Posts Tagged wealth management
Banks Counting On Wealth Management For Growth, Results Must Improve
Posted by Steven Maimes in Daily Service, Headlines on May 16, 2012
Armed with substantial assets, customers and loyalty, banks are counting on wealth management for future growth in a low interest rate environment. But they need to seriously improve performance to realize that potential, said industry executives at Prudential Investments’ Wealth Management Leaders Forum in New York yesterday.
Banks are spending “too much time on lower value activities,” and need to focus on increasing profitable growth and the client experience, said Gavin Spitzner, senior vice president, business development for Prudential’s Wealth Management Solutions division.
Optimism about banks’ prospects in wealth management were mixed with exhortations from speakers to keep pace with innovative industry leaders, best exemplified by the rapid rise of independent registered investment advisors.
Banks can expect their wealth management business to grow six per cent to seven per cent annually, said John Rolander, partner at the consulting firm Booz & Co. And trust companies are “perceived to meet client needs better than most other business models,” Rolander said the firm’s research showed.
But simply recruiting more advisors won’t be enough, he cautioned. Banks need to increase sales productivity by focusing on value-added activities, leveraging new technologies and adapting best practices, Rolander said.
“There is still a huge amount of inefficiency out there,”Rolander told attendees.
Yin and Yang
The yin and yang of the banking business was also articulated by Kenneth Thompson, senior vice president and division head of M&T Banks’ Investment Group.
“The key to growth is innovation,” Thompson said. But in the next breath he noted “but this is hardly an innovative industry”.
Thompson also pointed out that only 17 per cent of all accounts at M&T have an investment product. The glass-half-full interpretation of that woeful statistic, of course, is that there’s a huge opportunity for banks to grow.
Banks needed to improve client service, Thompson said, because the annual sales growth rate doesn’t make up for the attrition rate when clients leave. And banks need to focus more on top producers, he said, and support them with competitive pay and tools.
Prudential is also betting on banks wealth management business, Spitzner said.
The financial services giant’s outsourcing arm, which currently has a dozen clients, is targeting banks with assets between $5 billion and $100 billion and hopes to add two new clients a year.
“Experience is the only differentiator”
For banks to grow, enhancing the client experience has“never been more important or more urgent,” said Wallace Blankenbaker, senior director at research firm Corporate Executive board – VIP Forum.
In fact, Blankenbaker cited a private bank executive who said “As most components of the wealth offering become more commoditized, the quality of the client experience is the only differentiator”.
Last year wealth management firms invested heavily in three areas to boost the client experience, according to a VIP Forum survey: financial planning; client contact strategy and website capabilities.
The survey also showed that clients rated ease of doing business; customization and education as three factors that increased their confidence in their financial provider.
And, it turned out, the client’s initial sales experience went a long way towards forming their overall impression of the firm.
Nonetheless, Blankenbaker said, “the single hardest thing to do is to get advisors to listen.”
Source: Family Wealth Report
Posted by Steven Maimes, The Trust Advisor
Permalink: http://thetrustadvisor.com/headlines/banks-counting
Bloomberg News: U.S. Millionaires Told Go Away as Tax Evasion Rule Looms
Posted by Steven Maimes in Daily Service, Headlines on May 8, 2012
Go away, American millionaires. That’s what some of the world’s largest wealth-management firms are saying ahead of Washington’s implementation of the Foreign Account Tax Compliance Act, known as FATCA, which seeks to prevent tax evasion by Americans with offshore accounts.
HSBC Holdings Plc (HSBA), Deutsche Bank AG, Bank of Singapore Ltd. and DBS Group Holdings Ltd. (DBS) all say they have turned away business.
“I don’t open U.S. accounts, period,” said Su Shan Tan, head of private banking at Singapore-based DBS, Southeast Asia’s largest lender, who described regulatory attitudes toward U.S. clients as “Draconian.”
The 2010 law, to be phased in starting Jan. 1, 2013, requires financial institutions based outside the U.S. to obtain and report information about income and interest payments accrued to the accounts of American clients. It means additional compliance costs for banks and fewer investment options and advisers for all U.S. citizens living abroad, which could affect their ability to generate returns.
“In the long run, if Americans have less and less opportunities to invest overseas, it would be a disadvantage,” Marc Faber, the fund manager and publisher of the Gloom, Boom and Doom report, said last month in Singapore.
