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Partnerships between banks and IFAs – Best of both worlds

Partnerships between banks and IFAs – Best of both worlds. Olivier Collombin / Julien Froidevaux LODH – Independent Assets Managers Prague – April 29, 2008. Jean de la Fontaine (1621 – 1695). “The Oak and the Reed”. “The Oak and the Reed”. “The Lion and the Rat “. IFA Swot Analysis.

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Partnerships between banks and IFAs – Best of both worlds

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  1. Partnerships between banks and IFAs – Best of both worlds Olivier Collombin / Julien Froidevaux LODH – Independent Assets Managers Prague – April 29, 2008

  2. Jean de la Fontaine (1621 – 1695)

  3. “The Oak and the Reed” • “The Oak and the Reed”

  4. “The Lion and the Rat “

  5. IFA Swot Analysis

  6. Strengths • Independence • Flexibility • Proximity • Profitability Strengths

  7. Weaknesses • Dependence to large clients • Lack of investment capacities Weaknesses

  8. Opportunities • Banking consolidation • VHNWI • New career for senior privates bankers Opportunities

  9. Threats • Changing business model • Increasing legal constraint • Non-prepared successions Threats

  10. The perfect banking offer • An excellent brand name • A sophisticated and user-friendly IT tool • An international network • A reliable administration • A loyal and supportive management • A dedicated desk • A partner who thinks beyond your immediate needs

  11. Financial markets … have we seen the worst ??? • Volumes heavily down • Lack of liquidity in underlying investments • Major players badly hit • Barriers reached - structured products have lost part of their initial appeal • Alpha – which alpha - who cares when performances are negative ?!? • Who wants to provide leverage ? Which industry is next after financials ? Is your bank the next one to go ?

  12. Still problems … Real estate trouble and over evaluation have not disappeared Industries results publication will likely disappoint investors Default rate will keep on increasing, making additional write-down and recapitalization a reality => Shareholders will suffer further … But some hopes : Markets moving sideways Stabilization of financials with successful recapitalization Increased liquidity measures and tools provided by authorities worldwide Successful rescue of Bear Stearns, no bail-out with free lunch Problems … and hopes SO HOW DO WE GET THIS TRUST BACK ??? FIVE SOLUTIONS PROPOSED

  13. Long-term approach- the status of Private Bankers • The status of a “Private Banker” is defined in the Swiss Banking Act • Under Swiss law, bank Partners are jointly and severally liable for the liabilities of the Bank to the full extent of their assets without limitation • Private bankers have to comply with all Swiss regulatory and supervisory requirements, but they are not required to make their balance sheet and profit and loss account public • There are 14 Private Bankers left in Switzerland, under the supervision of SBC

  14. Be close to your clients and prospects

  15. State-of-the-art IT system should : • Be truly user friendly • Allow to be self-sufficient at workplace and when traveling • Provide comprehensive internal and external financial research on all underlying investments • Include electronic storage with immediate retrieval of data • Allow online services to end-users • View, organize, analyze, and actively manage group of portfolios • Display and readily print report for your client in several languages • Allow all transaction orders through one single application

  16. Key criteria for successful partnership • Investment professionals in several countries and ability to open accounts in several jurisdictions • No mix with institutional or other private clients • Majority of team should be client facing ! • Presence of specialists within the team for business development, advisory, investments, IT, compliance, risk management, special projects, etc. • Access to all bank resources through one contact person • No opportunistic approach – make sure your bank has been active in the field for many years and that IFAs are considered strategic partners

  17. Full access to investment tools and services • Access to comprehensive financial research, including external funds • Direct advisory services • Potential direct access to trading desk • Opportunity to create private label to centralize asset management • Common investment proposal • Delegation of asset management • Common client visits

  18. Conclusions • IFAs local and international development to continue, if not to accelerate • Banks to further partner with IFAs - not compete – in true spirit of partnership • New markets and economies will increasingly see emergence of IFAs • Open architecture not only for investments but also for global services could provide larger playground for IFAs as true alternative to banks • Independence not a vain word … “Tout ce qui augmente la liberté augmente la responsabilité” Victor Hugo (1802-1885)

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