Why Independent Asset Managers Win vs Private Banks? (Part 1/2)

Investing

Why Independent Asset Managers Win vs Private Banks? (Part 1/2)

Now, we dig into the reasons behind the preference of independent asset managers over private banks managers.

Published on 25 February 2016

This is the first part in a two part series, interviewing Urs Brutsch, CEO and founder of HP Wealth Management.

There is much talk about boutique wealth managers, otherwise known as independent asset managers. They are often mooted as the future of high net worth wealth management and are a force that will prove stiff competition to the private banks in the coming years.

But that’s only happening slowly.  If the proposition is so strong, why are boutique brands so rarely recognised by clients (in our experience at least)?

Ex-private bankers making their own way

In this episode of Insider Talk we sit down with Urs Brutsch, CEO and founder of a leading Singapore boutique, HP Wealth Management, one of the pre-eminent boutiques in Asia, to confront this head-on and ask him:

• Why do independent asset managers exist?
• What is the difference between a private bank and an independent asset manager?
• What’s the future of Independent Asset Managers versus Private Banks?

01.

Why do independent asset managers, or boutiques, exist?

UB: Independent Asset Managers are founded by ex-private bankers, almost without exception.  These individuals, like myself, realised that the private bank – client relationship is rife with conflicts and bias.  Not to mention that large institutions are simply demoralising places to work with all the heavy processes and administration. Private banks are typically owned by shareholders who want a return. The private bank must always be selling to hit new revenue targets. Salespeople set quarterly targets, and products are pumped in to sales teams with targets to sell.  It’s a revenue game, which unfortunately results in milking clients, usually not in their best interest!A smaller and, crucially, independent wealth manager can service clients in a truly transparent and supportive way. Why?

• Fees are transparent
• Advice is independent and unbiased
• Remuneration of the ‘sales people’ (a term we definitely don’t use in our business model!) is not based on volume of sales as it is in the banks

Conflicts of interest with the client are removed in a way that is impossible at  private banks. Not to mention that independent asset managers are typically owner managed, so the incentive to provide great service and develop long-term client relationships is strong whereas at private banks there is often a ‘churn and burn’ mentality.

Our business model is different. It’s based on a long-term relationship and transparent remuneration. We can look at the whole market and advise the client what we think is the right option.  But whether or not the client takes our advice has no bearing on our revenues. That’s the mantra of an independent asset manager. Our fees are flat, no product sales required.

In part 2 of this series, we will ask Urs Brutsch how boutiques work and what is the future of boutiques and private banks?

If those potential clients reading are interested in having a conversation with HP Wealth Management about their wealth, please contact us here and we will arrange.

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