire population after theUS (although the survey adds that thecombined wealth of German billion-aires remains higher).

By contrast the number of Europe’sbillionaires fell by the same propor-tion to 766. North America and theMiddle East saw slight increases. Theglobal total was 2,170, with combinednet worth exceeding $6.5tn.

In spite of the disproportionatelyhigh growth numbers for Asia, track-ing down this elite group of peopleand winning their business is argua-bly more difficult than it is elsewhere.

That is because billionaires in Asiatend to be a relatively new generationof entrepreneurs who have made theirfortunes only in the past 20 years.

In Europe, extreme wealth tendsto be in the hands of multiple genera-tions of the same family, with wealthbuilt up over a far longer period.

Relationships are already established.Asia’s billionaires are at the van-

guard of a breed of family-owned com-panies that dominate the businesslandscape. According to a CreditSuisse survey, more than half thelisted companies in Asia with a mar-ket capitalisation of more than $50mare family-owned, while 38 per cent ofthem have been listed only since 2000.

Singapore is arguably the region’sfastest-growing wealth managementhub, capitalising on its role as south-east Asia’s trading entrepot.

“More and more of the wealthy arechoosing Singapore as a base to dobusiness, due to its financial hub sta-tus and ease of conducting business,”says Sandeep Sharma, co-head of pri-vate banking for southeast Asia atHSBC.

But it is a fiercely competitive busi-ness, and margins for many playerscan be thinner than in the west as aresult, bankers say. Billionaires arealso spoilt for choice when it comes toprivate bankers.

“These people are all quite over-banked. Everyone’s looking to dobusiness with them,” says MunishDhall, executive director at the globalfamily office business for southeastAsia at UBS.

Nor, on the face of it, is banking forbillionaires a business in which manybanks are able to exercise much pric-ing power. Jay Jhaveri, Asia directorat Wealth-X, says: “There is abso-lutely no billionaire who is paying‘rack rate’ for a bank’s services. Hewill be dictating pricing to a bank.”

Yet managing the money of theultra-wealthy – which includes abracket of wealth below $1bn – is stillof vital importance to the two biggestplayers in the sector, UBS and its

Swiss rival Credit Suisse. “We areskewed much more to the upper endof the market,” say Mr Dhall.

One reason for this is that billion-aires typically are business owners –indeed, about half in Asia have madetheir money in property. So there isplenty of advisory, merger and acqui-sition and capital markets businessthat can be won for other parts of thebank, if it is as large and diverse asthe two Swiss institutions.

“Entrepreneurs are highly optimis-tic and focused about the businessthey run. Generally the first thingthey ask a bank is to provide balancesheet [support] and partner with themearly on to help finance their businessgrowth,” says Francesco de Ferrari,head of private banking, Asia Pacific,at Credit Suisse.

Yet smaller Asia-based rivals aremuscling in and could be big playerseventually, bankers believe. DBS, Sin-gapore’s largest bank by assets, inMarch bought the private bankingbusiness of Société Générale, partlybecause it had a strong ultra-high networth presence.

One way to attract clients is to holdseminars and workshops at which bil-lionaires and their family memberscan learn about philanthropic giving –an increasingly important element

of the wealth management business.“They [ultra-wealthy clients]

increasingly seek targeted and meas-urable ways to directly address socialissues, without having to go throughmiddlemen, and they are willing toestablish the necessary infrastructureto ensure this,” says Paul Patterson,deputy chairman of the ultra-high networth division at RBC Wealth Man-agement.

UBS runs a “young successors pro-gramme” in Singapore for the sonsand daughters of the ultra-wealthy.Held at Command House, a formercolonial-era British military headquar-ters, the two-week long event isdescribed by the bank as a “mini-fi-nance MBA”.

“At some point in time they aregoing to take over [from their par-ents]. Our average relationship withUBS is 46 years so it goes from gener-ation to generation,” says Mr Dhall.

