Making all the right noises

It’s been an interesting couple of months at the helm of St George Private Bank for David Hewett.

Soon after Hewett agreed to take on the role in April this year, Westpac announced its ambitious takeover offer for St George – the details of which are still being tinkered with.

At the same time, investment markets have continued their alarming slide downwards, presumably leaving many high-net-worth individuals wondering whether they still belong in that elite category.

Either one of these events in itself would be unsettling to an incoming boss of a private bank, but the confluence of the two must surely have had a more destabilising effect.

Hewett, however, is maintaining his balance.

Firstly, he says, “there’s not too many of us” worrying about the Westpac move.

According to Hewett, Westpac CEO (and former chief of St George) Gail Kelly has been making all the right noises about “separate brands and multiple channels”, indicating that the dual branding at the private bank level would continue.

“We’re still investing very strongly in this business,” Hewett says. “We’ve done budgets; we’ve got plans for 2009 – very clear plans for areas of investment. We’ve got a strategic plan out to 2011.”

Tumbling markets and the consequent wealth destruction, though, are not so easily dismissed.

In March, Carl Molden, who was interim head of St George Private Bank after the departure of Andrew Black to Skandia the previous month, told Professional Planner the group’s clients were keeping calm.

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

A further three months of volatility has clearly ratcheted up the tension in the St George client base.

“No-one likes to see losses in their portfolios. This is a major correction and there’s certainly been a high level of [client] anxiety,” Hewett says. “We’ve been meeting that with measured advice and being as proactive as we can.”

He says having the backing of a “major wealth management group”, in the form of Asgard, has certainly helped St George Private Bank provide clear communication to clients.

“There’s been a need to be more proactive individually [for advisers] but we’ve also been giving seminars about what the outlook might be,” he says. “Clients are definitely seeking more information, more updates. As an adviser this is a very challenging time – advisers are really earning their money through this process.

“This is the time when a fee for advice can be a very good insurance policy.”

In a portfolio management sense, too, many clients have been shifting to cash.

“The risk-free rate is clearly giving return,” Hewett says.

While the external conditions have been rough, he says that internally, St George Private Bank is in fine form.

In his previous role, Hewett headed up the NSW region for the rival ANZ Private Bank and he has already noted some cultural differences between the two.

As per St George’s broader customer base, he says the private bank clients feel a much greater sense of loyalty to the brand than those at the larger banks and “have chosen a smaller bank for a reason”.

“The level of feeling about the brand in the St George Private Bank client base is very strong – it surprised me how strong it is. It’s different from the ANZ client base, let’s put it that way,” he says.

“It’s not about the mahogany. It’s not an aspirational brand. Clients don’t come to the St George Private Bank because it advertises well. Our clients are typically low-key. They want very good service. They want the basic stuff done really well and they want good advice from a very reputable wealth business.”

And the links to the broader St George wealth management business are integral to the private bank offering, which relies on Asgard for much of its investment administration and research. Hewett also reports directly to Asgard chief, Geoff Lloyd.

The private bank does retain its own research capability, however, and is more geared to direct share and debt advice than the other financial planning groups in the St George stable – the bank chain and the Securitor dealer group.

While there is no natural internal career path across the various St George advice groups, the private bank has recently hired an adviser from one of the retail branches, Hewett says.

The group is also looking beyond the typical private banker recruitment pool in order to meet the demand for high-net-worth advice.

He says St George has just recruited a number of “retired senior banking executives” whose age and experience meshes well with the client base.

Indeed, Hewett rates the “war for talent” as his number one concern – in this context market ructions and corporate dalliances are just short-term distractions.