Australia’s private bank market is highly competitive but conversely it also has an enormous potential for growth, according to Carl Molden, acting head of St George Private Bank.

Molden, who assumed temporary control of the division after former chief Andrew Black left for a job at Skandia earlier this year, says research con­ducted by the Australian Private Bank Council (a recently-formed grouping of several private banking organisations) has found that only 30 per cent of the country’s high net worth individuals access financial advice through the private bank sector.

That statistic might reflect the competition for high net worth clients from other boutique financial planning firms but, from a glass-half-full perspective, Molden says it also represents an excit­ing market opportunity for private banks in general, and St George in particular.

He says St George’s own research has shown that high net worth individuals see the bank as “ap­proachable and engaging”.

“We’re not seen as elitist,” Molden says.

Being Australian can also be a plus, he says.

“Research we’ve done shows that while clients see the international private bank brands as presti­gious, they like local brands.”

But a decent brand and local ownership are not in themselves enough to keep hold of discerning high net worth clients.

Service, Molden says, is everything.

He says the St George Private Bank offers an “holistic suite of services” that includes investment advice, banking, insurance and estate planning.

“It’s a team-based approach that begins with understanding client needs,” Molden says.

The first point of contact in the process is the “client relationship manager” who establishes the kinds of services a high net worth individual may require – in the St George definition this means anyone with at least $1 million to invest and a minimum annual income of $250,000.

From there the relationship manager refers the client to the appropriate specialists in the St George Private Bank team – most of whom are in-house, although sometimes external experts are used.

Molden says if clients already have “existing centres of advice” St George will also work in with them.

“We’re very flexible,” he says.

On the investment side the private bank also differentiates itself from the other St George finan­cial advice arms – the bank branch financial planner and the Securitor group – with its “open architec­ture” approach.

“We have our own investment committee that is independent from St George,” Molden says.

However, the private bank does access the St George-owned Asgard platform for administra­tion, and other in-house services, such as margin lending.

“We are more focused on the advice, the prod­uct comes out of that,” he says.

Currently, the private bank advisers are paid a salary plus a bonus linked to assets under manage­ment while the client relationship managers are on a salary.

“We’re always looking at remuneration models – we’re considering some different models now,” Molden says. “That’s really being driven by what the industry wants.”

But it’s not just about the money, he says, with support, training and career development also all important features in retaining the high quality advisers the private bank requires.

Curiously, none of the St George Private Bank advisers have arrived via the bank’s other financial planning channels – although Molden says they are not precluded from doing so.

“You just have to be of a certain ilk to deal with high net worth clients,” he says. “Private bank advis­ers must be experienced and know how to commu­nicate effectively with high net worth individuals who can be very time poor.

“They have to deal with difficult and complex advice often in a short time-frame. They also have to be very efficient in the way they produce that advice and implement it.”

Private banking may be worlds apart from the mainstream financial planning business but Molden says the lessons learned at “the cutting edge of advice delivery” often filter down through the industry.

“We’re at the pointy end of what’s happening,” he says.

For example, many strategies and implementa­tion methods of including direct equities in client portfolios were developed in the private bank and these are now being adapted in the bank’s other advice businesses.

The private bank clients have also been man­aged through the latest round of market turbulence with remarkable calm, Molden says.

“There’s been no panic selling… it’s about keep­ing communicating, being there when they call with questions and anticipating those questions in advance,” he says. “It’s demonstrating the true value of advice.”

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