Global Private Banking Awards 2017: Winners’ Profiles – National Winners (The Americas)

Best Private Bank in the US;
Best Private Bank in the US for Succession Planning;
Best Private Bank for Family Offices
Northern Trust

Posting a respectable set of metrics with assets managed for private clients rising from $227bn to $248bn in 2016, alongside a hugely impressive ratio of each adviser working with less than 30 clients, Northern Trust is also revising its compensation structure to remove product sales-based incentives and align bonuses to client retention and growth.

The Chicago-based wealth managers’ hierarchy puts the success down to “breadth of capability, depth and experience and integrated delivery,” but beyond this corporate speak is a more fundamental reason for the bank’s ability to stay at the top of rankings. Northern Trust has hit on the formula of how to marry old fashioned wealth management with technology and goals-based asset allocation techniques in a way that not only helps clients, but keeps the bank very profitable, with the help of a significant infrastructure built for custody customers, leveraged for wealth management. 

“The custody infrastructure we have developed is a foundational contributor to Northern Trust’s wealth management success,” admits Steven L. Fradkin, president of Northern Trust Wealth Management, who believes having $9.3tn in assets under custody and administration offers the bank an “extraordinary competitive advantage” in addition to economies of scale.

Deep conversations with customers are, where routinely possible, backed by empirical data with technology helping visualise outcomes. “Our goals-driven wealth management is a fusion of adviser-driven experience supported by robust digital technology,” ventures Mr Fradkin, typical of Northern’s crop of veteran leaders who appear traditional in outlook but are happy to entertain and encourage constant innovation programmes, influenced by other industries, especially those based in Silicon Valley. “It is not an either-or experience as much as it is taking the best that both advisers and technology have to offer,” he says. 

But the more time-consuming and onerous disciplines of succession planning are not ignored by any means, with this service seen as providing a “window to the entire family, business and wealth structure of a client,” according to Mr Fradkin. “As we work with clients on succession, we are privy to the core intentions, business and family dynamics of our clients, which informs how we can best help clients plan and manage their wealth.” 

The bank is also starting to respond to criticism of being an undemocratic, US-centric institution, focused on a tiny sliver of clients. Mr Fradkin talks both about opportunities to serve a broader spectrum of affluent families across the US, served by 60 offices, and the notion of serving “Families without borders”, the title of Northern Trust’s recent family office forum in London. Acquiring the Swiss-based wealth fund administration business of UBS, adding jobs in both Switzerland and Luxembourg, has also made the claim towards being a cross-border player marginally more plausible. YB

Best Private Bank in Brazil;
Best Private Bank in Latin America for Customer Service
Itaú Private Bank

Despite economic turbulence and political instability in Latin America, Itaú Private Bank, which manages more than BRL300bn ($94bn) in client assets, enjoyed BRL11bn in net new money, while net income and revenue increased 71 per cent and 21 per cent respectively. These results, combined with consistent cost management, enabled the bank to reduce its cost-income ratio by 12 basis points.

In Brazil, what paid off was the bank’s ability to “understand client needs, propose a complete offering aligned to those needs, and being transparent, especially in regard to pricing and risks,” explains Luiz Severiano, head of Itaú Private Bank Brazil. “This strengthens our relationship with clients, which is built on trust.” 

The bank’s efforts in developing a sophisticated product offering and an international platform over the past few years – with further enhancements made in 2016 in Switzerland, the US and the Caribbean – leave Itaú well positioned to work in the new scenario of lower interest rates, which are likely to be a challenge, as investors are used to double-digit annual returns.

“We expect clients to be more willing to invest in higher risk products, with an international exposure, in order to maintain their returns,” predicts Mr Severiano. “This is a good opportunity for us to further increase our market share in Brazil and enhance our positioning offshore.” 

The private bank has a market share of 28 per cent in Brazilian wealth management market. Among ultra high net worth clients it is even higher, 30 per cent, and is expected to increase following the implementation of Brazil’s tax amnesty programme.

Over the past year, the bank raised the asset management threshold for Itaú Family Office to BRL400m and tailored its marketing approach to focus on potential clients with assets exceeding BRL10m. “Both changes were made to enable us to provide more tailored, specific services,” he says. 

During 2016, improvements were made to the technology platform, affecting both clients and advisers. “Clients have been reacting surprisingly well and want to try new features, such as video conferencing, investments and authorisations through digital channels,” reports Mr Severiano.