The almost 400 pages of proposed rules issued by the U.S. Internal Revenue Service in February create “unnecessary burdens and costs,” the Institute of International Bankers and the European Banking Federation said in an April 30 letter to the IRS, one of more than 200 submitted to the agency. The IRS plans to hold a hearing May 15 and could amend how and when some aspects of the rules are implemented. It can’t rescind the law.
Bank Transparency
The government needs to be tougher on offshore tax crimes than it has been, said U.S. Representative Richard Neal, a Massachusetts Democrat and one of the original sponsors of the legislation. FATCA, introduced after Zurich-based UBS AG (UBS) said in 2009 that it aided tax evasion by Americans and agreed to pay $780 million to avoid prosecution, is already helping to improve banking transparency, he said.
“People should know, and the IRS should know, what money is being held offshore and for what purpose,” Neal said. “I don’t think there’s anything unreasonable about that.”
UBS, the world’s biggest non-U.S. private bank according to London-based industry tracker Scorpio Partnership Ltd., said in 2008 it would discontinue offshore accounts for U.S. citizens. The firm now refers them to its wealth-management offices in the U.S., or to its Swiss Financial Advisers unit, which complies with U.S. and Swiss regulations, said Serge Steiner, a spokesman for UBS. The company continues to provide Americans outside the U.S. with services other than securities investments, including consumer and commercial loans, foreign-currency spot trading and precious-metals transactions, he said.
‘Too Complex’
Investments in products offered by third parties that non- U.S. citizens can purchase through UBS or other banks also may be restricted.
“Most of the hedge funds I know in Asia won’t take American clients,” said Faber.
Bank of Singapore, the private-banking arm of Oversea- Chinese Banking Corp. (OCBC), ranked strongest in the world for the last two years by Bloomberg Markets magazine, has turned away millions of dollars from Americans because it doesn’t want to deal with the regulatory hassle, according to Chief Executive Officer Renato de Guzman. The bank had $32 billion under management as of the beginning of the year.
“It’s too complex, too challenging,” de Guzman, who at 61 has more than 35 years of banking experience, said in an interview in Singapore in March. “You probably should have a dedicated team to handle them or to understand what can be done or what cannot be done.”
Rejecting Americans
At industry meetings he attends in Singapore, not accepting U.S. clients is “quite a prevailing sentiment,” de Guzman said. There are 18 private banks operating in Singapore, including units run by UBS, Credit Suisse Group AG, Deutsche Bank (DBK) and HSBC, he said.
“We have enough business in Asia, so we don’t want to make our lives too difficult,” de Guzman said.
Asia has the world’s fastest-growing number of people with more than $1 million in investable assets, according to a report last year by Bank of America Corp. (BAC) and Capgemini SA. Singapore is Asia’s largest wealth-management center, with $512 billion in offshore assets in 2010, data compiled by the Boston Consulting Group show. Bank of America is the world’s No. 1 wealth manager, with $1.9 trillion under management, followed by Morgan Stanley and UBS, with $1.6 trillion, according to Scorpio.
HSBC, Deutsche Bank
HSBC decided last July that it would no longer offer wealth-management services to Americans from locations outside their home country after tax authorities stepped up a probe of the London-based bank’s U.S. clients.
Americans would be “better served” by private bankers in the U.S., Goh Kong Aik, a spokesman for the firm in Singapore, said in an e-mail. He declined to say whether those who already have private-banking accounts abroad will be allowed to remain customers, except that they would be helped through an undefined “transition process.”
Deutsche Bank said it terminated securities accounts held abroad by people with U.S. residency as of mid-2011. The action didn’t include checking or savings accounts and didn’t affect citizens living outside the U.S. The Frankfurt-based bank said “only a small number of customers” were affected.
Spokesmen for Credit Suisse, France’s BNP Paribas SA (BNP) and Amsterdam-based ABN Amro Bank NV, also among the top 10 non-U.S. global wealth managers, said their banks are studying the issue and haven’t decided what to do with American account holders.
Collateral Damage
“Bank accounts, investment accounts, mortgages and insurance policies are being refused to American clients, and those with accounts are seeing them closed or have been threatened with closure,” Marylouise Serrato, executive director of American Citizens Abroad, a Geneva-based organization, wrote in an e-mail.
U.S. citizens who live in countries that aren’t served by U.S. banks may find themselves unable to bank at all, and implementation of the law in its current form could cause collateral damage to American businesses abroad, she said.
“Americans either will not be allowed to enter into international partnerships or live and work overseas, and will be replaced by foreign nationals who do not have these limitations,” Serrato wrote. “The extensive reporting requirements of FATCA will be destructive to those who wish to do business internationally as well as to those Americans who are legitimately living and working overseas.”