But for any other bank wanting tomake connections more directly, theWealth-X/UBS survey helpfullyreveals key social events to which bil-lionaires typically mingle every year.They include the Wimbledon tennistournament, former US president BillClinton’s Clinton Global Initiative inNew York and horse racing’s Mel-bourne Cup in Australia.

Region’s newgeneration ofbillionaires isspoilt for choiceAsia’s ultra-wealthyPrivate banks cannotexercisemuch pricing power but still do notwant tomiss out, writes JeremyGrant

‘The vast majorityof portfolios inemerging marketsstill tend to have astrong home bias’

Singapore bling:the island state isarguably theregion’s fastest-growing wealthmanagementhub Bloomberg

Private Banking

‘The industry ismanaging moreassets because ofthe ageing of thepopulation’

Global private financial wealth

Source: Boston Consulting Group Global Wealth Report 2014

$tn

* Estimates

0

10

20

30

40

50

60

NorthAmerica

WesternEurope

Asia Pacific(ex Japan)

Japan Middle Eastand Africa

LatinAmerica

EasternEurope

2011Global total

2012 2013 2018*122 132.7 152 198.2

FINANCIAL TIMES TUESDAY JUNE 10 2014 ★ 3

Private Banking

Private banks have spentmuch of the time since thefinancial crisis on the backfoot, as declining fees andmounting regulatorydemands have made thebusiness of looking afterrich people’s money consid-erably tougher than it oncewas.

One area of activity aboutwhich private bankers areparticularly optimistic,however, is lending towealthy clients.

UBS has boosted lendingin its non-US wealth man-agement business by 36 percent to SFr102bn ($114bn)since 2011, and in its USbusiness by 25 per cent toSFr35bn over the sameperiod. Analysts reckonCredit Suisse could boostlending by SFr50bn over thenext couple of years. Andlast week, Goldman Sachsjoined the throng, identify-ing lending to the superrich as a future priority.

“Ultra-high net worthlending has become agrowth driver for the bank,and key to expanding busi-ness with this client seg-ment,” says John Zafiriou,global head of solution part-ners at Credit Suisse.“When you look at theultra-high net worth busi-ness, every bank has veryaggressive targets rightnow.”

This lending is composed

mainly of mortgages andLombard loans, when bankslend money to individualswho offer assets – typicallyshares and bonds, but some-times other financial prod-ucts – as collateral.

While some clients useLombard loans to fund lux-ury purchases such asyachts or ski chalets, mosttypically use them to diver-sify their portfolios, or, inthe case of entrepreneurs,to invest in their own busi-nesses.

“I would say that themost active clients areentrepreneurs. They’re bor-rowing because they wantto grow, because they wantto diversify their asset port-folio,” says Mr Zafiriou.“For instance, the individ-ual who has 80 per cent of acompany, who may want toleverage his shares toacquire other assets.”

For private banks, suchlending has a number ofadvantages. The first is thatthe interest payments pro-vide an additional incomestream.

“In the US, only 30 percent of assets under man-agement at the big wealthgroups earn monthly fees,”says Christopher Wheeler,an analyst at Mediobanca.

“A lot of their revenuesare still down to transac-tions. But if you can get cli-ents to borrow money, youhave a trailing incomeline.”

A second advantage, saysDieter Enkelmann, chieffinancial officer of JuliusBaer, a Zurich-based bank,is that clients who have aloan, and in particular amortgage, with a bank areless likely to leave thanthose who merely havedeposits.

“Mortgages are clearly aretention tool, because it iscumbersome to move amortgage from one bank toanother,” he says. “Even ifyou lose the rest of a cli-ent’s business, if they havea mortgage with you, youstill have a relationshipwith them and maybe youcan win them back.”

Another attraction is thatcollateralised lending hasbeen less heavily penalisedthan other areas of bankingby the wave of regulationthat has hit banks since thefinancial crisis.

Perhaps the main appeal,though, is that lending canserve as a hook to workwith a client in other areas,says Mr Zafiriou.

