Selling becomes problematic when a bank puts pressure on its relationship managers to «push» certain products and sets sales targets for them, Oliver Pernet and Mike Brun from LGT Group explain in an exclusive interview with finews.asia.

Oliver Pernet: The environment in private banking has changed significantly in recent years and many relationship managers feel that they have less room for maneuver. Do you share this view?

If by room for maneuver they are referring to being able to invest for clients in all types of securities and investments without any restrictions or administrative hurdles, then yes. The strict regulations that have been introduced in recent years have certainly reduced the range of possibilities. I think what’s important is how a bank deals with the overall situation.

At LGT, we are using technology to significantly reduce the administrative burden faced by relationship managers and the time they require to conduct complex compliance checks. We are doing this with the help of IT-supported, automated processes. These enable them to dedicate more time to discussions with their clients and to the quality of the advice they provide, despite the regulations.

«There is nothing intrinsically wrong with selling something to a client»

Mike Brun: In my view, their room for maneuver has actually increased in terms of responsibilities: the idea that the role of the relationship manager has shifted from that of a product specialist to that of a financial coach who offers holistic investment advice has become commonplace, even if this claim is not always lived up to.

However, completely new areas have opened up, such as sustainable investments, impact investing and philanthropy. This gives relationship managers the opportunity to approach their clients on a much more personal level and therefore get to know them better. Whether or not a relationship manager takes advantage of these opportunities comes down to their creativity and commitment.

It is often said that relationship managers today are primarily salespeople and less committed to the interests of the client. Is there any truth in that?

First of all: there is nothing intrinsically wrong with selling something to a client. Provided, of course, that the investment solution or product in question makes sense for the client and helps them achieve their financial goals. Determining that means that I have to understand the client, their needs and their risk tolerance to the greatest degree possible.

«The question is, what is meant by «entrepreneurial»?»

Selling becomes problematic when a bank puts pressure on its relationship managers to «push» certain products and sets sales targets for them. For example, when «the flavor of the week» on Monday dictates what and how much thereof I have to sell to my clients that week.

Pernet: Providing wealth management advice comes down to trust. Trust is built over time and only exists when there is an alignment of interests. A purely sales-oriented approach, as my colleague described, might be positive for revenues in the short term, but in the long term, it’s certain to have a negative impact on the client relationship.

I believe that whether a bank takes a long or short-term approach makes a big difference and I think that a family-managed company like LGT has a real advantage in this area. In addition to its long-term approach, which also sets LGT apart is that our clients, the Princely Family and our employees can all invest in the same investment solutions. This also promotes the alignment of interests.

Today, relationship managers should ideally act in a way that is «entrepreneurial». But how is that possible as an employee of a bank?

The question is, what is meant by «entrepreneurial»? For me, it means that my boss sets goals – also ambitious ones – for me, but that I have a lot of scope in terms of how I want to achieve those goals. That’s what I do with my relationship managers: I set ambitious goals for them, but they decide how they want to implement those in concrete terms. If, in addition to that, the bank provides a suitable platform and the proper resources, then the ideal prerequisites are in place for people to act entrepreneurially.

«Being entrepreneurial also means that I can influence my compensation through my dedication and skills»

Brun: For me, being entrepreneurial also means that as a relationship manager, I can influence my compensation through my dedication and skills and that I have the opportunity to try out new things and make mistakes that I can learn from.

What kind of professional and personal skills are required to be an «entrepreneurial» relationship manager?

Pernet: It requires thinking beyond one's own area of expertise, the ability to recognize opportunities, a large dose of creativity paired with a high level of social competence, the ability to work under pressure, the courage to take calculated risks and healthy common sense.

Does a more entrepreneurial approach not entail considerably higher risks and dangers for a bank?

Brun: That depends in part on how effective the company’s compliance is, but ultimately, it’s a question of risk and corporate culture. An entrepreneurial approach encourages creative and new ideas. Clear communication creates the transparency needed to identify risks and dangers early on.

«Overly-ambitious relationship managers who take unrestrained risks are not team players»

Pernet: It’s also important to have the «right» people on board. It’s safe to say that LGT does not have a reputation in the industry for maximizing returns in the short term or taking unreasonable risks. Overly-ambitious relationship managers who take unrestrained risks are not team players, and simply want to maximize their career and bonus wouldn’t consider joining our bank.

How will relationship managers be working in five years' time, especially in view of the many technological advancements and developments?

Technology has significantly changed the way we communicate with clients in recent years and will continue to do so going forward. Technology will also increasingly make it possible to better evaluate data, for example, to analyze client portfolios intelligently, and therefore improve the quality of advisory services.

«Robo-advisors will never be able to replace us in our role as relationship managers»

What will not change is the fact that personal contact between the client and the relationship manager will remain central. Robo-advisors will never be able to replace us in our role as relationship managers – at least not in private banking.

Brun: Technology and the intelligent use of new communication channels will allow for more flexibility in terms of how we organize our everyday working life and perhaps also open up new opportunities to better reconcile work and family life.

Is LGT actively seeking additional relationship managers? If so, what kind of skill sets are you looking for?

Yes, we are actively looking for «entrepreneurial» relationship managers who match the definition I gave previously.

Olivier Pernet has a High school diploma (Matura) from HIF in Ftan. He then studied law at Basel University, did his post-graduate studies at IFZ in Zug and completed the Advanced Management Program at IMD in Lausanne. He worked and had managerial responsibilities at a major Swiss bank for numerous years, both in Switzerland and abroad. Since 2014 he is the regional head market Switzerland at LGT Vaduz.

Mike Brun has a Degree in Business Administration, ZHAW and as a Certified Wealth Management Advisor, CWMA. He has numerous years of experience at a major Swiss bank in corporate and private banking. Since the beginning of 2019 he is a senior relationship manager market Switzerland at LGT Vaduz.