‘Turned Away’
That view is shared by Richard L. Weisman, Hong Kong-based head of law firm Baker & McKenzie LLP’s global tax practice.
“U.S. expatriates already face severe U.S. tax rules related to their non-U.S. income and investments,” Weisman said. “FATCA will increase the extent to which they are turned away by non-U.S. financial institutions.”
Tan of DBS said she refers Americans seeking private- banking services to U.S. institutions with operations in Singapore such as Citigroup Inc. (C), Bank of America, Morgan Stanley, Goldman Sachs Group Inc. (GS) and JPMorgan Chase & Co., which are able to open securities accounts for Americans because they’re regulated by U.S. authorities. Such accounts allow purchases of investment products without restricting Americans to cash and time-deposit accounts.
While that may be easy for Americans in Singapore, those who live elsewhere face obstacles. Before FATCA, U.S. citizens in Bangkok or Manila could find investment opportunities through non-U.S. banks such as HSBC. Now their only option is to fly to cities where U.S. firms operate.
Limited Choices
If Americans choose to bank with a non-U.S. firm such as HSBC, their investment choices are limited. At the HSBC branch in the bank’s Asia regional headquarters in Hong Kong, Americans can hold only savings deposits. They’re prohibited from opening accounts to trade local stocks or buy products available to non- U.S. customers, including 45 equity funds investing in China or other geographies and industries. There’s only one comparable emerging-markets equity option available on HSBC’s U.S.-based investors’ website.
Financial institutions that choose not to accept American customers still must determine whether new or existing clients are so-called U.S. persons in order to comply with FATCA, according to Michael Brevetta, director of U.S. tax consulting at PricewaterhouseCoopers LLP in Singapore.
The definition includes citizens, green-card holders and non-Americans deemed U.S. residents by being present in the country for at least 183 days over a three-year period, which makes them subject to U.S. tax on their worldwide income, according to the IRS.
Compliance Costs
The compliance costs for banks, asset managers and insurance companies “could stretch into the billions of dollars,” Brevetta said. Private-banking firms in Hong Kong and Singapore already have operating costs between 88 percent and 90 percent of their revenue, compared with 70 percent at Swiss banks, PricewaterhouseCoopers estimated in a September report.
Penalties for not complying will be stiff. Non-U.S. firms that don’t make required disclosures will be subject to 30 percent withholding of certain dividends, interest or proceeds from the sale of assets they or their customers receive from U.S. sources, according to Baker & McKenzie’s Weisman, who has conducted workshops and seminars on the proposed rules for current and potential clients in Hong Kong and Singapore.
“Overwhelmingly, financial institutions outside the U.S. don’t like it, for obvious reasons,” Weisman said, calling the withholding tax a “stick” the U.S. is wielding. “The U.S. is outsourcing a tax-compliance function, which is enormously expensive.”
Renouncing Citizenship
Americans who don’t comply with FATCA are deemed “recalcitrant,” and income they receive from U.S. sources also is subject to a 30 percent withholding tax, said Jason Choi, a Singapore-based tax lawyer with Latham & Watkins LLP.
Renouncing citizenship is an option chosen by increasing numbers of Americans. A record 1,780 gave up their U.S. passports last year compared with 235 in 2008, the IRS reported.
Royal Bank of Canada (RY), the sixth-biggest wealth manager with $435 billion under management as of the beginning of 2011, said it sees an opportunity as competition is exiting, including in emerging markets, where it manages $60 billion.
“We are one of the few wealth managers to hold a Securities and Exchange Commission license offering U.S.- compliant investment advice in Switzerland and London and see an opportunity in accepting tax-compliant U.S. persons as clients outside of the U.S.,” said Barend Janssens, the Singapore-based head of the bank’s wealth-management unit for emerging markets.
Tax Evasion
Coutts, the wealth division of U.K. government-owned Royal Bank of Scotland Group Plc, plans to comply with FATCA and to continue accepting tax-compliant U.S. persons, according to Tim Winter, associate director of the U.S. Competence Centre at Coutts. The London-based bank has invested since July 2010 in a “global program of work established to support the implementation of FATCA,” he said in an e-mail.
The Swiss government has been in talks for more than a year with U.S. authorities, who, after obtaining data on about 4,700 UBS clients, are now investigating 11 other firms, including Zurich-based Credit Suisse (CSGN) and Julius Baer Group Ltd., for alleged assistance in U.S. tax evasion.
