I have been working for banks for over 20 Years as a Trader, Client Advisor, Product Manager and Project Manager for process optimization and big IT projects. I still find it a very exciting world. In this blog I write about various banking topics (People, Strategies, Development, IT, Finance 2.0 etc.)
Cold calling of potential wealthy
clients has not been an option that worked well in the past few
years, and it will not be an approach that will work in the future
very well, even using social media.fffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffff ----
In my case though, if social media had
been there already 20 years ago, I would have at least additional 500
contacts and friends on XING, Facebook etc. Some of these former
school / military friends..., maybe have become entrepreneurs, made a
great career, earning a big salary now or inherited a bunch of money.
Not having social media available then, I lost them all out of site,
I have no idea what they are doing and no chance that any of them
will become a client of mine.
Using social media for acquiring new
clients is no quick win but in the long run, social media is going to
be a great help in the following areas:
Deepen friendship with old
acquaintances and stay in
contact with former contacts.
wealth management requires a lot of trust of the future client. Where
would you find more trust than with an old friend, who was a “partner
in crime “ in earlier days. Who would recommend you more, than an
old buddy with whom you had great times. Maintaining a relation with
all the great people you met in the past was hardly possible so far.
It would have taken to much effort. In our days with social media it
can be done easily. Do not even think how you could benefit from
these guys. Just be interested in what they are doing and provide
help/advice if you feel its needed. All the rest will happen by
introduced by your social media contacts to other social media usersggggggggggggggggggggghhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhffMore
and more people are going to be social media users. Half of the
population of Switzerland is already on Facebook. I do not know a 25
year old who has no Facebook profile. There fore more and more it is
probable, that your clients will be on social media and that you can
see who they know. Like this you can can approach these existing
clients actively and ask them if they could introduce you.gggggggggggggggggggggggggggggggggggggggggggggggggggggggggggggggggg---- ----
Meeting new potential clients by being
active in forums
a member in forums for topics such as trading, investments, asset
management. Read the posts and the questions people are asking there,
on a regular base. Be active, answer questions of other forum
members, try to help these users and show your expertise. Members who
can benefit from you might become your clients or will be happy to
new people online (e.g. XING)
for people with interesting profiles, whom might be interested in
your profile too and to whom you can bring value. Contact them and
ask them to become a member of your network. Explain them the
advantage of connecting and sharing ideas. Do not even think on
acquiring those contacts as a client in the first place. Keep in
mind, the base for future steps towards a client relation is honest
sympathy and then trust.----gggggggggggggggggggggggggggggggggggggggggggggggggggggggggggggggggg---- ---- TO BE CONTINUED...... with 4th and last part "CLIENT RETENTION"-gggggggggggggggggggggggggggggggggggggggggggggggggggggggggggggggggg---
In general to support their corporate branding its helpful that companies encourage employees in their activities to build up an own valuable web presence with social media. A positive and professional personal branding of employees will reflect on the company in a positive way.
When the individual web presence of employees is important for companies in general e.g. a food company, how important must it then be for a bank, to whom clients entrusts with all their savings.
In our days, when evaluating new employees HR responsibles very often research in the internet as well. Some companies (→ report Wall Street Journal Online February 2012) are not interested anymore in receiving CV's but ask potential candidates to send them links with evidence on their web presence.
Hiring the wrong person can generate a loss of a full years salary. Bad client advisory and wrong investments can cost far more. Therefore as a potential client, I would be very interested to learn more about the person to whom I entrust with all my assets and all my confidential information, before even transferring my funds. Funny enough many of my colleagues working as client advisors do not have a web presence at all, no XING, no LinkedIn and no Facebook.
Again if I wanted advisory service on investing a fortune o a few millions, I would asks my Relationship Manager to give me access to at least his Facebook, XING and Facebook profile. A relationship manager not having a web presence doesn't need to be bad. Only I would not have the transparency I want. Would a HR responsible hire a candidate where he can not make a clear judgment due to lack of information. No he wouldn't!...Neither would I and should a client accept a client advisor where he can not judge properly.
Therefore it should be of big interest for banks, to coach their client advisors on the crucial elements and the key content of personal social media profiles. Client advisors should understand how having a convincing CV and description of the own personality can have a positive impact on future or even existing clients. Reading recommendations by other XING, LinkedIn members, finding out that there are some common contacts or even seeing on Facebook that their future client advisor has a social life and is a great person will certainly influence wealthy individuals in a positive way.
Of course the above mentioned may not be needed to consider for 60 year old clients. For 25 year olds, who spend an important part of their life on Facebook or social medias in general I certainly would recommend to give it a few thoughts....at least.
Keep in mind “Facebook might be tomorrows golf court. Instead of fighting to have a good golf handicap, Relationship Managers maybe should rather fight to have a good web presence”
... to be continued --> Social Media Strategy "Client Acquisition and Retention"
Assuming moderate and stable economic growth, we expect total household wealth to rise by more than 50% in the next 5 years from USD 231 trillion in 2011 to USD 345 trillion by 2016 (CS Global Wealth Report 2011)
Administration costs will increase, profit margins will decrease
Competition among banks has been increasing and will increase further
Banking will remain an interesting business to stay in, but a tough one. In order to prosper, Social Media is crucial
Components of Social Media Strategy
1) Corporate Branding
Twenty years ago, marketing and corporate branding for banks was a no go (at least in Switzerland). From the outside you could not even recognize that it was a bank. As we all know, this has changed and marketing and advertising has become very important for banks as well.
