The private banking industry is in urgent need of an international organisation to represents its interests at governmental level as well as...

The private banking industry is in urgent need of an international organisation to represents its interests at governmental level as well as to give leadership and guidance. Sebastian Dovey, managing partner of Scorpio Partnership, a research consultancy, said at yesterday’s Wealth Management Congress 2005 in London that such an organisation could model itself on the highly regarded Swiss Private Bankers' Association.

Mr Dovey was among a host of top level speakers at the event, including HSBC Private Bank’s chief executive Marcus Gregson, Warwick Newbury, chief exeuctive of SG Hambros and Paul O’Donnell, managing director of UBS Wealth Management in London.

According to Mr Dovey, the industry needs to find some common ground and to delineate itself because, at the moment it is attempting to be all things to all people. He also pointed out that there is a current obsession with being unique even though the offerings are essentially very similar and with the large numbers of providers in the market presently this undoubtedly leads to customer confusion.

He contrasted this with the situation in Switzerland. “Ask a small Swiss child what they want to be when they grow up and high on the list will be private banker. Awareness is far less here in the UK. I would find it difficult to explain the private banking market to my father and he used to be a banker”.

Trailing a report due to be published next week, Mr Dovey told the conference that the annualised growth in the private banking market was around 11.5 per cent, although this headline figure hides some large variations including a 5 per cent annualised growth figure for Credit Suisse.

Mr Dovey echoed a theme common among several of the speakers. Although asset levels are growing the rise is predominantly in the volume market--clients with $1 million to $10 million of investable assets.

Concentrating on “trophy clients” is very difficult to make profitable, according to other speakers – there are just too few of them to justify the time and expense acquiring them. The mandate for managing the Beckham family wealth has recently been up for grabs and the conference was told that, in common with most very wealthy family the negotiations on fees were fierce.

The core volume wealth management market accounts for around 85 per cent of the total. This is not, though how private bankers like to perceive their market, nor is it the face that they show to their clients. But this is the section of the market where, according to Mr Dovey, margins are better and more consistent and with the predominance of repeat business. This, he said, is what UBS have understood for several years.

So what can and can’t differentiate a private banking proposition from the herd? It’s not performance, according to Mr Dovey – that’s a given, along with product. Neither is it fee levels. It is through people who their banks have invested in to be leaders and trainers for the future. It is also having a list of clients that the bank can be publicly proud of and investing in branding and marketing, as well as a well-thought out proposition and good processes.

The last sentiment was echoed by Warwick Newbury. “If you think compliance is expensive,” he said, “see how expensive non-compliance is!”.