MLI Marc Lussy Innovation

Wealth Management & Client Advisory

23rd April 2012 Marc Lussy
Guest Lecturer for Banking Fhrungsfachmann mit Eidg. Fachausweis Consultant Banking & Social Media

Experience
7 years Trader, Sales, Relationship Manager

8 years

Project Manager in Private Banking Area

5 years

Senior Consultant Banking & Social Media

MLI Marc Lussy Innovation Fhrungsfachmann mit Eidg. Fachausweis Senior Consultant Banking & Social Media

marclussy@bluewin.ch www.xing.com/profile/Marc_Lussy www.linkedin.com/in/marclussy

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Index of contents

Overview Roles & Products Advisory Approach Past to Future New Paradigm

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Topic

Overview

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Need for advice to manage assets n

Overview

Why do wealthy individuals need advice to manage their assets?

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Need for advice to manage assets

Overview

For the same reasons ill people need a doctor

Expertise

Experience

Diagnosis = Profiling

Hold clients hand

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What is meant by wealth management? n

Overview
What type of services?

highly customized sophisticated investment management financial planning services

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What is meant by wealth management? n

Overview
To what clients?

wealthy individuals

Which client groups are covered....and which not? O Ultra High Networth Individuals O Affluents O High Networth Individuals X Institutionals X Retail O Very High Networth Individuals
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Classification of clients by wealth en

Overview
Ultra HNWI $ 50 million+ Very HNWI $ 5 million+ HNWI $ 1 million+ Affluent $ 100000+

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Classification of clients by residence

Overview
Resident Onshore

Management of Assets

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Assets are managed in country in which owner of assets is resident

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Classification of clients by residence

Overview
Offshore

Resident

Management of Assets

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Assets are managed in country in which owner of assets is not resident

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Types of banks Auswertungen

Overview

Global banks with private banking units Traditional offshore focused private banks Traditional onshore focused private banks Retail or affluent focused local banks

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Wealth held in offshore centers, 2010 ($trillions)

2.5

Overview
2 1.5 1 0.5 0

Total 7.8 trillions USD

Source: BCG Global Wealth 2011

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Global wealth on- and offshore, 2010 ($trillions)

Overview
45 40 35 30 25 20 15 10 5 0

Total 121.8 trillions USD

Source: BCG Global Wealth 2011

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Market share AuM on-/offshore by country, 2007 (2007)

Overview
2007, total 109.5 trillions USD
New figures for following chart not available

10 trillions USD managed by Swiss banks in Switzerland and abroad

Source SBA, Wealth Management Switzerland, January 2009

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Assets managed in Switzerland, 2010

Overview
Total 5.5 trillions USD

Domestic clients 2.65 tr, 48% Foreign clients 2.85 tr, 52%

Source SBA, Wealth Management Switzerland, January 2009

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Value creation banking sector Switzerland, 2010 Auswertungen

Overview
Billions CHF Total Banking Sector - Retail Banking - Wealth Management - Asset Management - Investment Banking 36.7 13.7 15.5 4.5 3.0 % GDP 6.7 2.5 2.9 0.8 0.5

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Importance of wealth mgmt for a global bank eitere Auswertungen

Overview
Core Results CS by Division in Billions (CHF) 2007 - 2011
Private Banking 25 20 15 10 5 0 -5
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Investment Management

Asset Management

2007

2008

2009

2010

2011

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Topic

Roles and Products

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Roles in wealth management eitere Auswertungen

Investment Consultant Portfolio Manager

Roles & Products

Financial Planner Relationship Manager (RM)

Tax Specialist

Analyst

Trader

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Defintion relationship manager

Roles & Products

Relationship managers are the customer service giants that own the customers, know everything about them, manage that knowledge as an asset, and are able to meet the full complement of financial needs. [Ernst & Young ]

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Key activities of an RM

Roles & Products

Client retention - Make sure that existing clients stay with the bank

Client selection - Identify profitable clients

Client Acquisition - Increase client base

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Knowledge an RM needs to be a successful RM ProfoundAuswertungen product knowledge

Roles & Products

Social Skills Sales Skills Knowledge of compliance and regulations Know-how IT tools

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Mandate types I/III

Advisory Mandate

Roles & Products

Client makes investment decisions himself RM provides expertise and current market information Client follows the markets on a regular base

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Mandate types II/III

Trading / Investment Consulting Mandate

Roles & Products

Client makes investment decisions himself Short term approach Active Trading Market sentiment is more important than fundamentals Relationship Manger / Investment Consultant provides trading ideas on a daily base Client follows the markets on a daily base

