Advisers take client view on products
Private banks are no longer prepared to run a closed shop when it comes to prod-ucts and quite freely use products from institutions other than those of their em-ployers.
Private banks are no longer prepared to run a closed shop when it comes to prod-ucts and quite freely use products from institutions other than those of their em-ployers.
This was one of the key findings of a survey conducted by Ernst & Young into the private banking sector presented at the recent Asia Pacific Private Banking Forum.
Nine senior executives from large private banks were surveyed on fees, profitabil-ity and management of advisers.
Ernst & Young partner Andrew Price, who presented the survey results, says pri-vate banks are prepared to use other providers products as they felt there was no threat to their organisation as long as the relationship with the client was main-tained.
"All the organisations put clients into other providers services and were adamant that the best of breed approach was necessary for business in the market," Price says.
While all banks agree on the need to source products from outside, there is wide-spread disagreement on the number of clients an adviser is able to service ade-quately. Some banks say a adviser should have no more than 10 clients , while at the other extreme, some banks felt an adviser could service up to 200 clients.
At the same time most respondents felt their own ratio was within world best prac-tice.
"By naming each of their own set of figures as world’s best practice it seems un-clear in private banking as to the correct adviser and client ratios," Price says.
Half of those surveyed see no real threat from competitors, either local or interna-tional, online or traditional. However, some did feel the Internet and branch based banks were making inroads into their market.
"The big four group of banks were seen to be making good use of their primary relationships and the size of their customer bases," Price says.
The survewy also found there is considerably more widespread consensus on fees. Most banks charge about one per cent of assets under management with a range of additional fees. These included strategy, appointment, annual and transaction fees as well as discretionary portfolio fees management fees.
The banks covered by the survey were Macquarie Bank, Deutsche Bank, National Australia Bank, Private Bank, UBS Warburg, ANZ Private Bank, Commonwealth, St George, Westpac Private Bank and Merrill Lynch.
AUTHOR
Jason Spits
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