The next step is/is going to be corporate branding with Social Media. The current branding with Social Media reminds me a bid of the first car after the horse-drawn carriage. This car still looked pretty much like horse-drawn carriage. Same with Social Media. Banks keep on relying on what they know and so, they apply the usual marketing approach and methods.
Keep in mind, 20 years olds spend plenty of time online, on Facebook for example. They are there for having fun. Becoming a fan of a bank's Facebook page is not so much about fun. So banks give them fun on Social Media. Why not offering something similar to FarmVille --> a social network game on Facebook. On the top FarmVille had 80 million users.
Instead of letting them build there own farm:
Let them build their own bank. Let them compare with their friends. Show a ranking. Let them form teams to build the bank together.
Give them a possibility participate in a social network stock trading game. Generate scenarios and provide them informations, on which they can try to predict future development of their stocks. Teach them like that, the basics about stock markets.
Or instead of calculating based on their Facebook data, what animal they are or how many children the will have, give them the possibility to find out, what “investment personality" they are”.
The list can be extended arbitrarily but in brief you just have to provide fun and value.
To be continued with...
2) Social Media Strategy "Personal Branding"
3) Social Media Strategy "Client Acquisition"
4) Social Media Strategy "Client Retention"
Duties: Decision on Strategic Asset Allocation (SAA) and Tactical Asset Allocation (TAA)
The investment committee consist of senior members of the management of the bank. At Credit Suisse for instance, Ossi Gruebel as CEO of Credit Suisse Private Banking was a member of the Credit Suisse investment committee. Further more the chief investment officer (CIO) and the head of private banking usually are committee members. Last but not least the head of portfolio management, the banks chief economist and the quantitative specialist will participate.
Duties: Decision on investment product selection according asset allocation in case of strategic
Decision on switches (sell a stock and replace it by an other)
Usually this duties are structured according markets. Usually they are structured into stocks Switzerland, stocks Europe, US stocks, stocks Asia/Emerging markets and bonds. Depending on asset classes the bank is offering there might be other groups, such as commodities, alternative investments etc. In bigger banks, there are usually teams, who are exclusively responsible for one of those groups/market. They are not involved in rebalancing of client portfolios at all. In smaller banks responsibilities for above mentioned groups are shared among the portfolio managers. In hour days its not common anymore, that one PM is individually covering all markets and even rebalance client portfolios
Duties: Implement strategy changes and changes of specific investment products on client
These portfolio managers, evaluate the gap in-between the model portfolios and the client portfolios and are increasing, decreasing, buying and selling positions accordingly. Doing this they have to consider client restrictions. If by proceeding according the decisions of the strategy team a restriction would be violated, the have to find an alternative and buy this investment product instead. In bigger banks there are teams only being responsible for the implementation. In smaller banks the are also responsible for selection of investment products.
Duties: Controlling portfolio manager
This unit should be outside the portfolio management unit. They analyze all client portfolios and among others ensure that no client and no bank restrictions are violated. They also analyze the standard deviation of performance of client portfolios and inform the head portfolio management/ portfolio managers if deviation is to big.
Decide on Strategic Asset Allocation (Benchmark/SAA)
Investment Committee (IC) defines an Asset Allocation for the various Risk Profiles the bank wants to offer their clients. Risk in this sense means, the maximal possible loss. Usually a bank offers at least 15 risk profiles, from bonds only to stocks only (eg. Fixed Income, Yield, Balanced, Growth, Equity in the common reference currencies USD, EUR, CHF). These asset allocations consist of various Asset Classes. The common asset classes are Equity, Bonds, Cash. Since around the year 2000 the asset class alternative investments and a bid later commodities became more popular. This asset allocation is optimized (Diversification) in order to achieve the maximal return with the risk taken. The strategic asset allocation remains unchanged over years. Changes happen when due to longterm market outlook a new asset class is seen to be favorable as for example the asset class “alternative investments”.
Decide on Tactical Asset Allocation (TAA)
Investment Committee reviews the current tactical asset allocation usually several times per month and decides if an adjustment is needed. A change happens several times per year. The bet is taken against the strategic asset allocation. That means because of the current market outlook the Investment Committee meight underweight or overweight TAA against SAA in order to achieve a higher return. Since the tactical/strategic asset allocation (usually) is static, but the asset asset allocations of client portfolios change because of market movementsa decision is needed, when to rebalance back to the static asset allocation. Depending on the banks organization this is made in the Investment Committee or by the portfolio management unit itself.
Within the limitation of the tactical asset allocation specialists from the portfolio management unit decide, which investment products to by or sell. Adjustments are made when the TAA changes, but changes are also made when market conditions and company outlook favor a switch from one instrument into an other. An example: IC decides to overweight stocks US against strategic asset allocation. Tactical asset allocation is increased from 20% to 26%. As as result the PM specialist for US stocks needs to find two US stock investments for 3% each.