JP Morgan's Peter Flavel on why he believes private banking in Asia is becoming more of a team sport than ever.

Peter Flavel

Peter Flavel is chief executive officer of JP Morgan
Private Wealth Management in Asia, a division which serves clients with a net worth from US$10-30 million. Here, he tells WealthBriefingAsia where he believes the future of private banking
in the region is heading. 

WBA: How do you think private bank advice is evolving?

Peter
Flavel: Our view is that wealth management advice should be delivered by an
integrated team. Every private client at JP Morgan has a dedicated banker and
investor coverage team. They’re co-partners in understanding client needs and
delivering the best thinking of our whole bank for the benefit of our clients.

We believe
the team-based model is the future for advice in our industry. Other models in
the market do make use of what are generally called investment consultants but
usually less than 10 per cent of clients get to see both a relationship manager
and an investor. And when they do, the role of the investor is usually more of
a part time specialist support role rather than being a dedicated, active, long
term accountable member of the client coverage team. 


WBA: How
does the team model work in practice?

Peter
Flavel: In our team coverage model, every client has both a dedicated banker
and investor. In addition, when there is a credit need, we have a dedicated
capital advisor. When there is a need for trust and estate planning, we provide
a dedicated wealth advisor. And for day-to-day client service, we have two
allocated client service specialists. Delivering advice for us is a ‘team
sport’. It is the future for advice in our industry.

WBA: What
type of advisor does your model best suit? Who is attracted to your team based
model?

Peter
Flavel: Our advisors understand the best way to deliver first-class advice is
to leverage all the specialist resources of JP Morgan, whether that is our multi-asset
class specialists or our asset class leaders. Our bankers recognise that global
markets are way too complex and volatile to understand every asset class and
have detailed real time knowledge of multiple markets, the entirety of our
solutions platform and then also be responsible for every additional element of
client coverage. It's just too much workload for one person. First-class client
service today requires a team-based approach.

So why does
it work? 
The team approach provides our bankers with the resources they need
to meet their client needs across all asset classes and to bring the very best
ideas and thinking of the whole bank for the benefit of clients. The extra coverage
resources mean our bankers then have time available to prospect for new clients
as well as cover their existing relationships. And when our bankers are out of
the office, they do so with the comfort and knowledge they have their first class
coverage team partners back in the office helping them develop and deepen
client relationships.

It’s a very
banker friendly model once you understand the resources provided to help the
banker deepen their client relationships. In contrast, I believe the model
commonly adopted in the Asian market over the past 10 years has placed too many
burdens on bankers. When you ask Asia-based bankers about their personal
workload, many of them feel simply overloaded.

WBA: How do
you see prospects for offshore banking?


Peter
Flavel: Offshore banking remains strong with both Hong Kong and Singapore
continuing to grow. It's about peace of mind that your investment portfolio is
being well managed in a secure, safe environment with strong regulation and
transparency. Some parts of the world can be more exposed to risk particularly
for the wealthy. Having a part of your wealth invested in a safe place will
remain a valid business model for some time to come.


WBA: How do
you view competition of international vs regional/domestic banks going forward?

Peter
Flavel: There's room for each of the different types of players meaning
international, regional and purely domestic private banks. Each will play to
its strengths. Clearly for JP Morgan that means bringing the huge breadth and
depth of our resources and detailed research we deliver globally for the
benefit of our Asian clients. It could mean distressed debt opportunities in
Europe, commercial real estate plays in the USA or local Asia focused
investments. We have a particular focus on private equity where we see
ourselves having considerable knowledge and specialist access. We have some
very interesting unique private equity vehicles tailored to the specific needs
of high net worth clients.

WBA: What
will be the key elements to deliver value to clients nowadays? Is investment
performance most important?

Peter
Flavel: What is required to deliver value in today's environment is the much-used
term of being a trusted family advisor. Our goal is to deliver superior risk
adjusted returns over the long term through the natural different investment
cycles. We have a much higher percentage of our client money managed in our bespoke
discretionary portfolios. This is an important issue for us, we seek to be in a
fiduciary relationship with our clients. We see that as a key element of being
a trusted advisor.

WBA: Have
wealth management firms managed to provide service to meet with the complex
needs of Asian entrepreneurs?



Peter
Flavel: Not all private banks are well set up for all the complex needs of the
Asian entrepreneur. You need the strong links and global capabilities we have
with our investment bank and commercial bank partners. You also need to have a
liquid balance sheet able to help fund a client's legitimate need for leverage.
For instance, providing access to single stock lending with the proceeds then
used to diversify our client's investment portfolio and reduce risk.


WBA: How
can you achieve a profitable wealth management business in this region?

Peter Flavel: Achieving a profitable wealth management business in Asia
has to be about taking the long view. We are fortunate to be in the region
growing HNW wealth faster than elsewhere in the world. It means we are probably
the most exciting wealth market globally. But as with any business there is the
right rate of growth, neither too slow nor too fast. I see some in the market
continue to simply talk about their hiring plan targets. Our goal is to be the
best private bank, not the biggest. It's about the right rate of measured growth
and maintaining an absolute focus on delivering first class team-based advice
while you grow.