Credit Suisse continues to “work hard” to resolve the probe, CEO Brady Dougan said in an interview April 25. Julius Baer exited its U.S. private-client business between 2009 and 2011, said Jan Vonder Muehll, a bank spokesman in Zurich.
Wegelin Forfeiture
Wegelin & Co., a Swiss private bank established in 1741, became the first Swiss lender to face criminal charges in the U.S. crackdown on offshore firms suspected of abetting tax evasion. It had to sell its assets in January to Switzerland’s Raiffeisen Group to save its non-U.S. business before the U.S. indicted the firm in February. The St. Gallen-based private bank helped Americans hide more than $1.2 billion in assets and evade taxes, wooing clients spurned by UBS, according to an indictment filed in federal court in New York.
U.S. District Judge Laura Taylor Swain ordered Wegelin to forfeit $16 million on April 24, allowing the U.S. government to take the amount from Wegelin’s U.S. account, held at UBS in Stamford, Connecticut. Albena Bjoerck, a spokeswoman for Wegelin, declined to comment.
Spokesmen for Citigroup, Bank of America, Morgan Stanley, Goldman Sachs and JPMorgan all declined to comment on how FATCA is affecting their business, with some citing company policies not to discuss government regulation. Standard Chartered Plc (STAN), France’s Societe Generale SA, Barclays Plc (BARC) and Hong Kong-based Hang Seng Bank Ltd., which all have wealth-management businesses, also declined to comment.
‘Pain for Americans’
The restrictions on products available to Americans may not matter to a savvy investor, according to Hugh Young, who helps manage $70 billion in Asian equities in Singapore for Aberdeen Asset Management Plc.
“The financial institutions can restrict you from some of the best products, but you have others of the best,” he said.
Still, the limitations create complications that act as an investment deterrent, said Philip Marcovici, a retired U.S. tax lawyer who advises wealthy families and governments.
“It’s a pain for Americans to invest in markets outside of the U.S.,” he said.
Source: Bloomberg News
Posted by Steven Maimes, The Trust Advisor
Permalink: http://thetrustadvisor.com/headlines/fatca
Wealth Management a Top Priority for Banks
Posted by Steven Maimes in Daily Service, Headlines on April 24, 2012
Wealth management is a top priority for many banks and financial firms across South Florida, and they court their high net worth clients in myriad ways.
Seated in a private room at Café L’Europe in Palm Beach, jeweler Judith Ripka munches on her Mandarin Chinese chicken salad and listens to Valerie Ramsey discuss her book, √Gracefully — Looking and Being Your Best at Any Age.
Ripka flew in from New York especially for the luncheon, hosted by Sabadell Bank & Trust for three dozen of its wealth management clients and guests, as part of its “Women’s Connoisseur Series.”
“This bank is a wonderful bank,” said Ripka, who bought a vacation home in Palm Beach two years ago and was referred to the bank by her real estate broker. “They understand their clients, but they care about the clients, too.”
Genteel as can be, the setting offers a peek at the perks of South Florida’s wealthy banking clients who entrust financial firms to invest their savings, build for their future and plan their estates.
Catering to those clients by giving top-notch service — even, in the case of Sabadell, chauffeuring one attendee who had broken her foot and couldn’t drive — is all part of the package.
“We really try to make it informative, useful information,” said Debra Vasilopoulos, regional president of Palm Beach County for Sabadell Bank & Trust, whose events also include a series of lectures by Johns Hopkins physicians. “In addition to our clients needs, we care about their well-being.”
Across South Florida, banks, trust companies and financial advisory firms of all sizes are focusing on wealth management as a key part of their financial repertoire.
“If you intend to deal with businesses and their owners and professionals and high net worth individuals, it’s essential that you be in the wealth management business,” said Mario Trueba, president and chief executive of Miami-based Sabadell United Bank, which bought failed Lydian Private Bank last year to convert it to its wealth management division, Sabadell Bank & Trust.
Investing for the wealthy has a rich history nationwide.
J.P. Morgan has been serving the upper crust for more than 160 years. Northern Trust bases its heritage, dating to 1889, on the wealth management business. Fiduciary Trust International of the South has managed money for high net worth individuals and foundations since 1931.
Major banks such as Wells Fargo also cite the segment as its utmost priority.
