With the current focus on tax amnesties, and with the UK
deadline approaching on 4 January, UK private banks have to
consider their options.
Undoubtedly some money will be moving back
onshore, and they will be asking themselves how they can capture
that. Further into the future, looking at the G20 meetings in
Canada next June, I think we are going to start seeing an
increasing move away from offshore and an increased focus on
declared offshore. Even Patrick Odier, the new head of the Swiss
Private Banker Association, admitted that. I know many in the
industry are up in arms about it, but I think it’s an accurate view
of the future of the offshore industry.
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The issue for the likes of Barclays, Lloyds,
Coutts, which have offshore arms in Switzerland, is whether they
link that offshore offering to the onshore offering or keep them
separate. And how do they make their offshore business competitive
as a declared offshore offering as opposed to an undeclared
offshore offering?
Linking on or offshore
businesses
Those are fairly fundamental things
to consider. As for the linkage for the onshore and offshore, some
banks I talk to say, ‘Yes, of course we’ll link it.’
It’s not clear to us that this is the best
thing to do. There will be some clients who want some money in
Switzerland, some money in the UK and they’ll be happy to talk to
one relationship manager (RM) who covers both.
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By GlobalDataEqually, there will be some clients who –
though they’re all above-board – like using Switzerland for
segregation of assets. The worst thing you could offer them is one
RM based in London covering Geneva, Zurich and London. They would
hate it. You’ve got to be quite careful – a lot of thought needs to
go into a declared onshore/offshore strategy.
If we assume we’re right and offshore becomes
fully declared, why would anybody use it? Well for a number of
reasons, firstly some people just like the idea of having assets in
different locations, they feel safe about it. And Switzerland is
generally a safe place.
Some clients will think ‘great’, and some
clients will think ‘terrible’. So we’re saying rather than just
assume that it is the right answer, banks need to carefully
consider the strategy and how to best implement it, and they may
want to actually give clients the choice.
Client- driven tech
changes
Another area that is always
important to wealth managers is compliance and regulation. One of
the things that private banks need to invest in is good client
reporting. If you look at the report produced for clients of many
private banks, all it is is a list of transactions. That’s not
actually what clients want to see.
Some clients want to see that, but many
clients are more interested in other things: they want to know the
overall shape of the portfolio, the construction of the portfolio
across asset classes, they want to understand how their portfolio
has performed against an appropriate benchmark that’s linked to
their risk profile. They might also want to talk about the
outlook.
Then, as we get into declared offshore and
onshore, clients are also looking for the client report to provide
them with the information they need for their tax returns. That’s
quite different from what client reports were in the past. This
isn’t regulatory driven, mostly, it’s more from a client-need point
of view and we believe it is important that banks do respond to
that.
Now, in terms of technology our view is that
it needs to be driven from a business and technology point of view
rather than just one or the other. You can often find in banks that
there is a big technology programme which seems to cost a lot of
money – but is the business really involved?
If it isn’t, there’s a risk that you
over-specify or don’t specify the right things and you end up
spending a lot of money. The first thing they should do is focus on
understanding their client needs and designing what a good client
report would look like. That’s a business-driven thing.
With that in mind, go and look for a system
solution. Often times it’s the reverse. ’
Alan Gemes, a senior vice-president at Booz &
Company