“The US is a very compet-itive market where spreads

are low. If you’re dealingwith some of the verywealthy families, you haveto be competitive.

“Lending opens adialogue around theirbroader needs: once youprovide funding to the cli-ent, you may follow up witha hedge of his interest rateor currency risk, and soon,” he says.

“It’s not a matter ofextending a loan and disap-pearing, the bank strives todeepen the relationship fur-ther. What you ultimatelywant to achieve is thatwhenever a client has aneed, they think of you,” headds.

Viewing lending as ameans to an end makes

sense, because one obviouslimitation of lending as agrowth strategy is that atsome point it becomes riskyfor banks to lend more toany given individual.

Another limitation is thatwhen markets turn bad,banks can find the value oftheir collateral has plunged.In the case of Lombardloans, this typically meansthat clients have to stumpup extra collateral, whichthey are not always in aposition to do, as a numberof banks found in 2008.

Mr Enkelmann recognisesthat there is a risk to Lom-bard loans, but says it issmall, pointing out thatJulius Baer suffered lossesof just SFr10m on a loanbook of SFr10bn in 2008.

In the case of mortgagelending, he adds, the risk isalso minimal.

“The advantage of mort-gages – particularly inprime locations such asMonaco and London – isthat the loss experience isvery low,” he says. “Theyare fully collateralised, weknow the position of the cli-ent.”

The key is for privatebanks to ensure that theirrisk controls around mak-ing loans are watertight,says Mr Zafiriou. As long asbanks get this right, lend-ing offers huge potential, headds.

“Last year we executedabout 200 highly structuredtransactions for ultra-high-net-worth clients. A decadeago, when we started, weexecuted less than 20,” hesays.

“This whole segment isvery active. It is one of theareas of banking that isvery profitable overall andhas huge upside.”

Loans add to income and helpbuild relationships with clientsLending

The practice hasbenefits for wealthmanagers and risksare relatively low,says James Shotter

London is in the middle of awealth management renais-sance. Private banks andtheir clients alike are rushingto come to the UK capital as

they seek to participate in the buzz ofone of the richest and most interna-tional cities in the world.

New institutions such as Edmondde Rothschild (see sidebar), Reyl & Coas well as established US and Cana-dian banks are developing privatebanking units in London, while otherssuch as Credit Suisse are expandingexisting operations through acquisi-tions.

“If you want to be taken seriouslyas a wealth manager, you can’t affordnot to have a presence in London,”says Heinrich Adami, group managingdirector at Pictet & Cie, the Swissprivate bank and fund manager.

“In the past two or three years ithas become quite clear that Londonno longer is the third centre behindSwitzerland and New York. It hasreplaced New York. Everything thatis in New York, you also have herenowadays,” he adds.

The advent of new groups is onlypartially driven by a wealthy UKhome market. The dominant reason isthe continuous influx of internationalmoney to London, mostly fromregions such as Russia, the MiddleEast, South Africa and India, but alsofrom countries such as France andItaly.

Phil Cutts, chief executive of privatebanking at Credit Suisse in theUK, says: “London has a strategicadvantage because of its central time-zone. You can talk to every clientaround the world within a workingday.”

As a result of the inflow of foreignmoney, London has more billionairesthan any other city in the world,according to the Sunday Times RichList.

And it continues to grow. In itsmost recent global wealth report,Credit Suisse estimates that the

number of people in the UK with $1mor more of financial and non-financialnet wealth will rise 55 per cent to2.38m by 2018.

Jürg Zeltner, chief executive ofUBS’s wealth management arm, says:“For wealthy individuals, London hasbecome the go-to place. It is clearly

becoming the hub for ultra-high networth people.”

One big reason for this is that once-favourite offshore financial centreshave lost their appeal for wealthyindividuals. Switzerland has been hitby the end of banking secrecy andlocations such as Cyprus have suf-

fered a banking and sovereign debtcrisis.