“The number one strategic initiative for all Wells Fargo is to grow our wealth management business,” said Jason Williams, Miami-based regional managing director of Wells Fargo Wealth Management. The mandate is spelled out in a booklet on the bank’s vision and values, which he carries in his jacket pocket.
Wealth management is defined as “financial services provided to wealthy clients, mainly individuals and their families,” said Alexander Camargo an analyst at Celent, a financial services research and consulting firm.
To enter the domain, wealth management firms require a minimum level of investable assets. Many banks segment their customers into tiers of wealth, defined differently by each bank. Celent defines the tiers as beginning with the mass market, those with liquid assets up to $250,000, followed by the mass affluent market, those with $250,000 to $1 million in investable assets, then high net worth clients of $1 million to $10 million, and lastly ultra high net worth investors above $10 million, Camargo said.
In South Florida, wealth management has weathered the economic downturn better than many other areas of banking and is the closest of any segment to being recession-proof, said Ken Thomas, a Miami-based economist and independent banking consultant.
It is also one of the three segments — along with the huge retail market and the international banking/trade finance business — that make South Florida one of the nation’s five most attractive areas for banking, he said.
Moreover, wealth management has the most growth potential of all three, Thomas said, which is why every institution wants in on the game.
“There is more demand for wealth management because the rich are getting richer,” he said. “And it is even more so in South Florida because we have access to more wealth because of the proximity to Latin America”
Indeed, as institutions compete for a slice of the lucrative pie, the competition for clients is fierce. And every institution touts its approach as best.
“The end consumer is demanding a holistic one-stop shop, and financial institutions are going to have to meet that demand to be successful into the future,” said Jeff Ransdell, managing director and market executive for the Southeast for Merrill Lynch Wealth Management, which is part of Bank of America.
Perhaps most of all, wealth management bankers and clients cite the importance of their relationship.
When Danny Toccin sold his portfolio of apartment buildings in 2005, he needed to find an alternative way of investing. So he interviewed various firms and divided his funds among four institutions, including Wescott Financial Advisory Group.
“I need a total comfort level,” said Toccin, 62, of Miami. “I am a micromanager by heart, and I want to know where I am, where we stand, where we are going. I also didn’t want to be a minnow in an ocean. I wanted to be somewhere I would be like a big fish in a lake.”
But after a while, he found he didn’t feel comfortable with the other three firms.
“With Wescott I have so much trust in them that I probably did something other investors wouldn’t do,” said Toccin, who has a wife, Ferne, and two grown children. “I put all my eggs in one basket because I have so much trust and there is so much transparency.”
Indeed, Wescott Chief Executive Grant Rawdin views the advisor/client relationship as very personal. The firm even has an industrial psychologist test prospective advisors for empathy before hiring them.
“It’s why I changed my career from being a tax and business lawyer to being a financial advisor,” said Rawdin, who divides his time between offices in Coral Gables and Philadelphia. “They close the door and they tell you things. You become a psychologist. Money leads into other intimate admissions and issues.”
Financial firms say they bring in new clients through referrals from other clients, attorneys and accountants, as well as from the networking bankers in the community.
For banks and financial firms, wealth management starts with devising a plan, and input from the client is paramount.
“We really want to get to know our clients.” said Alex Navarro, senior vice president and private financial advisor at SunTrust in Bal Harbour. “It’s like going to a financial doctor. We want the client to feel comfortable enough to disclose all their financial concerns so we can do a good job at addressing them. The financial advice is only as good as the information we get.”
In fact, analysts and bankers say that amid the turbulent stock market, clients have become more watchful of their investments.
“Consumers are more demanding now,” said Camargo of Celent. “They want to see their advisors more, they want their advisors to inform them of the risk more, and they want to know they are protected on the downside, so if the market crashes, they don’t lose their entire life savings.”
Going a step beyond is also de rigueur. Many South Florida institutions invite their high net worth clients to a range of seminars, sporting events and concerts that they sponsor, along with speaker-led luncheons and dinners.
J.P. Morgan Private Bank dedicates the 33rd floor at 1450 Brickell Ave. in Miami to its wealthy clients, a private client center unparalleled in cities other than New York, said Phil Conway, Southeast regional head of J.P. Morgan Private Bank.
The center offers lounges and private dining rooms, conference rooms with video capabilities, a sky-high view and a chance to see the bank’s extensive contemporary art collection, which was started by David Rockefeller.
J.P. Morgan also provides summer and winter reading lists to its private clients. Northern Trust hosts a literary society in Miami that meets regularly.
In February, UBS hosted an event in Miami with former presidents Bill Clinton and George W. Bush for its wealth management clients.