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Mandate types III/III

Discretionary Mandate

Roles & Products

Relationship Manager / Portfolio Manager makes investment decisions Relationship Manager informs the client several times per year about development of the portfolio Client does not need to follow the markets

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Topic

Advisory Approach

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Advisory process

Advisory Approach
Analysis Financial statement Profile Strategy Implementation

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Analysis

Advisory Approach
Investments Get an idea of size and asset types Wealth creation Inflows such as earnings on assets, salaries, expected inheritance etc. Liabilities Current and future financial obligations Expenditures Living costs, regularly payments, tax payments etc

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Financial statement

Advisory Approach
Channeling and visualization of information Financial statement must reflect the clients overall situation Allows RM to provide client a personalized investment solution

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Financial statement - example

Financial statement 2012
Liquidity Bonds Stocks Loan Mortgage Bonds Funds

Financial statement 2022

Liquidity Mortgage

Advisory Approach

Real Estate

Funds

Stocks Real Est.

Inflows

Inflows

Expenditures
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Expenditures
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Client profile I/III

Adequate classification of the client in a client profile
is a key success factor for a successful advisory process

Advisory Approach

Risk profile Client profile Service profile

Risk ability Risk tolerance

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Client profile II/III

Risk ability It defines clients ability to cope with financial losses without a noticeable effect on their standard of living

Stock price

Advisory Approach

Risk tolerance It defines how a client deals emotionally with investment risks

Stock price

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Client profile II/III

Service profile

In order to suit different client requirements it is very important to understand which services he needs and to define an according service profile

Advisory Approach

Possible service profiles are:

Advisory mandate Investment consulting Discretionary mandates

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Strategy

Risk profile Low

Investment Strategy Fixed-income Income-oriented Balanced Captial-gainsoriented Equitities

Advisory Approach

Moderate Medium Enhanced High

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Implementation

Advisory Approach
Implementation Control Adjustment Implementation and maintenance of a strategy is an continuous process Every strategy must be reviewed on a regular base Risk control for every investment is a must

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Topic

Past to Future

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Development of wealth managment I/II

Excellent Service Performance Personal Relation Personal Relation

Past to Future
1990 2020

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Development of wealth managment II/II

1990 2020 Hold clients hand

Expertise

Experience

Profiling

Expertise

Past to Future

Experience Hold clients hand Profiling

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Situation in the past

Past to Future
Strong banking secrecy Main goal of a lot of clients was tax optimization Performance of limited importance Clients had limited access to market information ( Newspaper) Clients were loyal to the their bank

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Current situation
Technology Internet Mobile e-commerce Challenges Client Retention Increase of sales potential Client Well informed Decreasing loyalty Complex products

Past to Future

Competition New competitors Trading Platforms Discount-Broker Consolidation

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Bank Restructuring Compliance / Legal Higher Quality Standards

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Types of CRM tools

Operational CRM Analytical CRM

Past to Future

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Print screen CRM tool

Issues
- Get a new copy of passport due 25.5.11
- Needs to sign risk disclosure due 31.12.11 - Invite for gulf turnament

Remarks
05,1,11 Became father 10,2,11 Would like to invest in commodities 15,3,11 Plans to transfer more money 20.4.11 Wife had car accident Name Birthday

Client data

Riskprofile Client since Monthly reports Hobbies Name wife Number of Children

Portfolio

Performance

Past to Future

Responsibel RM Relations with other clients

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How a CRM tool can add value

Past to Future
Measure activities Analysis of current situation Identification of target clients Manage sales activity Quick access to client information Consulting

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Wealth management in the future

Threats Weaker banking secrecy Regulations Decreasing margins Increasing costs Increasing quality standards The way forward New markets (BRICS / Emerging Markets) Increased effort for client retention Increased tool support (CRM, product selection) BPO (Business Process Outsourcing) Mergers / take overs of smaller banks

Past to Future

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Topic

New Paradigm

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New paradigm is needed

Although global wealth will keep on rising banking business will not be as it was New models are needed imperatively

New Paradigm
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Could social media be this new paradigm?

New Paradigm
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Could social media be this new paradigm?

Google has a banking license

New Paradigm
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Could social media be this new paradigm?

New Paradigm
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Could social media be this new paradigm?

Social Media to predict stock prices

New Paradigm
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Where could social media support banks?

Provide value and fun Training/ coaching of RMs

Corporate Branding

Personal Branding

Client Retention
Risk Profiling Product Offering Personal Relation

Client Acquisition
Building up new relations

New Paradigm
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MLI Marc Lussy Innovation

Wealth Management & Client Advisory

Presentation Wealth Management & Client Advisory and more reports/documents on banking http://www.scribd.com/marclussy My banking blog http://banking-marclussy.blogspot.com/