Private bankers say that money isalso flowing into London accountsthanks to the longstanding affinitythat many wealthy foreigners havewith the UK.

Russians and Arabs often send

their children to London schools, ownproperties, buy businesses and, insome cases, have UK citizenship. Theyalso like the strength of the jurisdic-tion, enabling some to shield theirassets against the political vagariesand risks in their home countries.“The wealthiest families want their

assets spread globally,” one bankersays.

In recent years, many Italians andother southern Europeans have alsomoved some of their money to Lon-don, because of the economic and sov-ereign debt risks at home.

The fast inflow of money is behindbanks’ expansion of their wealth man-agement offices in London.

Tim Monger, financial institutionspartner at Boston Consulting Group,says: “I have received many morecalls over the past year or so frompeople who look at this market andsee it as an opportunity.”

Mr Adami at Pictet says he has adozen relationship managers in Lon-don but wants to expand that to 20 inthe next 12-18 months.

The venerable Swiss private bankhas had a presence in London for 25years. But this April, the privatebanking arm moved its offices awayfrom the asset management side’sbase in the City to the upmarket dis-trict of Mayfair.

“The City has become predomi-nantly institutional,” Mr Adami says.

Many banks have already estab-lished London as a booking centre,but they are expanding their opera-tions in a move to capture some of thenew client money coming in.

Essentially, they have two options:either buy a rival business or hirerelationship managers.

Most do the latter but Credit Suisselast year went for the former option,snapping up the wealth managementoperations of Morgan Stanley in Lon-don, Milan and Dubai in a deal thatdoubled the Swiss bank’s UK businesswith rich clients.

It gave Credit Suisse a top-10 rankin the UK, where the group lacked thestrong foothold it has elsewhere.

Others, such as Swiss rival UBS, aresimply hiring further staff in a moveto attract more clients. Mr Zeltnersays: “We are building out in London.We are growing our internationalbooking centre, our family officecentre and our ultra-high net worthbusiness.”

Such expansion has already had animpact on the market for wealth man-agers, with swathes of US and Euro-pean banks seeking to hire privatebankers for their London-based Rus-sia or Middle Eastern desks.

“If you are a relationship managertargeting Russian, Chinese or MiddleEastern clients, you will have seenyour salary rise significantly,” onebanker says.

Capital gains from foreign money and timezoneLondon The city’semergence as a hub forthe rich has prompteda response fromwealthmanagers,writesDaniel Schäfer

One of the most prominent examples ofa venerable private banking namesetting up shop in London is Edmondde Rothschild, the Franco-Swiss privatebanking group chaired by the lateEdmond’s son, Baron Benjamin deRothschild.The private bank’s chairman, who is a

sixth-generation scion of the bankingdynasty started by Mayer AmschelRothschild more than two centuriesago, launched a London-basedmerchant banking business last yearin an effort to turn the City into the

group’s fourth main business centre.The bank, which operates separately

from David and Eric de Rothschild’sbanking group, has hired 20 senioradvisers, mostly from large banks, tohelp start a private banking andcorporate finance business in the Cityalongside its existing asset managementunit.The Geneva-based group has had a

presence in London for three decadesbut that has not included its corebusiness of serving the investmentneeds of entrepreneurs and families.

Given that focus, its merchant bankis not at risk of a clash with other partsof the sprawling group, such as thecorporate finance advisory firm – oneof the UK’s largest – that belongs toParis-based Rothschild group.Led by Richard Briance, Edmond de

Rothschild’s UK head and a former chiefexecutive of Hawkpoint Partners, thegroup now has nearly 100 staff inLondon but has plans to expand further.Christophe de Backer, Edmond de

Rothschild’s chief executive, recentlytold the Financial Times that the private

banking and asset management groupcould accommodate 150 people at itsMayfair office and was consideringtaking an additional building ifnecessary.“At present, we have three main hubs

in Paris, Geneva and Luxembourg.London will become the fourth hub,” theformer HSBC banker says.“London is the place where we can

find talent, it is the place to be,” headds.

