Northern Trust’s relatively young wealth management business in Europe, Middle East and Africa is led by Nick Ring, the former chief operating officer and managing director of the US bank’s European investment management business.

Northern Trust’s relatively young wealth management business in Europe, Middle East and Africa is led by Nick Ring, the former chief operating officer and managing director of the US bank’s European investment management business.

Mr Ring has been chief executive of Northern Trust’s EMEA wealth management business for two years, having started his career with accountants Touche Ross (now part of the Deloitte empire), moving on through Prudential, Gartmore and KPMG Management Consultants.

The organisation he manages operates at the very highest end of the wealth management market and concentrates on reporting and custody as well as investment management, offering a holistic wealth service to a very specific market segment.

“At the moment we’re interested in clients with over $75 million but this is probably going up to $200 million. There are still thousands of families in this space.

“We don’t do any estate planning, tax planning and wealth structuring, and we’re not an investment bank. And it’s at the higher levels we can add more value,” said Mr Ring.

The ultra-high net worth market is very different from the lower levels of wealth management – I often view it as being institutional but with emotion, says Mr Ring.

Our private clients have an institutional level of wealth, but unlike pension fund trustees they haven’t built in an emotional filter. After all it’s not the pension fund trustees’ money.

Family office managers are the people who Northern Trust comes into most contact with. These people are very close to the family, says Mr Ring. They need to know valuations on a daily basis – this really matters to families, whereas institutional reporting is usually month end.

Although Northern Trust only works with 381 families worldwide, it still has $30 billion under investment management and services $185 billion in wealth management globally. The average client relationship is a whopping $430 million, and the billionaire clients are in the multiples of ten.

And at this level, clients tend to be conservative, Mr Ring tells WealthBriefing.

“Our client don’t take risks – they’re not looking to make money – and they’re not so affected by market moves.

“They think - let’s structure the wealth for the family first, then structure for tax. Only then do they think about making the money work for them. It’s all about wealth preservation not wealth creation.”

That’s not to say that they don’t take risks, but rather that they do so within a risk budgeting framework. Clients with a low risk profile generally may still have some high-risk investments thrown into the mix.

Within the tolerances of risk budgeting Mr Ring has noticed an increased trend towards direct private equity investments. These allow for more direct control both in terms of engagement in the business and how and when to realise the investment.

Although Northern Trust is constantly surveying what its clients are invested in, there is no single in-house asset allocation model which is forced onto clients.

“We find out the client’s investment philosophy, then their investment policy, then look at their investments and compare with standard in-house models – we work together with them to come up with the best specific solution for that client,” said Mr Ring.

Mr Ring sees his role building up the EMEA wealth management business, based upon the foundations of the highly successful US business. His business unit now has 45 front office staff split between London and Guernsey, including the Barings Financial Services Group acquisition that was made in March 2005, and which is now fully integrated.

He sees huge potential for Northern Trust’s wealth management business in the EMEA region– following on from the growth in the US. “This is the start of something big, as we truly gloablise our business and our client base,” he told WealthBriefing.

But he says that one of the main challenges for the business is hiring more business development people especially those with relationships with advisors such as lawyers and accountants.

Apart from Northern Trust’s broad reputation, especially in the US and its client focus, Mr Ring points to the Chicago-based bank’s emphasis on technology as being a major strength and differentiator.

Every year $300 million is spent on the technology platform that has thus grown organically. “We’ve taken a simple custody platform onwards. There’s has been a linear growth as clients needs grow and change,” said Mr Ring.

“We’re a single global provider, we see this as being particularly important as families are now global.”

Mr Ring also stresses that Northern Trust’s wealth management business has the same platform as institutions, so private clients get institutional based strength.

The bank’s wealth management business is being grown not through selling, but by building relationships, according to Mr Ring.

“We’re also looking at sponsorship of events and cultural activities, along with involvement in family business clubs, but it’s mainly word of mouth referrals at the moment.”

“Timing is very important. For us, when a business is sold, it can be too late to get involved with the family – it should be beforehand.”

Mr Ring points out that other wealth management professionals sometimes confuse what it is that Northern Trust actually does.

For Northern Trust it’s all about aggregating information, and not, initially at least, about investment management.

“Clients struggle with data, and relationships tend to start with this. To this we add credit and liquidity services. You then get to see everything that’s going on and then you can start to advise. And when trust has been built up, you can start talking about investment opportunities.”

Looking to the future, what we are seeing now is for multi-billion dollar families to have many custodians and what we seek to do at Northern Trust is be the master record-keeper. But we don’t want to take business that we don’t add value to. It’s only if we add value that we feel that we can charge a fee.”

“We’re also transparent about fees and we try to have a flexible approach which may differ around the world.”