Clients want more open architecture

Private bank customers are unhappy with the fund choices on offer, writes Roxane McMeeken.

European private banking clients are dissatisfied with the levels of open product architecture practised by their banks. Investors have become wary of in-house products and believe that even when their banks do offer an open architecture proposition, they fail to deliver fully objective advice. These are the findings of the latest survey from information provider Reuters and global management consultant Booz Allen Hamilton. Allan Gemes, vice president of Booz Allen, warned: “Private banks are at an important fork in the road. Clients are not satisfied with the service they are receiving and are beginning to reconsider their options.” The survey of over 60 clients and 60 advisers from 27 banks in Germany, Switzerland and the UK found that German investors are particularly concerned that their bank is too focused on selling them generic, proprietary products. “German clients feel that they are being pushed around by their banks, that banks are just showing them their own products rather than giving them a choice of best of breed,” said Mr Gemes. Another major complaint from the sample of Germany’s wealthy individuals was that they were often migrated from a retail style service to private banking without being informed. Others had been told to open several accounts with the same bank in order to split their holdings into smaller amounts and thus avoid being upgraded. Reuters and Booz Allen concluded that banks should assess client needs more closely through the development of client risk profiling. The survey further recommended that investment strategies be more tailored to fit clients and include best of breed products. In order to spend more time with clients, less time should be spent on administration. The survey found that private client advisers were spending 25-60 per cent of their time on internal admin, leaving only five to 10 hours a year to spend with each customer. Mr Gemes added that for banks that were prepared to meet customer demands, the rewards would be significant.

Gemes: clients feel pushed around