Daniel Schäfer

Fourth hub Edmond de Rothschild adds private banking to its City activities

Room for expansion: the Franco-Swiss private banking group’s Mayfair office could accommodate additional staff Charlie Bibby

Daniel SchäferInvestment bankingcorrespondent

Anne-Sylvaine ChassanyPrivate equity correspondent

Sharlene GoffRetail banking correspondent

Jeremy GrantAsia region corporatecorrespondent

Jennifer HughesAsia financial correspondent

James ShotterZurich correspondent

Sarah MurrayFreelance writer

Andrew BaxterCommissioning editor

Andy MearsPicture editorSteven BirdDesigner

For advertising details,contact: Robert Grange,tel +44 (0)20 7873 4418,email robert.grange@ft.com.

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Some clientsuse Lombardloans to fundpurchasessuch asski chalets

4 ★ FINANCIAL TIMES TUESDAY JUNE 10 2014

When David Coultharddrove racing legend JimClark’s Lotus 25 at Sil-verstone motor circuitlast year, it was not only

the former Formula One driver‘sheart rate that started beating faster.

Paul Denman’s did, too. The direc-tor responsible for media and sportsat Arbuthnot Latham, a UK privatebank, was excited to see Mr Coulthardracing in a car that sported thewealth manager’s logo on its side.

The picture of Coulthard in a 1960scar – the first to be built with a mono-coque chassis – was on the frontpages of several motorsport enthusi-asts’ magazines, in newspaper articlesand on television.

For Arbuthnot Latham, it markedthe high point of a decade of motor-sport sponsoring.

“In the past, not many historic rac-ing cars carried logos,” Mr Denmansays. “But now there is more of thatand cars with our logo end up inraces, museums and on TV.”

Motorsport sponsorships have beenused by a number of private banks asa tool to enhance their brand nameas well as to attract and entertain

clients. It seems a natural fit, as manywealthy clients like motorsport.

But are there tangible benefits tosponsorship of such high-profilesports; and is it worth the largeamounts of money?

For Jürg Zeltner, the answer is anemphatic “yes”. UBS, the Swiss bank-ing behemoth whose wealth manage-ment arm he runs, is supporting thehigh-octane world of F1 as a globalpartner.

The bank’s logo is plastered on thesides of circuits that include Silver-stone, Buddh International in Indiaand Interlagos in Brazil, andcan be seen by 450m people on televi-sion.

When UBS started to sponsor the F1Grand Prix series in 2010, its mainambition was to find a platform thatcould raise its brand awareness inemerging markets, the centres ofgrowth in wealth management thesedays. As the largest wealth managerin the world by assets under manage-ment, the Swiss bank’s brand hadhuge strength in the west, but had notachieved the same recognition incountries such as China, Mexico orTurkey.

“We were looking for a global plat-form with high visibility and reach.There are very few of those,” Mr Zelt-ner says. Other possibilities wouldhave included the Olympic Games,the Fifa World Cup or maybe tennis.But the huge crowd attracted by F1,its high frequency and its expansioninto emerging markets were decisivefactors behind UBS’s decision to backthe motor sports.

UBS acts as a global partner to F1,which for the private bank has advan-tages over sponsoring an individualteam. For one thing, it does not hingeon the success or failure of a particu-lar team or driver. And second, it doesnot upset any of its clients who maybe passionate supporters of a differentteam.

While the initial motivation was toraise brand awareness, UBS soonfound there was an additional benefitfrom the sponsorship: client hospital-ity.

“Our clients have responded posi-tively to our F1 engagement,” Mr Zelt-ner says. “So we have built out theclient experience by taking them tothe races.

“Today, our focus in F1 is on

hosting high-profile client events, asopposed to further building our brandawareness,” he adds.

The bank now shepherds about 110-120 wealthy clients to each race –offering experiences such as flyingthem in on helicopters, a trip on theracing circuit with one of the drivers,a visit to one of the team garages orthe chance to handsign one of theracing cars.

