Low interest rates, global uncertainty and Brexit concerns are leading wealthy clients to private banking – so says Andrew Wheeler, Head of Business Development at Kleinwort Hambros, which reports a rise in client demand.
After nearly a decade of ultra-low interest rates and an eight-year bull market, it is becoming increasingly difficult to find any assets capable of producing a decent income. When combined with uncertainty of Brexit and fears about the fate of equities after years of quantitative easing, affluent individuals are having to think seriously about the best way to manage their wealth.
The rise of passive portfolio management and the arrival of digital players also caused traditional private banking clients to question whether they could actually manage their own affairs. Yet, in two years, the assets under management of digital newcomers has hardly impacted the wealth management landscape*, certainly not on a global level. In addition, passive portfolio management appears to be losing its appeal due to the obvious difficulties of finding value in any assets, let alone generating income, for people who do not have the time or experience to navigate what has become a minefield.
For the reasons outlined above, Kleinwort Hambros, the private bank which was formed following the acquisition Kleinwort Benson by Societe Generale in 2016 and its subsequent merger with SGPB Hambros, is experiencing a rise in client numbers. Wealthy investors and private banking clients are cottoning on to the fact that private banking, far from being more costly, can provide value for money. Indeed, clients benefit from teams of experts handling their affairs. A private banker at Kleinwort Hambros, for example, brings with him a team of experienced wealth planners and investment experts who can anticipate early market trends and make a move accordingly, helping to boost income and profits in the long run.
The rise in client demand is seen not only in London and the Home Counties, where entrepreneurs, professionals, lawyers and accountants are reaching out for the services of private banking, but also in areas outside of the capital. Edinburgh, Leeds and Cambridge, where Kleinwort Hambros has offices, are also experiencing a rise in demand.
Whilst entrepreneurial wealth is boosting client numbers in the regions, professionals, landowners and even divorcees are signing up. In today’s uncertain world, the wealthy and newly-wealthy are seeking expert advice to help them to manage low interest rates and the consequences of tightening of monetary policy which is making it more difficult to generate profits, income and, ultimately, find security.
Such is demand that Kleinwort Hambros is seeking to recruit more private bankers to bolster its client-facing teams in the regions and is working towards setting up new offices in obvious pockets of wealth including Manchester, Birmingham and Bristol.
Two of the most recognised names in private banking
Against the backdrop of uncertainty and change on a global scale, another of the main reasons for clients coming to, and staying with, Kleinwort Hambros is the security provided by history and longevity of the brands the combine to form the bank it is today. Kleinwort, for example, can trace its roots right back to the eighteenth century. In 1786, Hinrich Kleinwort set up a partnership with Otto Mueller in Holstein to finance trade with England. Hambros, on the other hand, was founded by the Danish merchant and banker Carl Joachim Hambro in London in 1839.
The merger capitalises on their common heritage, shared values and respective strengths, while giving clients access to the wider infrastructure and security of parent Societe Generale.
The two historic brands have been legally merged this year to become part of the same group, bringing together two of the most recognised names in private banking in the UK and Channel Islands. The merger capitalises on their common heritage, shared values and respective strengths, while giving clients access to the wider infrastructure and security of parent Societe Generale.
With assets under management of £16bn, Kleinwort Hambros is a pre-eminent wealth manager and banking solutions provider for High Net Worth Individuals, families and charities. An ethos, established after giving advice for over 200 years, is present today through the intellect and abilities of a highly experienced team of private bankers and support teams.
The private banking teams differentiate themselves through an ability to advise on personal and corporate aspects of their clients’ wealth in a cohesive manner and provide access to a very wide range of services. The private bankers are specialists in financial problem solving using an internal range of services combined with external advice where appropriate. Their purpose is to help clients create, conserve and enhance their wealth.
Depth of service
Kleinwort Hambros focuses on its advice-driven relationships with wealthy clients. Its client base in this category includes established wealth, entrepreneurs, private individuals and families, professionals, complex structured wealth, charities – clients at every stage of the cycle of wealth creation, whether onshore, offshore or international.
Each client is provided with a dedicated client adviser and team, who oversees a client’s total position and involves internal and external specialists (where required) to shape the most appropriate solution. Private bankers have an in-depth understanding of a client’s personal circumstances including family, business interests and financial affairs, and will create a robust and comprehensive framework for managing client’s personal wealth alongside their corporate wealth.
Private bankers have an in-depth understanding of a client’s personal circumstances including family, business interests and financial affairs, and will create a robust and comprehensive framework for managing client’s personal wealth alongside their corporate wealth.
Our investment philosophy
Fundamentally, however, clients are attracted by the strength of investment performance. They want to know that they are dealing with a team which is able to navigate the vicissitudes of the global investment landscape.
Kleinwort Hambros’ private bankers work with the in-house investment management team which focuses on three guiding principles.
Firstly, that asset allocation is the most important decision they make, and that it should be actively managed. Essentially, the investment management team strives to get the big decisions right.
Secondly, they believe that when assets are expensive, risk is not well rewarded; when assets are cheap, it is. Indeed, valuation is a near obsessive focus for Kleinwort Hambros.
Finally, the team is nothing if not prudent, and believes the pain of losing money – the ultimate definition of risk – is much worse than the fleeting joy of spurious gains.
Simply put, Kleinwort Hambros aims to get the big decisions right and that asset allocation should be actively managed. It takes risk only when risk is well rewarded as valuation is the key driver of long-term returns. To mitigate against large losses, Kleinwort Hambros looks to construct portfolios to withstand market stress scenarios investing in a wide range of asset classes including cash, equities, bonds, commodities and hedge funds.
When wealthy people are seeking help to find value in assets, produce an income and protect what they have worked hard to build, a private bank with heritage and investment performance is far more appealing than going it alone.
In today’s uncertain environment, when wealthy people are seeking help to find value in assets, produce an income and protect what they have worked hard to build, a private bank with heritage and investment performance is far more appealing than going it alone.
If you would like to start a conversation with Kleinwort Hambros, please get in touch with the findaWEALTHMANAGER.com team HERE.
*Robo-advisers worldwide currently have less than $300bn in assets under management. The wealth management market as a whole is worth $145 trillion(PwC).