Swiss private banks are snapping up executives from the luxury goods industry. What does the world of high-fashion, luxury race cars, and fine jewelry and watches know that wealth management doesn’t? finews.com takes a look behind the scenes with two luxury executives.
A high-ranking Tiffany’s executive for Julius Baer, a former Chanel fashion executive for Lombard Odier, and a branding specialist to Edmond de Rotschild – the list of executives to exit the glamorous world of high fashion, fine jewelry and luxury watches recently for jobs in the staid world of high finance is growing.
What does the nearly $1 trillion luxury goods industry know that Switzerland’s priciest and choicest private banks don’t?
Flawless Luxury Service
«Experienced luxury goods executives have honed a set of skills that are highly relevant for other industries, including private banking,» Pamela Thomas-Graham told finews.com. She should know: a former president of upscale clothing brand Liz Claiborne, Thomas-Graham (pictured below) spent six years at Swiss bank Credit Suisse and now authors luxury blog «Dandelion Chandelier».
Luxury industry executives know «how to curate what wealthy people would like to see and hear about, and with what frequency; how to deliver a flawless luxury service experience, every time; how to work across brick-and-mortar and online so that every channel of distribution complements and reinforces what is happening in all the other ones,» according to Thomas-Graham.
Wealthy people? Check. Swiss banks have been dealing with the world’s wealthy – and in some cases hiding their money – for centuries. Switzerland is home to several wealthy families such as the Heinekens, Inbev billionaire Jorge Lemann and his family, and the Brenninkmeijer clan of clothing chain C&A, and the country’s low-key style appeals to many of them.
Service? Here, the banks get a passing grade only. While their reputation is one of impeccable white-glove coddling, many Swiss banks have resorted to treating clients rudely in a rush to clean up with dirty assets, disappointing many clients.
Discerning Luxury Client
Those clients to survive the cull are still being wooed: despite slumping revenue and rising spending, private banks spend lavishly on client events like a winter polo tournament in St. Moritz or Formula 1’s Grand Prix circuit.
What about consistent delivery? Hardly. Battered from a years-long tax crusade, Swiss banks are struggling to find their identity without banking secrecy. This has led to countless new strategies and markets, then strategy reversals, and so on. Clients can hardly be blamed for wondering what a particular bank’s strength and identity is.
This is where the brand-conscious luxury industry comes in. Baume & Mercier Chief Executive Alain Zimmermann (pictured below), a veteran of Swiss watchmaking who ran Julius Baer’s marketing from 2006 to 2009, says the luxury industry has understood how to reach and speak to its target client in various settings – something banks have woefully little experience with.
«The luxury client is always the same one at a spa, hotel, boutique or a bank, so he isn’t comparing service at one bank to that of another one, but to another exclusive provider like a luxury hotel, private jet service, and so on.»
Relationship as Luxury Product
Zimmermann, who sells watches in the range of $4,000 to $5,000, a price point which represents the gateway to the luxury industry, says the luxury product in banking is actually the relationship a client maintains with his or her private banker and the bank’s top management.
Performance – the holy grail of many private banks – is also important, but most clients won’t defect to another bank over a difference of 1 percent in performance, he argues, provided they feel they are getting good service.
«The key thing is whether you feel listened to, are in good hands, that you are exceptional and unique, or at least the bank gives you that feeling, and it doesn't push products that you are not looking for,» says Zimmermann, who has run Baume & Mercier, a Geneva-based luxury watchmaker, since 2009.
Nightmare vs Fantastic Experience
That includes what the luxury industry refers to as «making impossible things possible,» often cementing an emotional tie. He cites two examples: a person inherits a decades-old luxury watch from a beloved, recently departed relative, but the watchmaker doesn't have spare parts. Instead, the watchmaker can broker contact with a professional restorer to mend and service the watch.
Another example: you are woken in the dead of night in a luxury hotel, shivering because the air-conditioning in your room is malfunctioning into overdrive. While a heating and cooling technician might not be available until morning, the hotel staff can make a world of difference to whether you perceive the situation as a nightmare or ultimately a fantastic experience, by helping to alleviate the cold by offering to bring a hot drink, space heater, or even helping to change rooms.
«How many solutions are you capable of bringing to a one-to-one problem? That is how to make someone feel unique and that applies everywhere, even in finance, where you have a highly structured process,» says Zimmermann.
For Swiss banks, which have learned to live and die by thick compliance handbooks following years of tax and other scandals, such out-of-the-box thinking is an anathema.
«Wow» Factor
The world of luxury watches, high fashion and sports cars have the «wow» factor going for them – luxury goods are meant to be shown, creating an instant brand ambassadorship among peers. By contrast, personal finance is an intensely personal and intimate affair – in Switzerland even more than in most places.
Performance aside, the intangible brand merits that Swiss banks typically sell their clients on – stability, robustness, history, exclusivity, impeccable service – are much the same as many luxury houses, says Jon Cox (pictured below), Kepler Chevreux’s head of European consumer equities.
Just as a wealthy client is concerned that his bank has been stable enough to weather any financial storm, the purchaser of a luxury watch is concerned that the watchmaker – or Maison, in industry parlance – will be there several generations down the road for repairs, maintenance and spare parts, Baume et Mercier's Zimmermann says.
Ambiance, Smell, Flowers
If private banks have until now focused strongly on beating each other’s performance, they are becoming increasingly aware that the soft factors count, he says.
«I believe private banks have understood that it’s not just about performance, it is a 360-degree relationship and part of the quality and relevance of events is how you treat clients in all touch-points: the ambiance and atmosphere, architecture, the smell in room, choosing the right flowers, everything that makes you feel welcome and well.»
The luxury boutique setting is part of a carefully-crafted plan which begins long before the client sets foot on the doorstep.
Until now, private banks have focused largely on the relationship manager, but the luxury approach goes far beyond this, according to Zimmermann. «It's the reception, the person bringing you additional documents, and so on. It's a total attitude change and I think some institutions which are still relying on their legacy have to rethink.»
While private banks can undoubtedly learn from this approach, it isn't enough to hire luxury executives, he emphasizes: backing from top management is essential to reinforce the organization's rethink of how it deals with wealthy clients.