And Wells Fargo and Fiduciary Trust have met with clients on private retreats to discuss investing and estate planning, and to teach younger generations to be responsible stewards of their wealth.
Source: miamiherald.com
Posted by Steven Maimes, The Trust Advisor
Permalink: http://thetrustadvisor.com/headlines/wealth-management1
Bank of America Said to Pursue Sale of Non-U.S. Wealth Management Units
Posted by Steven Maimes in Daily Service, Headlines on April 18, 2012
Bank of America Corp. is seeking to divest wealth-management units outside the U.S., its largest market, a person with direct knowledge of the process said.
Brian T. Moynihan
Bidders were asked to submit the first round of offers this week for a business with about $90 billion in assets under management, said the person, who declined to be identified because details about the auction are private. The Charlotte, North Carolina-based lender’s non-U.S. wealth-management units operate in Europe, Asia, the Middle East and Latin America.
Chief Executive Officer Brian T. Moynihan has sold more than $50 billion in assets to boost capital and simplify the company since taking over in 2010. The units up for sale were acquired in the 2009 purchase of Merrill Lynch & Co., and co- chief operating officer Thomas K. Montag gained oversight of the business in September.
Moynihan, 52, has said that adding financial advisers in the U.S. is a priority. The firm’s global wealth-management division had $2.1 trillion in total client balances at year-end.
The sale of the business was reported earlier today by Reuters. It could generate $1.5 billion to $2 billion, and Deutsche Bank AG (DBK) or Julius Baer Group Ltd. (BAER) may be among bidders, according to CNBC.
John McIvor, a Bank of America spokesman, said he couldn’t comment.
Source: Bloomberg.com
Posted by Steven Maimes, The Trust Advisor
Permalink: http://thetrustadvisor.com/headlines/bofa
SEI Poll: Investment Managers Optimistic as Investor Confidence Rises
Posted by Steven Maimes in Daily Service, Headlines on April 13, 2012
Marketing and Distribution Identified as Top Area for Investment in Coming Year
With the economy and the market showing ongoing signs of improvement, business optimism among investment managers is extremely high according to a poll released by SEI. The poll, conducted at a recent event for the company’s investment manager clients, shows that a majority of participants (78 percent) are optimistic about their firms’ business prospects over the next three years, while nearly all of those polled (86 percent) believe investor confidence levels are higher today than in the aftermath of the financial crisis.
There are a number of reasons behind the optimism, but brand strength (32 percent, up from 19 percent the year earlier) was cited most frequently, followed by positive market prospects for their strategies (24 percent), and strength of their distribution strategies and resources (21 percent). For the minority of managers expressing concern about their prospects, weak distribution strategies and resources was the most commonly cited reason.
The poll showed managers are backing up their optimism by investing in their businesses. The top three selections were identical to the results of last year’s poll, although the top-ranked area for investment in the next 18 months, marketing and distribution, was pointed to by nearly half (45 percent) of those polled, up from 34 percent in 2011.
Other areas identified for investment included back-office operations and technology (23 percent), and portfolio management (10 percent). Business opportunities in alternative investing and in the institutional channel were pointed to as the greatest opportunities for growth. Specifically, more than eight of 10 managers polled (83 percent) believe that firms managing active alternative strategies have the best prospects for asset growth over the next three years, while only 15 percent of respondents named firms managing active long-only strategies.
When it comes to client segments and distribution channels, more than two-thirds of respondents (69 percent) said institutional channels present the greatest opportunity for asset growth over the next 12-18 months, followed by new assets from retail channels (17 percent) and high-net-worth channels (8 percent).
Only a small percentage thought the greatest opportunities lie in organic sources of growth such as market appreciation.
“While the markets remain somewhat volatile, managers are seeing investor confidence grow, which gives them greater business optimism and that leads to more business investment,” said Ross Ellis, Managing Director, Knowledge Partnership for SEI’s Investment Manager Services division. “Managers continue to invest in their operational infrastructures and achieving operational efficiencies to support their firms remains a key focus. With a robust and scalable operational platform supporting them, managers have been focusing more and more on providing high-touch client service and delivering improved transparency and insight to their increasingly institutional prospect and investor base.”
While there is broad optimism, more than a third of participants (36 percent) see economic uncertainty as the most significant challenge the industry faces over the next 12-18 months, followed by geopolitical uncertainty (30 percent), and regulatory requirements (22 percent).
