This article in two parts is available under “public access”.

First part.

Any investor reaching a certain level of assets on his account moves from being in the shade to being overexposed to light.

Indeed, a small saver is almost invisible in his bank. He is processed industrially in call centers, and if he has a particular question he has to go through a series of voice messages to, in the best case, get in touch with a bank officer. On the contrary, at the other extreme, above a certain level of wealth, the client becomes a target and will be overly solicited to become more active on his portfolio, and thereby contribute more to the profitability of his custodian bank. As a rule, a tailor-made approach is only available to HNWI (High Net-Worth Individuals) with portfolio values in excess of CHF 30 million.

Times have changed a lot, especially the legal environment, leading to deep restructuring in banks, forced to strengthen control and compliance. These cost centers strongly impact profitability. To offset this erosion, banks have been forced to increase their revenues by boosting the sale of funds and structured products of all kinds. For the client, avalanches of commercial solicitations, often incomprehensible without a PhD in mathematics and, in most cases without guarantee of performance, since indeed in the long term only 1 fund out of 10 beats its benchmark. Of course, for the banks, the transactions (purchase / sale) and fund management fees are guaranteed and paid regardless of the performance of the investment.

To extricate yourself in this ruthless world, it is essential to start by looking for an expert, a trusted person who speaks your language. A pedagogue who does not drown you in technical gibberish, especially when it comes to treating such an important and intimate parameter: your savings.

But how to find this rare pearl, the trusted advisor on whom to rely, and what selection criteria to use? Employed in a bank or independent, what difference does that make?

Let’s first look at how a bank advisor operates. The bank advisor generates income from two sources, which allows to measure his performance and possibly an attribution of a bonus:

1. Revenue from New Net Assets (NNA): The advisor needs to increase the total assets under management, either by developing existing clients or by bringing in new clients.
2. Revenues from increased profitability: transforming cash into investments which generates transactions (buy / sell) and therefore commissions.
   
   

This double pressure is permanent since in a bank, the counters are reset every year. The client manager must continuously generate new contributions and commissions related to investments. This pressure is felt by the customer.

The external manager, once he has reached a sufficient volume of business, is not subject to this pressure of continuous expansion of its mass under management and its profitability. Being paid exclusively by his clients, he is free in his choices, not conditioned by the generation of commissions but by the pursuit of pure excellence and the objectives of his customers whatever they are. For exemple he can opt for a strategy that is very unprofitable for a bank: “buy / hold bond”, that is to say the constitution of a bond portfolio by keeping the securities until maturity. The bank will do this too, but a client of this type, who is not very profitable, will be somewhat neglected by his account manager, who will have to solicit others to compensate for this shortfall in his profitability objectives.

For the client, independent wealth management is the only option that ensures that his interests will always be respected, free from all conflicts of interest and in full transparency.