But supporting a high-profile sportsuch as F1 comes at a huge cost, withexperts estimating that UBS’s spon-sorship bill is tens of million dollarseach year.

The Swiss bank’s entry into F1already went against the grain in thebanking sector. Dutch financial groupING severed its financial ties in thewake of the global banking crisis,while Royal Bank of Scotland stoppedbeing a leading sponsor of the sportafter it had to be bailed out by thestate.

UBS does not comment onspeculation that it might dropout as well. But bank insidersstress that so far the deal hasbeen worth the money.

According to Mr Denman,

the same applies to ArbuthnotLatham with its much lower budgetfor sponsorship of the UK’s HistoricGrand Prix Cars Association. He saysits involvement in classic motorsporthas generated a lot of new businessand continues to enlarge the bank’sclient base among petrolheads.

“The primary aim for us is to meetnew high net worth individuals,” MrDenman says. “It is a wealthy per-son’s sport.”

Its intensive network among motor-sport enthusiasts has even helped itto attract some professional drivers asclients.

But because of the private bank’sdiscretion, it remains unclear whetherMr Coulthard is among them.

Seats at a Parisian catwalkshow or a chance for thekids to be zookeepers for aday are some of the perksavailable through an onlineportal for a select group ofprivate banking clients atBarclays.

The “Little Book of Won-ders” service – a digitaltake on the traditional pri-vate banking concierge – isone of the latest attemptsby private banks to boosttheir online offerings forhigher earners.

Regularly criticised forlagging behind other partsof financial services – par-ticularly mass market retailbanking – in terms of theirdigital capability, consult-ants say private banks arenow trying to catch up.

As a younger generationof tech-savvy wealthy inves-tors emerges, IT expertspoint to a growing demandfor conducting privatebanking and investing onmobile devices and online,rather than traditional face-to-face meetings.

Most big private bankshave launched mobile appli-cations in the past couple ofyears – but with limitedfunctionality. Consultantssay they are now scram-bling to launch new appsthat will better enable cli-ents to review their portfo-lios and make trades, aswell as receive marketinformation, quotes andnews that might be relevantto their investments.

Shaking up often time-consuming and old-fash-ioned private banking proc-esses presents a significantopportunity for wealthmanagers. Recent researchby Temenos, the IT servicescompany, found that about$1tn is being transferred tothe next generation everyyear – taking significantfunds into the hands of the

under-40s, who are morewilling to conduct theiraffairs digitally.

But Temenos found thatmany wealth firms consid-ered the move to digital asa threat to their businessmodels, as it improvestransparency around pric-ing and increases competi-tion from online brokers.

“Today what they see ismore of a threat than anopportunity,” says PierreBouquieaux, product direc-tor at Temenos. “Privatebanks are quite behind withtheir digital strategies.Some are struggling as theyare starting from a blankpage.”

Consultants say there is aperception among somefirms that digital servicesare relevant only toyounger or “lower tier” cli-ents who want to invest forthemselves.

“One of the core reasonsfor the slow uptake of dig-ital capability in wealthmanagement is becausemany executives have helda belief that digital is notrelevant in the privatebanking model,” says JeanLassignardie, chief salesand marketing officer at

Capgemini Global FinancialServices. “Firms need tounderstand that digital isrelevant for all groups.”

Improving technology hasbeen a key priority for bigbanks in western marketsafter years of underinvest-ment that has left manywith decrepit systems thatare struggling to cope witha surge of online andmobile transactions.

IT specialists say smallerlenders and those operatingin emerging markets areleapfrogging establishedwestern rivals in technol-ogy as they build new stateof the art systems.

Retail banks in the UKhave been caught out by anumber of severe IT crashesthat have underlined thenecessity of upgrading theirsystems.

Private banks tend to runon independent systemsthat are not so prone toproblems; during a damag-ing power cut at RoyalBank of Scotland in 2012, itswealth arm Coutts wasunaffected, for example.