Going forward, the bank’s strategy is to reinforce its operations in markets where Itaú already has a major retail presence, such as Brazil, Argentina, Chile and Colombia. ET

Best Private Bank in Canada;
Best Initiative of the Year in Relationship Management Technology in North America;
Best Performing Private Bank
RBC Wealth Management 

The strong financial performance reported by RBC in 2016, showing an increase in net income and assets under management by 35 per cent and 14 per cent respectively, is testament to significant improvements made to its value proposition and client service. 

In Canada, the collaboration of the wealth business with the commercial bank, aimed at deepening relationships with business owners, by discussing succession planning and financial goals and helping them plan for personal and business milestones – generated “strong traction and significant uptick in the number of franchise clients, those having both a personal and business financial relationship with the bank,” explains Doug Guzman, group head, RBC Wealth Management & RBC Insurance.

To address the substantial intergenerational wealth transfer expected to occur in the country over the next few years, the institution, the winner of the Best Private Bank in Canada for six consecutive years, also launched a programme to help advisers support the needs of multi-generational families.

Drawing on results from its recent study – which found that 84 per cent of women have full or joint responsibility for overseeing the family investment portfolio – a key focus for the bank has also been to train advisers to better understand nuances in preferences, attitudes and behaviours between female and male investors, while finding ways to better attract, retain and develop female advisers. 

Focus on client service, greater cross-business and cross-function collaboration, and continued investments in people and innovation were the main factors that helped the bank achieve the top spot in the best performing category, states Mr Guzman. The result emerged from key performance indicator quantitative analysis on private banks globally by Scorpio Partnership, the wealth management consultancy. 

The acquisition of City National, a US private and commercial bank, effective the first quarter last year, enhances and complements RBC’s presence in the US, its “second home market”. The combination of the US wealth business, City National and its US Capital Markets business provides “a powerful and scalable engine for accelerated growth in the US”, believes Mr Guzman.

The bank’s Advisor’s Virtual Assistant (AVA) application for iOS and Android devices launched in Canada and the US last year, impressed our panel of judges as the best initiative of the year in RM Technology in North America. AVA provides advisers with real-time access to client insights and all the revelant information they need to be more productive, while meeting clients’ evolving needs. 

“Going forward, we plan to continue to release new improvements and functionality for AVA, as we continue to invest in digital innovation to strengthen the client-advisor relationship,” states Mr Guzman. ET

Best Private Bank in Mexico
BBVA Bancomer Banca Privada

For BBVA Bancomer Banca Privada, part of the BBVA Group, 2016 was a year of growth, and one which saw many of the projects initiated in previous years coming to fruition. The bank focused its strategy on improving service levels, developing their loans portfolio, and maximising returns for their clients.

During the course of the year, BBVA Bancomer revamped their ‘Experience Unica’ service model, in response to market changes and feedback from clients. The model aims to strengthen the customer experience by standardising the way private banking advisers interact with clients, thus ensuring they all receive the same quality of service, regardless of their location.

The bank also took a further step in servicing the ultra high net worth segment by opening a dedicated office in Guadalajara last year, adding to the already established branches in Mexico City and Monterey. 

“The private banking sector in Mexico is growing fast and we are seeing more and more competition, both from local and global players. We are trying to remain competitive by expanding our product offering, improving our service levels and retaining talent,” says Salvador Sandoval, head of private banking at BBVA Bancomer.

In terms of expanding its product offering, the bank’s mutual fund strategy has improved significantly thanks to the ‘Fondos de estrategias’ platform, which comprises three categories of funds: capital preservation, income and capital growth. These include both proprietary and advised funds.

The bank launched the first private banking app in Mexico, which allows clients to access their portfolios, make wire transfers and reach their relationship managers through video conference or chat.  “Many of our clients are 60 plus and some are reluctant to use new technologies, but others are already asking for it. We also know we need to cater for the younger generations, who might not be our clients right now but could be in the future,” he explains. PG 

Best Private Bank in Chile
LarrainVial

LarrainVial’s main focus in 2016 continued to be aggressive growth in terms of AuM and to increase recurring income in the medium- to long-term.

The bank services clients with a net worth of more than $1m. Recently, it has placed a renewed focus on expanding its investment product offering, adding a greater variety of products, including alternative investments.

“This has allowed us to grow, as well as to bring better returns to our clients through an expanded product line,” says Gonzalo Córdova, head of wealth management. Over recent years, the private bank has worked closely with other areas of the business, such as its corporate finance division, or private equity subsidiary Activa. 

“This has enabled our higher net-worth clients access to special investments, such as controlling stakes in important local and foreign companies in industries such as healthcare and energy,” he notes.