Many of those polled suggest that their firms still have work to do in educating employees about their core brand message. Respondents were split on whether all key employees could clearly and consistently convey the uniqueness of their firms’ value propositions, with 53 percent answering in the negative and 46 percent saying “yes.” Those polled say they clearly believe brand reputation plays a role in their ability to win mandates, with 39 percent saying it plays a large role and 33 percent a moderate role; another 20 percent say it plays a small role.
The poll was completed by C-level and senior executives across management operations, distribution, and investment professions.
SEI (NASDAQ: SEIC) is a leading global provider of asset management, investment processing, and investment operations solutions for institutional and personal wealth management.
Source: SEI
Posted by Steven Maimes, The Trust Advisor
Permalink: http://thetrustadvisor.com/news/sei-poll
Key Wealth Management Concerns for 2012
Posted by Steven Maimes in Headlines on December 29, 2011
You won’t get too many arguments at holiday parties if you say that 2011 has been one of the most challenging years for investors.
With the European crisis unresolved and major bi-polar dysfunction in Washington, it’s never been more difficult to plan ahead. Yet there are always core wealth management concerns that you need to address.
Here are some that I think are key.
DO YOU TRUST YOUR ADVISER?
Under pressure from the brokerage and insurance industry, the Securities and Exchange Commission is reconsidering a proposal to make all advisers fiduciaries.
A new standard will be released next year, although it may be highly diluted. In the interim, seek out an adviser such as a fee-only certified financial planner, certified public accountant or chartered financial analyst who acts as a fiduciary.
That means they have to put your interests above their own. They should not make a commission on what they recommend, and they should put your needs first. Read their ADV Forms (Part II) to see how they make their money. They should clearly disclose any conflicts.
HAVE YOU PREPARED FOR “SYSTEMIC” RISK?
What happens to your portfolio if the European debt crisis isn’t solved? What happens if a worldwide slowdown affects countries like China, Brazil, India and most of the developing world? Have you prepared for that?
The good news is that there are numerous ways you can work with your adviser to hedge your most vulnerable positions.
You can “short” any index, whether it’s a basket of U.S. Treasury bonds – if you think rates are climbing – or specific stock sectors. You can even find funds that offer triple the inverse return of an index.
Of course, I don’t recommend these funds unless you understand their risks. You could lose a lot of money if you don’t know what you’re doing. The important task here is to identify where your greatest exposures lie and hedge against them.
Do you have a lot of your employer’s stock? You may want to protect yourself with options. Do you have a huge position in bond funds? Then inverse Treasury ETFs or Treasury Inflation Protected securities might help.
FINE-TUNING THAT ESTATE PLAN
At the end of 2012, the $5 million exemption (per person) on estate and gift taxes could disappear – if Congress does nothing.
You need to huddle with your estate planner to see if you need to reduce the size of your estate for tax purposes. Don’t wait for Congress to act. Work on a long-term plan that includes charitable intentions.
EXAMINING TAX LIABILITIES
Along with the estate and gift tax exemptions, the low Bush-era income, dividend and capital-gains rates are set to expire at the end of 2012. While I doubt that Congress will enact any major tax reform next year, you need to be prepared if the lowest tax rates in a generation rise. Consult with your tax professional to see what kind of deductions you should take in 2012. You also might want to push more income into 2012 – if rates indeed rise in 2013.
IS YOUR FINANCIAL HOUSE IN ORDER?
This is something you should do every year. What’s your debt/income ratio? Are you saving enough for retirement and college? Are your out-of-pocket medical expenses rising? Have you put enough in an emergency savings fund? Do you have enough health, life, homeowner’s and disability insurance? All of these items need to be reviewed and updated this time of year.
Aren’t you glad I gave you all these additional things to worry about when you were hoping to relax as the new year dawns?
Fortunately you can delegate most of these items to trusted advisers. And if you have reason not to trust them, you need to do more than make a New Year’s resolution; you need to make some changes.
Column written by John F. Wasik (views expressed are his own)
Source: Reuters
Posted by Steven Maimes, The Trust Advisor.
Help Wanted: Salesmen Preferred
Posted by Scott Martin in News on April 24, 2010
Looking for a job in the trust industry with a high base salary and lots of perks? Jobs are abundant once again, but product knowledge and sales skills are essential.
The long recession froze hiring budgets throughout the financial industry, but now the trust business is thawing as firms staff up for the growth cycle. Positions are opening, offers are getting made and compensation is on the rise—as long as you’re the kind of candidate that trust companies are hunting.