But consultants say pri-vate banks and wealth man-agers have also spent fartoo little on their systems.

“Over the past couple ofdecades, wealth manage-ment institutions havechronically underinvestedin technology because theyhave lived off low customervolumes and customisedofferings (which do notrequire large processingpower),” Temenos said inits report on the transfer ofwealth between genera-tions.

It found that during the1990s, as most businessesstarted engaging with theinternet, private banks“mounted their defences”instead: “Email was tightlycontrolled, attachmentswere banned, codes andsecure ID cards wererequired to access the inter-net.”

Some bankers admit thatsome of that nervousnessremains within privatebanks. “There has been aperception that the valueadded by a good banker ishard to digitise,” says AnneGrim, global head of clientexperience at Barclays.“Can technology completeday-to-day activities withthe same quality and sameoversight?”

Activities that can be eas-ily digitised include sharinginformation with clients –through charts, research,commentary on financialmarkets and streamingquotes, for example – andbasic transactions such asopening accounts, moneytransfers and simple trades.

Consultants say provisionof financial advice is moredifficult as bankers are con-cerned about breaching reg-ulatory requirements whenoperating through channelssuch as mobile apps andsocial media.

Mr Lassignardie atCapgemini says one excep-tion is UBS, the Swiss bank.“While other firms appearto be taking tentative,experimental steps, UBShas been piloting signifi-cant mobile investmentssince at least 2011, and hastaken the forward-lookingstance that mobile applica-tions are the adviser desk-top of the future,” he says.

To avoid falling behind,other banks are likely tofollow suit in coming years.

Scramble to improve mobileapps as sector warms to webTechnology

The net is seen as anopportunity butsome nervousnessremains, saysSharlene Goff

For staff at a private bank,advising clients on how todistribute their largessewas once relatively simple.But as today’s donors pur-sue more complex givingplans – some even using for-profit investments as a wayto fulfil their social mission– advisers find they need tobeef up their skills.

In one study, 57 per centof professional advisers saidthey were planning toincrease their knowledgeabout philanthropy so thatthey could advise their cli-ents better.

“Donors are looking to bemore strategic, focused andintentional versus merelyresponding,” says GillianHowell, managing directorat the philanthropic solu-tions group of US Trust, thewealth management divi-sion of Bank of America,publisher of the research.

According to the study,not all wealth advisers offerthe kind of strategic advicephilanthropists seek.

Almost two-thirds ofwealthy individuals saiddiscussions with theiradviser about giving tendedto focus on technical issues.

Only 27 per cent said theytalked with their adviserabout charitable goals, val-ues and interests.

Yet philanthropic goalsare being pursued increas-ingly through long-termplans rather than a scatter-gun approach.

For this reason, manywealthy individuals estab-lish a private foundation ora donor-advised fund, wherethe donation is tax deducti-ble immediately, but fundscan be distributed later, giv-ing donors time to design agiving strategy.

“They’re not just lookingto write a cheque, but they

want to have these vehiclesso they can plan their phi-lanthropy,” says Ms Howell.

Helping donors planmeans asking the rightquestions. These couldrelate to the proportion ofwealth clients would like togive away or whether theywant to make the biggestimpact in the coming yearsor after their death.

“The answer to questionslike these can yield widelydifferent strategies,” saysGeorge King, head of portfo-lio strategy at RBC WealthManagement, part of RoyalBank of Canada.

At the same time, donorsare looking for greater con-trol over their giving andthe difference it is making.

“It’s a very personal set ofdecisions and motivations,”says Mr King. “But increas-ingly what unites them is adesire for greater involve-ment, and to see and quan-tify the material impact oftheir investments.”

This means advisers haveto help donors find causesand organisations wherethey can, say, take a seat onthe board or offer their

skills and time as well astheir funds.