Through Activa, the private bank has been able to offer a large number of private equity funds in sectors such as mining, energy, agriculture, forestry or housing, with investments in Chile, Peru, Colombia and other Latin American countries.

LarrainVial’s portfolio management offering includes both advised and discretional portfolios, managed by separate teams, who are independent from the commercial area. In 2016, the private bank deepened its relationship with the third-party product distribution team, meaning private clients were offered investment products that had traditionally been reserved for institutional investors.

“These are mainly alternative investments, including funds managed by many renowned global asset managers, such as Apollo, Landmark or Marathon. Thanks to these efforts, allocations to alternatives now represent between 15-20 per cent of our high net worth clients’ portfolios,” Mr Córdova adds.

With the aim being to build a stronger, closer relationship with its clients, the bank frequently holds meetings and events where wealth managers can provide any information they might need. “This year we took it a step further with the creation of LV Lab, a special course in which our LarrainVial Estrategia team provides financial tools and knowledge for our clients, so they can make the best investment decisions,” Mr Córdova explains. 

The course, which features face-to-face classes and workshops, targets clients with limited financial backgrounds, as well as family members of high net worth clients.  DT

Best Private Bank in Colombia
BTG Pactual

The economic environment for 2016 in Colombia was marked by a steep rise in interest rates, the highest inflation level in two decades, and a devalued currency, a consequence of the transition towards an economy less dependent on oil, coal and gold. 

Political uncertainty has also dominated, with president Juan Manuel Santos’ popularity reaching an all-time low, the controversial peace process and a tax reform. The political crisis in Brazil also affected BTG Pactual’s corporate stability, causing strong headline risks to the franchise in Colombia where confidence on the private banking industry was still recovering from a number of recent scandals. 

Nonetheless, BTG Pactual Colombia remained confident in its long-term strategy and fundamental core values, and managed to weather the storm. The bank operates as a fully-fledged investment bank, providing support to clients in areas such as wealth management, asset management, investment banking, and sales and trading, with strong local teams and presence in all the most important regional markets.

“We are focused on alpha-generating ideas, aiming at providing our clients with strategies that allow them to have investments with above par results,” says Juan Rafael Pérez, CEO of BTG Pactual Colombia. “Our global networks, with strong local teams, provide unique alternatives like our Brazil Equity Funds or credit products, that are not available to pure local or non-regional banks.” 

Good recent results and positive feedback from clients validates BTG Pactual’s current approach to private banking in Colombia. “We promote a partnership and meritocratic structure that fully aligns the interest of the bank with our clients and creates a culture and philosophy that is unique to BTG Pactual,” Mr Pérez adds. PG

Best Private Bank in Bermuda
The Bank of N.T. Butterfield & Son Limited

Butterfield was established in Bermuda as a private bank in 1858 and today the group’s operations span several jurisdictions encompassing community banking, wealth management and trust services. 

The group currently provides private banking services in Bermuda, the Cayman Islands and Guernsey, favouring a “high touch” model with regular interactions between relationship managers and clients.

Crafting bespoke financial solutions for clients requires a thorough understanding of their sources of wealth along with their needs and priorities, explains Curtis Dickinson, group head of private banking at Butterfield. 

“We’ve found that the best way to achieve that is with face-to-face meetings, both at the outset of the relationship and at checkpoint intervals. This creates a familiarity that fosters trust and enables us to keep on top of changes in our clients’ family and financial circumstances so that we can be sure we’re always providing the best products and services for their needs.” 

In September 2016, Butterfield completed a successful initial public offering of shares on the New York Stock Exchange, along with a follow-on offering in 2017. 

“Being listed on the world’s largest, most active stock exchange, provides the bank with long-term access to international capital, and with a portion of the proceeds of the IPO having been used to retire a relatively expensive tranche of preferred shares, the bank now has greater flexibility in its ability to deploy capital in pursuit of growth opportunities,” says Mr Dickinson.    

In 2016, Butterfield acquired the private banking and investment management operations of HSBC Bermuda, as well as its trust subsidiary, Bermuda Trust Company Ltd. The transaction doubled the size of Butterfield’s private wealth business in Bermuda, making the bank the largest provider of wealth management services on the island.

And further growth is very much a possibility, says Mr Dickinson. “We have made significant acquisitions over the last few years in the areas of trust, banking and private client wealth management, in jurisdictions we know well and in which are able to realise economies of scale. We will continue to explore similar opportunities.” ES