The inaugural Australian Private Banking Council award winners have diverse backgrounds but share common
philosophies. Simon Hoyle reports
The inaugural winners of the Australian Private Banking Council (APBC) awards have diverse and interesting backgrounds. But they bring the same philosophies to the task of private banking: Client before self, advice before product. Mark Dietrechsen says the personal contact with clients is the big difference between private banking and corporate or institutional banking. “In private banking you do see more of an intimate side of the individuals,” Dietrechsen says. “You deal with them and their philosophies directly. [In institutional banking] you’re dealing with where the business is going, but you never get the chance to sit down in front of the individual and find out what is going on in their mind.”
The key to establishing and maintaining a good relationship is to “really understand it’s no different from when you or I go into a bank and we want to be seen as an individual, no matter how big or how small, and not just seen as a number”. Dietrechsen has about 55 clients in his “portfolio”. He spends three weeks a month in his home town of Perth and one week a month on the road. During that week, however, he’s able to “set aside all the admin and just focus on clients”. He says the arrangement is a “very efficient” way of maintaining contact with all clients, and he meets each of them at least once every three months. “I think the easiest way from my perspective is to really understand the person as an individual, [to understand that] they’re no different from when you or I go into a bank: You want to be seen as an individual…and not just seen as a number.
“If I can understand the customer, what is really driving them when they ask for something, there’s always a different solution that you can put on the table that meets their needs better.I mean really understand them.” Dietrechsen says most of his clients meet Westpac’s definition of ultra-high-net-worth clients – they have at least $25 million of investible assets. Such clients are demanding, but realistic about what Dietrechsen does. “They do not expect you to be an expert on everything, but they want you to know a reasonable amount about everything,” he says. His clients cover quite a wide age range. “You’ve got some of the younger ones who are still making their money and making their mark on the world, and some are older, and have already made their money,” he says. Dietrechsen says most high-net-worth individuals still do not bank with private banks. Winning them over is a key challenge for the industry in the years ahead. “It’s only going to get harder,” he says.
Stephan Edselius left a career in the Swedish Foreign Service to move into banking, initially on the institutional side. But the lure of establishing closer relationships with the clients of a private bank were a deciding factor when Edselius and his wife were considering a move to her home town of Melbourne. “Having worked and enjoyed working in banking in London, even though it was a little bit different from what I am doing now, when we were talking about moving to Australia, I was thinking about what do I really enjoy?” Edselius says. “I did enjoy the numbers and investing, and internal rates of return and everything, but what I really enjoyed about diplomacy was the relationships side. “You try to get as much information as you can by having good relationships with senior people…in the countries you are posted to.” Edselius says he’s had a lot to learn about the Australian market, and quite a bit to learn about the private banking industry.
But his background as a diplomat meant that one crucial aspect of the job – building relationships – was relatively straightforward. “It was really tough – there’s a lot to learn and you need to know the Australian market,” Edselius says. “You need to understand what is what in the Australian market. It’s not easy, coming from the outside. “I am still learning, and I think I’ll probably keep learning as long as I am here. “You also have to pay close attention to who your clients are, and have they had dealings together before? Maybe it’s a good idea to bring them together; maybe it’s not a good idea to bring them together. “The only thing I didn’t have to learn so much about was relating to people. You have to have a deep interest in people. It’s a deeply personal type of banking. With many of my clients, I think there is … because I am very involved in everything they do. For many of them I manage all of their wealth, or nearly all of their wealth.” Edselius says there’s a trend for high-net-worth individuals (HNWIs) to include their children in discussions, sometimes from a very early age.
“On occasion they have been as young as 14 or 15, because they want [their children] to be involved in what is a truly intergenerational transfer of wealth,” he says. A modern private banker is involved in “not just creating wealth, but they come to [see] you as a trusted adviser for many other things as well.” Like Dietrechsen, Edselius acknowledges that he cannot be an expert on everything. If there’s an art to private banking, it’s establishing oneself as the conduit to all services and advice a client needs, and offering them seamlessly. “It’s important to understand where we sit within the bank,” Edselius says. “We have very close relationships with other parts of the bank. “I am able to say [to a client] I can put you in touch with them, and you can listen to what they have to say. In some cases we have to realise that Macquarie may not be the best provider of advice or services in one area, and so we will go outside Macquarie.
“We’re really not trying to sell Macquarie product; it’s all about my knowledge of Macquarie.” Edselius says private banking in Australia is a competitive industry, and that competition can ultimately only be good for private banking clients. “As a sector I think it’s going to become more competitive, and we’ll see international banks moving into and out of Australia,” he says. “But I think Australia is a very good market to be in. “We are going to see more and more banks adopt a fee for assets under management; I think this is the most transparent way. Also, retail banks will come to adopt that, as time goes by.”
Angela Mentis was recruited to the National Australia Bank from Westpac, where she ran that bank’s Premium Wealth Services Business. As general manager of NAB’s private banking business, Mentis oversees the development of services and products for a range of clients, from pre-high-net-worth clients (“those who we think are on the right track”), right through to NAB’s recent Family Office operations, which cater for people with at least $30 million of investible assets. Mentis describes a “thought leader” as “someone who shows innovation and leadership to our clients -things that go over and beyond what our clients are expecting and give them value”. “For our people [that means] education, giving them the right skills and tools to have the right conversations,” she says. “For our clients, it’s about providing them with the right communications and information that they need to make their decisions, and it’s [about] providing them with the right advice.”
Mentis says research and feedback are key components of making sure the bank gives clients what they want. It’s no good assuming; it’s only by carefully analysing clients’ needs and gauging their feedback on services already provided that new services can be developed and existing services can be refined. “What do we do well?” Mentis says. “What don’t we do well? What else do they want from us? What else can we do for them? “All of our innovation comes from our clients. “You want your clients to be advocates. “It’s about partnering them with the right banker and the right team. That’s a real skill, because our clients are very sophisticated; they have very complicated needs and they have very high aspirations. It’s a real skill to find the right person to partner with them.” Mentis says NAB consistently looks outside the ranks of the Australian banking industry to find the right people to bring into the organisation. In the same way that Edselius left a career in diplomacy to enter private banking with Macquarie, Mentis says NAB has had success with what might be described as left-field appointments.
One such appointment is a former barrister. Mentis says that not having a background in banking has not been a problem for this individual. He has all the attributes that private banking clients are looking for, including attention to detail, an ability to quickly grasp the big picture and define potential solutions to problems as they arise, and – naturally – gravitas. “Traditionally [we have] been raising people within the system, but we have deliberately gone out and raised a lot of talent,” Mentis says. “Most of them have not got a banking background. But through their experiences they’re connecting quite well with our clients.” Mentis says high-net-worth clients typically demand a lot of “after-sales” support. That’s an area where she says NAB is working to improve. “We’re not perfect at it, and we are working hard at doing that follow-up,” she says. “If our clients have an advice relationship with us, then we keep going back and checking. Same with our banking team. When they undertake that this is what we will deliver to you, we check on all of that. It’s that communication and feedback.” Mentis says a private banking relationship must be high-touch. And so the future for private banks is fewer clients per banker, to ensure “the client has that high-touch experience, and that reduces the risk of us not delivering what we promise”.