“We’re seeing more demand for upper management and sales types, anyone who can drum up business,” says Maggie Cunningham, a partner in Tulsa-based national recruiting firm BancSearch and a specialist in filling trust company jobs.
So far, regional trust companies have been fastest to staff up through the recruiter channel, Cunningham told me.
Saturna Trust, based in Reno, is one such expansion-oriented outfit. President Ken Cain told me that his company is taking on new talent at a pretty fast rate. In the last few months, he hired someone to sell into the philanthropic channel and a new wholesaler to cover the Midwest.
“As we bring in new business, we need new bodies,” he says.
The big boys are staffing up too, but as yet they’ve been hiring through their in-house departments instead of going through recruiters.
Wilmington Trust, in spite of reporting a loss yesterday in the first quarter this year, remained positive about its wealth management and trust businesses. The firm added a total of 18 new wealth managers to its Atlanta team in the last six months. More hires are on the way as the gigantic trust company looks for opportunities to cross-sell its trust and investment services to high-net-worth clients throughout the Southeast.
Relationships are Everything
Significantly, Wilmington is looking for people who not only know how to crunch the numbers but can manage client relationships. Most of the recruiters I talked to for this story confirm that relationship managers are in and traditionally paperwork-oriented administrators or fiduciary staff are out.
“We’re just not seeing a lot of call for pure trust administration,” Cunningham told me.
While a lot of managers admit that they need to hire administrators, she says, not many are pushing the button.
Instead, they’re betting that better back office technology will help their existing support teams handle more accounts. And they’re routing more of their basic service requests away from trust officers and to front-line support, Cunningham says.
“Some of the larger banks now, if there’s under $3 million in the account, it goes straight to the call center now,” she told me. “Smaller organizations will still assign a trust officer to relatively small accounts, but even there, under $1 million can go to the call center instead.”
Other recruiters agree that you need to be able to do more than run the numbers to get a job in the trust business right now.
“You’ve got to have the interpersonal skills to deal with clients,” David Glaser, president of New York headhunting firm EGC Resources, told me. “There’s just not a real home anymore for somebody that’s just a strong technician like there was years ago.”
Glaser says the way it usually works is that trust companies wait until the rainmakers prove they can front new business, and then they bring in the support. But because the typical trust operation runs lean anyway, that could take awhile.
What People Are Making
In any event, the days when a trust department ran on commissions seem to be over as well. Instead, more managers are offering new trust officers that can bring in business a relatively high base and a performance bonus.
Saturna’s not paying anyone on commission. “We just don’t do it,” says Ken Cain.
As for base and bonus, Glaser estimates that the typical split probably breaks down into 70/30. On a plain vanilla trust officer compensation package, that translates to a base that starts at around $80,000 a year.
That fits the offers Maggie Cunningham is seeing. She says that bank trust departments tend to pay higher salaries in order to keep people aboard through boom and bust. But even trust officers getting jobs at RIA firms are working on salary now—although it’s likely to be a smaller one.
“They’re still in a different type of world because a lot of them got started in the wirehouses and so have that performance-based compensation model in their heads,” she told me.
Packages vary widely depending on where you are. High-growth markets like Nevada are competing harder for relatively scarce talent, but in the Midwest, years of bank mergers have brought trust company compensation down.
“Here in the auto belt, there’s been a real compensation reset,” notes Hunter Judson, who heads a banking-focused recruiting firm based in Grand Rapids, Michigan.
“Other markets are less affected, but in places like Detroit, you’re having people take 20% lower salaries than what they got at their old bank before they got consolidated out,” he told me.
People are settling because even though new jobs are finally opening up again, there’s still a lot of competition for each spot. Cunningham says she’s finally placing people who were laid off seven months ago, and even those who kept their jobs are getting restless.
“There’s a lot of dissatisfaction out there,” she told me. “If bonuses don’t pick up this year, a lot of people will start looking to move if they haven’t already.”
What’s the best advice for these people? Brush up your interpersonal skills so you can prove you can deal smoothly with clients. And don’t get hung up on your title, Judson says.
“It’s gotten impossible to generalize in the trust business from company to company and even from position to position within a department,” he told me.
“What a title means at one bank is very different from what you’ll end up doing at another bank, and if you go to a smaller outfit you’ll almost certainly have to do more things. Don’t get stuck on your old title. You can’t eat it.”
Scott Martin, contributing editor, The Trust Advisor Blog. Steven Maimes contributed to the research.
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