There is a need to maintain a Chinese wall between product selectors and relationship managers at private banks to protect the sanctity of the gatekeeper function, says Tony Stanton of LGT Investment Management (Asia).
The relationship between the two is generally a collaborative one based on a core list of recommended funds at each institution, agreed participants at a private banking roundtable convened by AsianInvestor and sponsored by Aberdeen Asset Management*. Private banks use this as a way to implement a house view.
But Stanton, head of investments at LGT based in Hong Kong, underlines the importance of gatekeepers focusing on product selection and not getting involved in the sales process.
“If you have direct contact between the gatekeeper and relationship manager in a client setting, very often the relationship manager may expect the gatekeeper to perform a role that is an extension of the sales process. In some cases that is inappropriate,” he observes.
Stanton stresses that the role of gatekeeper should not be about raising assets, but about quality of selection and performance relative to peers.
“A lot of times product specialists try to take credit for successful launches and that is not what they should be doing,” he adds. “They should be taking credit for successful recommendations, not asset-raising. So we try to keep a bit of a wall there.”
Roundtable participants agreed that the starting point for the relationship between fund selectors and relationship managers was a high-conviction focus list of funds in-house.
Dany Dupasquier, head of group funds for group wealth management at Standard Chartered, says the firm has a larger list of about 90 funds, of which it focuses on perhaps 10 to 15.
“We try to guide relationship managers to the funds that we think are most likely to perform well,” he notes. “We really try to have all the RMs going in the same direction, which can be challenging from time to time.”
He explains that its list of recommended funds is updated on a monthly basis, and the firm writes research notes of eight-to-10 pages on its product choices. This research, along with a simplified one-page version, is put at the disposal of the RMs.
Asked whether a relationship manager would ever go to a gatekeeper to ask if they had a particular product, Dupasquier notes the starting point is always the focus list.
“To be able to have products to implement our house view is a good starting point for the RMs to enter a conversation with a client,” he adds.
Serge Janowski, chief executive of the Hong Kong branch of Credit Agricole Private Banking, notes that its product specialists also issue a fund recommendation list.
He points to the firm’s portfolio advisory services, where the RM reviews a client portfolio with an investment adviser before meeting the client.
“The investment adviser is going to propose some ideas, so really there is intelligence between the product specialist, investment adviser and RM before meeting a client,” he explains.
Rene Buehlmann, global head of investment funds at UBS Wealth Management, stresses that the whole process is about guided architecture, rather than being a fund supermarket.
“If you get clients to focus on asset allocation, you pick what fits or where there are gaps in a portfolio,” he notes. “That is the difference between recommendations that are hot in the market and the things you need on your shelf because they are building blocks for asset allocation.”
* AsianInvestor’s second annual Private Banking Roundtable was published in full in our November magazine edition. Sponsor Aberdeen Asset Management participated as a silent observer.