Training the face of your firm

What does it take to sell investments to individuals? Excellent products? Reliable returns? Intelligent, tailored asset allocation? Almost certainly all three. But every bit as important as selling the right products is selling them in the right way.

Never underestimate the importance of the client adviser: the man or woman who is meeting customers, building up a relationship with them, gaining their confidence and guiding their decisions. And these polished individuals – the face that a wealth manager or bank presents to the investing world – are the result of a careful process of recruitment and training.

Before the training can even get started, the right individuals have to be selected. “We are looking for individuals with good people and communication skills, with sound investment experience,” says Nick Perryman, sales manager for the UK and Jersey at Swiss-based wealth management giant UBS.

Private client advising is not a straight-out-of-university job, although different banks have different views on the exact background required. Manoucher Moshtagh Khorasani, assistant vice president at Germany’s Commerzbank, says: “You can’t just become a private banking adviser immediately. You have to be experienced in other fields, for example, retail banking.”

But Mr Perryman has a different view: “We have recruited many individuals with private client experience, and have also had great success hiring laterally from investment banking. We haven’t really taken people from retail banking, since we are looking for individuals with very strong investment experience.”

Training to play the game

Training involves upfront induction training, often including some external qualifications, or a series of courses attended by advisers alongside their day-to-day work. Or, frequently, a combination of the two. It also generally incorporates a mixture of so-called hard (or investment) skills, and softer, harder-to-pin down people-management skills.

“We divide our programme into three columns: product related, soft skills and computer-related,” says Mr Moshtagh Khorasani.

In terms of product training, just how much technical knowledge are advisers expected to have? According to John Kelly, head of client investment at UK big name retail bank Abbey, while client advisers are expected to grasp what the various products do, what matters most is not their detailed grasp of each technical nuance, but understanding the client’s risk profile and relating that to the services available.

“Imagine buying a motor car,” he suggests. “What goes on under the bonnet is incredibly complicated. No salesman will try to sell you the car based on that clever gadgetry. They sell it on what you get from the car – reliability, etc. That’s what the customer needs to buy, and that’s what we sell.”

Across the channel, Philippe Couvrecelle, deputy chief executive of Natexis Asset Management (NAM), the fund management arm of Banque Populaire, concurs. While, he says, NAM’s training programme for advisers can “be tailored from general training on the financial savings to more specific product training,” he stresses that “the main quality of an adviser is to know his client very well: the client’s projects, needs, and risk aversion”.

With this information, the adviser creates an investment profile and, using an NAM tool, “which enables the classification of products with a return/risk scale for a specific time period”, matches it to a product.

Essentially, advisers need to be able to get knowledge across. “You really need to understand the client’s circumstances, including their aspirations and risk profile,” says Mr Perryman at UBS, “but it is equally important to be able to communicate technical concepts in a succinct way that someone who is not necessarily an investment expert can understand.”

Often, moreover, advisers can call on experts in particular areas, as and when clients require it – perhaps on a particular asset class, or a tax regulation. “Each client has a relationship with one or more dedicated advisers,” Mr Perryman adds. “These are responsible for understanding their circumstances and needs, but accessing the wider expertise of the bank, and involving product specialists as necessary.”

Perryman: third-party providers speak to advisers

As the technical complexity of products on offer has grown, training has become correspondingly challenging. Banks and wealth managers have had to adjust to open architecture, and to the use of more sophisticated, structured products, as well as the rise of alternative investments.

According to Mr Couvrecelle, “the complexity of the financial products and the difficult context of the 2000s,” are what prompted NAM’s new approach to training advisers, including the incorporation of a module devoted to alternative multi-management.

Expert advice

Whatever the level of product knowledge required, the next question is: where should it come from? Should the fund managers creating the underlying investment products – including the external ones – be called in to help?

They should, according to Mr Perryman. “It is very much part of the process,” he says. “We regularly invite third-party providers and managers of products in to speak to adviser. We feel this gives advisers better insight into the role of those products and helps them explain products better to clients.”

Others are more equivocal. NAM, on the asset management side, provides an entire training programme for the Banque Populaire advisers selling its products, but the situation is a special one, as the bank is the parent company. Moreover, it is not the fund managers themselves who train the advisers, but “an external trainer selected by NAM’s teams”.

Commerzbank uses a combination of its own investment professionals and external trainers – former fund managers – to educate its advisers. However, it is not enthusiastic about involving third-party fund providers. “We have an open architecture structure, selling third-party products,” says Mr Moshtagh Khorasani. “However, these providers do not offer training for us.”

The only exception is in alternative investments, where instructors come both from inside Commerzbank and from the external specialist houses with which it co-operates.

Kelly: you either have people skills or you don’t

At the mass affluent end of the spectrum, Mr Kelly doubts the utility of bringing in external managers to train the bank’s own advisers. “We have an IFA side,” he explains. “And we often bring in external fund managers to present to IFAs, but with the direct Abbey proposition, the products will involve around 15 fund managers, and they won’t know exactly what role they are playing in it. The contribution they make to the product is the net contribution adjusted by the contribution of the others.”

Managing people

Product knowledge is necessary, but insufficient. Advisers also need soft skills. But can these more subtle qualities ever be successfully taught?

UBS and Commerzbank seem to think so, at least to some degree. Commerzbank, Mr Moshtagh Khorasani says, hires an external training firm to teach the different stages of selling: first contact, maintaining contact, how to describe products, and so on, with the process reinforced by role plays.

At UBS, the idea, as Mr Perryman sums it up, is to teach advisers “how to manage relationships, how to maximise them and how to make sure clients are happy”. This, of course, is the holy grail of private client advising. But Mr Kelly is sceptical as to whether training can provide it.

“Client advisers need two sets of skills,” he says: “Technical skills, which you can train them to have, and people skills, which either you have or you don’t.”