Choosing a private bank (part 2 of 2): Benefits of boutique firms

March 2, 2008 | Comments Off on Choosing a private bank (part 2 of 2): Benefits of boutique firms

Boutique firms can be appealing for many reasons. For most seasoned investors, the reputation of the private banker is just as important as that of the bank. Savvy investors need to like their relationship manager AND the bank itself before transferring assets. Some private banking clients are willing to move part of their asset with a relationship manager they know very well to a smaller, boutique firm.

A relationship based on trust
Boutique banks tend to treasure their relationship with a client, as the account often means more for the bank. Many private bankers at boutique firms aim to cultivate strong relationships with their clients, these bonds are often strong and personal, and selling become secondary to maintaining long term relationship. One of the most valuable thing a client can get out of a private banking service is high quality and impartial investment advice, in an uncertain market high quality advice is more important than ever. Many private banking clients therefore make decisions together with their bankers, instead of just placing market orders through them.

Good private bankers have a deep understanding of their clients, their family history, risk tolerance and investment philosophy. These types of insights are not commonly provided by the advisors at retail banks. Good private bankers don’t just push their clients to buy financial products that can earn them good commission, they actually go out and listen to the client’s special needs and reviewing investment performance regularly. Because of the level of trust and understanding involved, some clients are comfortable investing with private bankers at smaller firms, if they find a banker they really like and trust.

Customized services
For some retail banks who offer private banking services, private wealth management is only one of the many divisions. While many retail banks are able to offer high quality WM services on top of their retail business, some have difficulty meeting the high expectations private banking clients have. This is because some bigger banks actually share their IT infrastructure between their retail and private banking units. The legacy systems adopted are often user unfriendly and cannot handle bespoke requests. For example, some clients may prefer to customize their daily statement in a certain way and receive it by a certain time everyday, sometimes legacy systems prevent companies from offering these types of customized services, unless the clients are willing to pay higher fees to cover for the manual workaround required. Boutique banks, on the other hand, are built to serve a few important clients. The company’s IT system, culture and service model are designed to meet the needs of highly demanding clients.


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