Many bank employees are toying with the idea of becoming self-employed. But only very few of them know what they are getting into. That's why independent wealth manager and former UBS banker Francesco Magistra has written a personal guide he makes available to finews.asia.
«I talk about my new life because there is a life before and a life after leaving a bank,» says Francesco Magistra (pictured below) from Ticino in an interview with finews.asia, «once you leave a bank, you will never be the same person again.»
Francesco Magistra (Image: Media Nemesis)
1. Why go independent in the first place?
An independent asset manager or external asset manager (EAM) has time to devote 100 percent to their clients. It's true that regulatory demands are increasing these days, and a structure is needed to handle these administrative tasks.
But the customers who follow you because of your skills are yours. There are no more mandated goals to meet. The counter does not go back to zero on January 1 each year; it is cumulative.
2. What do I actually want?
Usually, the answer is, «I want to take more care of my clients and have more free time and enjoyment.» This is possible, but it depends greatly on the chosen asset manager model. There are EAM factories that are not much different from banks, and there are others.
3. Security
As a client advisor, leaving the bank is probably the most significant risk in a career. You have to set new goals, keeping in mind that your previous clients are the bank's property, and the bank will do everything it can to keep them. So, if you quit, you must be ready to build a new customer base.
4. What is the minimum?
The minimum number of customers depends very much on the individual's suitability, chosen standard of living, and professional ambitions. As a rule, however, you need fewer customers than you think.
Besides, there are always intermediate solutions when joining an existing independent asset manager.
5. Remuneration
The salary paid by an independent asset management firm is only an advance on a service yet to be provided. A client advisor willing to forego a fixed salary at the outset will act more confidently and may negotiate higher compensation for foregoing an advance.
6. Different compensation model
Newcomers must quickly learn to think entrepreneurially, calculate expenses and revenues, develop strategies, and organize activities.
They now have to pay for the expenses they incur – lunch, travel, rent, office, computer, etc. – for themselves. In short, more expenses mean less income.
7. Goodbye to the team
Assistants and colleagues in your banking life may have surrounded you. What's new is that you have to learn to work independently. If you want to take your team with you out of friendship and convenience, you must know this is unrealistic.
In such a case, you would have to pay salaries, vacations, social security contributions, office rent, and IT with what you generate. This is likely illusory in the initial phase and is why many newcomers find it challenging to get off their high horse and suddenly have to deal with administrative issues.
8. Clients enjoy your undivided attention
Good work in the past is the best prerequisite for customer loyalty. For the client, the «new» collaboration with you as an entrepreneur or business owner is an upgrade because the customer enjoys your undivided attention and benefits from your greater independence in selecting products and services.
You can offer different custody banks instead of just one product that changes every month. You are now selling yourself rather than the bank. It's fundamentally different but interesting and extremely exciting.
9. Like a new marriage?
If you join an independent asset manager, don't sign a contract for life. If the EAM firm doesn't meet your expectations, switching is much easier than leaving a bank.
Changing from one EAM firm to another requires only a few administrative signatures. And, of course, a credible and understandable explanation for your clientele.
10. Every day is the best day to leave a bank
Timing is always a complex thing. If you are good, the bank will go all out to keep you, so you tend to postpone leaving every year. Good pay, lots of vacation, little responsibility - no doubt, being employed by a bank can be quite pleasant.
But don't get too phlegmatic. Take the plunge if you're serious about it, and enjoy the years you have ahead of you as an independent asset manager. «I left the bank at the age of 40. It wasn't an easy thing to do. But where there's a will, there's a way. And it was worth it!»
Francesco Magistra is Chairman of the Board of Directors of the Ticino-based Nemesis Group in Lugano and a partner at the firm Osiris Asset Management in Vaduz in the Principality of Liechtenstein. After completing his education in New York, he was appointed representative of Swiss Bank Corporation (SBC, later UBS) in Lima and then in Montevideo. After returning to Switzerland, he resumed the «Fixed Income Emerging Markets» sales development project before returning to Lugano as Head of Latin America, responsible for Brazil, Argentina, Venezuela, and Peru. In total, he worked for UBS for 15 years. He has been self-employed since 2001.