However, private bankphilanthropy advisers areventuring into unchartedterritory, as wealthy indi-viduals harness some oftheir for-profit investmentsto solve social and environ-mental problems.

Impact investing, forexample, is a way to gener-ate social and environmen-tal improvements as wellas financial returns. Invest-ments might be in anythingfrom clean technologyto a company providing

affordable healthcare topoor communities in India.

For those who have madetheir pile in business, suchinvestments are appealing.

“For entrepreneurs, socialenterprises are very excit-ing,” says Maya Prabhu,managing director and headof the UK-based CouttsInstitute, which advisesindividuals and families onwealth management, in-cluding giving strategies.

“They can look into theeyes of a social entrepre-neur and see the spark theymight have seen in them-selves,” she adds.

Other investment vehi-cles are emerging, too.Through social impactbonds, also known as pay-for-performance invest-ments, individuals caninvest in services tacklingthings such as prison recidi-vism or low school perform-ance. They receive returnswhen the intended savingsand social goals have beenrealised.

Many of these investmentvehicles are designed to tapinto private capital as ameans of doing more toaddress social and environ-mental challenges.

Ms Howell says: “It recog-nises that the pool of phil-anthropic, government andaid money is not enoughto tackle these issues andthat we need to be morecreative.”

As wealthy individualsbecome more comfortablewith the notion of makingmoney while also contribut-ing to society, advisers needto arm themselves witheven broader knowledge.

Nor can they go it alone.After all, in most marketsonly registered financialprofessionals can giveadvice on for-profit invest-ments.

“We work closely withour investment team,” saysMs Prabhu. “They mightlook at the financial anddue diligence side of thingsand we’d comment on whatthis means from a socialand environmental impactpoint of view.”

All this requires more col-laboration between the phi-lanthropy advisers in pri-vate banks and their invest-ment colleagues.

“Wealth managementfirms looking to positionthemselves for the futureneed to be ambidextrous,”says Ms Prabhu.

She believes that, as thelines between philanthropicand investment capital con-tinue to blur, a time willcome when most adviserswill be able to cross thedivide.

“Eventually, we’ll haveinvestment professionalswho also understand thesocial and environmentalissues,” she says. “And howexciting would that be?”

Advisers realisecharity is morethan just givingPhilanthropy services

Clients’ demands arebecoming morecomplex, writesSarah Murray

Impact investing: a way to generate both social benefits andfinancial returns Getty

High-octanedeals propelbrands intopole position

Motorsport sponsorship Groups areattracted by the intense concentration ofwealthy petrolheads, writesDaniel Schäfer

‘Management firmslooking to positionthemselves for thefuture need to beambidextrous’

‘We were looking for aglobal platform with highvisibility and reach. Thereare very few of those’

Private Banking

The surge in demand fordigital banking services isprompting private wealthmanagers to follow high-street lenders into the worldof mobile applications andonline services.IT experts say global

private banks that are partof big retail banking groupstend to be more advancedin this field than their moretraditional, independentcounterparts.Most large private banks

have mobile apps that allowclients to carry out basicservices such as reviewingtheir portfolios, researchinginvestments, openingaccounts and movingmoney. However, some haveregional restrictions.Some have specialised

apps for sharing financialinformation. HSBC Private

Bank, for example, has an“Investment Outlook” appthat provides quarterlyinformation on the globaleconomy.Meanwhile, Coutts, the

private bank owned by RoyalBank of Scotland, offers the“Knowledge Exchange”, anonline network that providesclients with information onmarkets, entrepreneurship,family business andphilanthropy.Consultants say they are

working with a number ofbanks that want to use theirapp to improvecommunication with clients.Private banks are also

looking at communicatingthrough social mediachannels such as Twitter,Facebook and YouTube.

Sharlene Goff

Only connect Independents lag behind

Profile-raiser: UBS (above)started sponsoring FormulaOne in 2010; (below) a Lotus25 from the 1960s –Arbuthnot Latham has beeninvolved in classic motorsportfor more than a decade Getty