European Private Banking: The Triumph of A Poverty Mentality

There is an old saying that farmers and owners of vineyards are never happy. It is raining when their crops need sun and it is a drought when they need rain. Poverty and ill luck are their natural bedfellows.

I propose adding private bankers and wealth managers to that list.

After a morning listening to the top brass at Societe Generale, Coutts, Vestra Wealth, Barclays and Citi plus assorted “experts” from Big Four consultants and a British regulator, I am rushing for the aspirin box. Cumbersome regulation and reporting requirements, risk averse Boards, uncertain client relationships and so on. They universally fail to mention the real problem – their own mindset. The leaders with rare exceptions exhibit a “poverty mentality”. What I hear coming out of their mouths is a lack of self-belief in their own worth (a focus on protecting themselves rather than bringing new value to clients, a fear of taking prudent risk, a lack of energy and vitality, close to zero excitement about the future value provided to their clients and so on).  Rather like a horse, sensing an uncertain or fearful rider, starts second-guessing or ignores what it is asked to do, so clients, employees, shareholders and regulators are getting that same feeling and will undoubtedly act in the same way. 

“My banker seems more interested in protecting their backside than preserving my wealth”. (Why should I give them more assets to manage?)

“Quite frankly it is career suicide to suggest any new ideas to a Client that our compliance people haven’t signed off on. They take an age to respond.” (Why should I propose new ideas to a client if I cannot deliver in their desired timeframe?)

“Our top management are telling us (shareholders) they need to direct more capital and resource to compliance, it is non negotiable. With the cost to income, near 70% and no great confidence in top line growth that leaves little room for profit and reinvestment in the business model.” (We don’t see these businesses  or the sector as an attractive “hold”)

“Firms are slowly coming around to the idea that putting the customer first in the form of transparent products and services is the right thing to do. Boy, is it a battle with some of them.” (They’ll only embrace change if we, the regulator, continue to apply the big stick.)  

Ask any HNW or UHNW client, they want confident and successful advisers. They want individuals with high levels of credibility (intellectual property), and a compelling rapport (intellect and trust). Bankers and wealth managers convert credibility and rapport into increased assets booked and happy and successful clients when they maintain an “abundance mentality”.

What do I mean? Top management must have a willingness to invest in upgrading the firm’s skills and technology, create new value propositions, find new ways to attract new and existing customers, set new standards and build more powerful brands. They must want to actively pursue a collegial, not an adverserial relationship with regulators. One based on greater mutual respect and a common set of objectives. Their long-term strategic focus must be on creating customers and employees that are willing evangelists for private banking and wealth management brands, not merely subordinates to compliant businesses.

Changing that mindset starts with leaders, who really want to see and hear things as they are, not how they perceive them to be. It demands that they really want to change and they are willing to focus on the improvements in hand. They are willing to seek qualified “help”, where they need external support or individual coaching. They are willing to hold themselves and their subordinates accountable for maintaining the right mindset.

If they aren’t willing to make that change, Boards and shareholders must be bold and move those managers on.

© James Berkeley 2014. All Rights Reserved.

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