Has the 'relationship' left the relationship manager?
As the ultra-high-net-worth individuals gain purchasing power, the role of the middle man is questioned.
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Relationship managers are losing their value say some heads of private banks, particularly as family offices and the ultra-high-net-worth segment increase.
"I don't see relationship managers as being the gatekeepers that they were, " says one head of a private bank in Asia.
According to a PwC study in 2013, wealthy clients expect that the quality of client-relationship managers will be less of a differentiator for them in 2015 than a company’s brand, investment performance and global delivery. Changes in personal circumstances, poor investment performance and decisions about the next generation are the top three reasons for changing a wealth manager.
In Asia, for example, where family offices are becoming a bigger part of the wealth management landscape, bankers questions whether or not the industry has to change. While Asia’s wealthy individuals are happy to speak with a relationship manager to help them manage their money, family-office principals instead seek to speak directly to the chief investment officers, strategists and research heads at private banks to formulate portfolio construction.
“A sales attitude is no longer sustainable. Clients don’t want to be wined and dined – they want research and smart investment ideas, and they can go directly to boutiques, banks and private equity firms to get those ideas,” says one Asia CIO at a global private bank.
"They don’t need the middle man. It means that relationship managers are being disintermediated. Relationship managers add value where you have to go out and get new clients, but once the relationship is established, then the firm owns the relationship and that relationship will no longer be dependent on the relationship manager.”
Ray Soudah, founder of consultant Millenium Associates in Switzerland says that only 25% of clients stay with a relationship manager when he or she moves firms.
Furthermore, firms such as KKR and boutique advisers have seen a drop off in the number of hedge-fund clients looking for ideas and are turning to ultra-high-net-worth clients to fill the void. That means that where once private banks said they could get access to a fund or firm for a fee and as a value-added service, that no longer holds.
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