A survey of 14 Swiss private banks revealed the calibre of investment advice and consultation varied widely, with outstanding performance and some poor results, this publication can exclusively reveal.

High net worth individuals often receive poor or inadequate
investment advice although some firms give outstanding guidance, such as Schroders, according to a
survey exclusively reported by WealthBriefing today.

The results of the market test are presented in detail in
the Fuchs Report `TOPs International: Best Banks for International Wealth
Management’. It is produced by The Private Banking Prüfinstanz, a Swiss
partnership, and in association with Wealthmonitor, an online proprietary intelligence service that identifies new
wealth creation resulting from potential and announced liquidity
events. (WealthBriefing has published a number of insights from Wealthmonitor and continues to do so.)

The on-site visits came from a couple of central Asia origin, who
were seeking advice on behalf of their family on investing $14 million. The
money was to be used for the benefit of the investor’s three children during
their studies in London and New York, as well as for buying a property
and with a portion of the sum to serve as a hidden asset. At the same time, a
number of different services were requested, including help in looking for a
property in London.

WealthBriefing asked the authors of the report as to how representative is this family in judging the banks' performance, and how the family were chosen as subjects in the first place. In response, they said it was important for this report to be based on an actual real set of events (ie, an actual client or potential client). "The actual region
was not that significant.
We made sure though, that the banks which were tested, look after the
chosen region regularly and that they are well experienced with
international situations.
Due to the high
individuality of this business
we keep statistical questions
of this nature easy to understand, but
not target-oriented. To our knowledge, even big banks do not have many cases on such a large scale and constellation."

The significance of the findings may relate to the fact that Swiss
firms are tapping into the expanding wealth from regions such as Asia as sources of client, sometimes to compensate for
outflows or other pressures. 

“The road to new clients is rocky, however. Not only is it
characterised by stiff international competition, increasingly with Asian
banks, too, but it is also leading internationally focused Anglo-Saxon and
Swiss asset managers into new territory with regard to consultancy. The
industry in Europe does not appear to be
adequately prepared to deal with wealthy people from other parts of the world,”
the report said.

As the old Swiss bank secrecy model comes under attack, and
firms have to add value to retain clients, the quality of investment advice,
among other services, becomes increasingly important for a banking industry
that is home to around SFr5.56 trillion (around $6.14 trillion) of money, of which about half is
managed for overseas clients.

The Private Banking Prüfinstanz, a partnership between
Verlag FUCHSBRIEFE and Dr Richter IQF, a senior academic in Hanover, Germany, contacted 18 Swiss-based
banks and carried out on-site meetings with 14 of them.

The numbers

Three banks were already eliminated at the point when
meetings were being arranged over the telephone. These were Credit Suisse
Private Banking, Citibank Switzerland
and BNP Paribas (Suisse) – Wealth Management. They were not prepared to conduct
a meeting with the investor’s representatives. However, this was a prerequisite
for the test. Another bank – Berenberg Bank (Schweiz) – was eliminated after
the consultation because, by its own admission, this bank lacked experience
with clients from the investor’s home region, the survey authors said.

The 14 banks that received on-site meetings were Schroder
& Co Bank AG; Pictet & Cie (Suisse); Barclays Bank, Zurich Branch
(Suisse); Liechtensteinische Landesbank (Suisse); Morgan Stanley; Bank
Vontobel; Union Bancaire Privée; Rothschild Bank; Deutsche Bank Private Wealth
Management (Suisse); Coutts & Co; Bank Julius Baer; Mirabaud & Cie,
Banquiers Prives; UBS, and LGT Bank (Suisse).  

Schroders achieved an overall score of top out of the 14, as
ranked according to its consultation and investment proposal services. (The
highest possible score was 100, with Schroders at just over 95). This was followed
by Pictet & Cie (Suisse) in second; Barclays Bank, Zurich Branch (Suisse)
in third; Liechtensteinische Landesbank (Suisse) in fourth; Morgan Stanley in fifth;
Bank Vontobel in sixth; Union Bancaire Privée as seventh; Rothschild Bank as eighth;
Deutsche Bank Private Wealth Management (Suisse) in ninth; Coutts & Co in tenth;
Bank Julius Baer in eleventh; Mirabaud & Cie, Banquiers Prives, in twelfth;
UBS in thirteenth, and LGT Bank (Suisse) in fourteenth place.  

The survey found that only five banks received unlimited
recommendations. Among the highlights, the survey found, was that the consultation
services provided by Schroder & Co Bank AG were rated as “excellent”, with
those offered by Pictet & Cie, Barclays Bank, Liechtensteinische Landesbank
and Morgan Stanley being “very good”.

Schroders stood out both in terms of its expertise and
through the personalities of the consultants, who were excellently attuned to
the client’s Asian way of thinking, the report said.

The on-site visits came from a couple of Asian origin, who
were seeking advice on behalf of their family on investing $14 million. The
money was to be used for the benefit of the investor’s three children during
their studies in London and New York, as well as for buying a property
and with a portion of the sum to serve as a hidden asset. At the same time, a
number of different services were requested, including help in looking for a
property in London.

Explaining its approach, the report said that "every bank [in the survey] needs to be aware that a client will only approach it once and that the client’s experience will form their opinion of the bank as a whole. Therefore, it all depends on whether the banks set quality standards in their consultation and whether every consultant meets them. We believe that there can be no exceptions when it comes to this type of quality service. The banks themselves are the yardstick used to reach a verdict: the top performance for each criterion in the assessment becomes the benchmark".

The maximum possible number of points in the test for each bank was 100: 70 points for the consultation
and 30 points for the written investment proposal. Six criteria were used for the meeting: the consultants’ expertise, knowledge of the region (in terms of the people), empathy for the client and his objectives, local assistance (range of services in London) and ‘soft’ factors such as the ambience of the
bank and the discretion and friendliness of employees, the report said.

The Private Banking Prüfinstanz has spent more than 10 years
conducting annual assessments of over 100 institutions in the German-speaking
world. In 2011, it also launched what is called the Performance Project. Over a
period of five years, 102 asset managers administer a private banking client’s
account and securities account endowed with €1.5 million ($2.02 million) liquidity.