RFP: Diary of an institutional salesman, part 29

Will investigates the world of glorified brokers – er, private bankers.

I’ve mentioned before how little I know about the private banking community, but I’ve been doing my homework and, well, the more I learn, the less I like.

It seems that new regulations are forcing the legions to rethink their historic lucrative ways of churning crazy structured products to dumb rich people – apparently the new transparency rules around their cost frameworks is a bit too, how to say, what’s the word, revealing. Or embarrassing.

I guess their clients are not exactly the types to stand on the street outside the office chanting, but they can, at the drop of a hat, take their lucrative business elsewhere and make sure that getting reservations at the region’s top restaurants gets a whole lot tougher. Hitting the suits where it hurts the most…

So to get a more transparent cost structure, these so-called wealth managers finally want to shift clients into investment funds. This is where we come in, and why the phone has been ringing a bit more often recently.

This is good, as the consultants have flatly put all our product ratings on hold until the merger goes through, at which time they will have to re-assess. This takes years and years, and is a painful process – meeting after meeting, repeating the same mantras, ticking the right boxes and buying the right lunches. So to raise capital over the next few years, we’re going to have to suck it up and play the private bankers’ game.

What they really want is faux transparency. To these glorified brokers – ahem, I mean private bankers – this arrangement looks cheap(ish), it has a nice brand name attached somewhere, the fund manager’s staff will provide lots of impressive literature and the bankers can still rake in the commission, seemingly unbeknownst to the client, who apparently feels so thrilled just to access a strategy otherwise unavailable in the market.

It’s like the LV bag approach: apparently everyone wants one of those, is not really quite sure why, but regardless is willing to pay up for The Real Thing. And how good is it to be the only guy in town selling Louis Vuitton’s cow hides?

Fortunately for me, the Swiss Heritage brand seems to have some appeal to the private bankeroons. Yes, I know the name could easily be mistaken for a Guangzhou-made classic timepiece, but the combination of ‘Swiss’ (steady, precise, rich) and ‘Heritage’ (old, learned, prestigious) really has struck a chord with the local punters – er, I mean, local entrepreneurs. Besides, the Swiss Heritage guys keep telling me that the firm ‘had a good crisis’, whatever that means.

So, with Andreas Himpfeldorfer, my opposite number, off on holiday for three weeks, back to the land of cuckoo clocks and cheese with holes, this is my big chance…A few signed ‘exclusive’ deals with a few of these pretend bankers gives me the upper hand in the race to lead the combined business development department, post-merger.

So how to approach this? I dust off the pitchbooks and set to work. These brokers … Sorry, dear diary, there I go again! These esteemed wealth managers need strong performers to sell to their clients, so that means trashing 70% of the products straight away. They want the Swiss Heritage name, so that’s another 20% of products biting the dust.

What do I have left that is suitably sexy? Hmmmm, how about some Russian equity? Boom, there it is! So what if the oil price is looking high? That little skirmish in North Africa is just adding fuel to the fire. Russia’s raking it in. Oil ain’t going down. No way.

Another stroke of good fortune – the private banks have been hiring like there’s no tomorrow, so I have a few ‘warm’ entry points of my own. (Fact: if you strip out iClones and the private banks, people turnover in this industry is way down for yet another year.)

Nonetheless, I could use a few extra name cards to help me on my way, which is why I’m working late in the Integrity goldfish bowl set up inside Swiss Heritage’s office. In the interests of cooperation, I have spent the day with their product ambassadors, pretending to get up to speed with the strategies.

This is all nonsense, of course – what do I care if it’s top-down, bottom-up, micro, macro, value, growth, quantitative, imaginary, made of wood or even managed by Mickey Mouse – if it has good numbers, these junkies will want a score.

OK, the last back-office drone has gone home – time for me to sneak to Andreas’s desk and find his rolodex. It’s like taking candy from a baby, and hey we’re on the same side, right? Wow, he has so many name cards, from all the banks. I’m going to have to edit quite a bit here. I quickly work out a filter:

If title is lower than VP, throw the card away
If I know them already, throw the card away
If name sounds even vaguely French, throw the card away
If the date written on the card (of course he does this – he’s Swiss!) is earlier than 2009, throw the card away

This leaves me with around 60 new name cards to photocopy. God, I wish I’d brought April with me; it takes me four attempts to get the copier working.

I sneak out of the office with the valuable file under my arm. I have the right names, I have the right funds, I have three weeks. Now to come up with the right fee structure to fulfil the Golden Triangle: ensuring I get paid, the suit gets paid and the rich dumb client thinks they’ve won. And here at Integrity, that’s exactly what we do…

William T. Fitzgerald is a fictional character, as are all the other individuals and companies in "RFP Diary". Any resemblance to the living or to real firms is purely coincidental. Will's adventures continue fortnightly.

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