International news from Australian private banking has been scant in recent years – and the headlines that did make it across the ocean largely negative. Mario Bassi examines why in an essay for finews.first.
finews.first is a forum for renowned authors specialized on economic and financial topics. The texts are published in both German and English. The publishers of finews.com are responsible for the selection.
«Bad for shareholders, bad for customers – banks should exit wealth management», «Private banking lets down both sides», «Nobody has got private banking right in Australia» are recent headlines in the local finance press, summarizing the overall sentiment related to banks.
It seems that there is a big divide between retail banking services, with their mortgages and deposits, and a private wealth offering. Regulations and the skills-sets of the advisers are some of the reasons. High-net worth individuals (HNWI) do not believe that any one organisation could be a one-stop shop for all financial needs, a study conducted by a major Australian bank concluded.
Are only the local banks struggling with private banking? No – foreign ones are too. Market leader UBS parachuted out of the Australian wealth management business through a management buy-out which created Crestone Wealth Management. Deutsche Bank also shut down its private banking offices for good.
«More than 1,700 visas were granted, 90 percent from China»
The number of UHNWI clients – those with $30 million or more – in Australasia total 4,220, an increase of 85 percent since 2006. This number is expected to grow by another 70 percent by 2026, according to the latest Knight Frank Wealth Report.
This growth is mainly driven by Australia and New Zealand, with visa schemes designed to attract wealthy overseas families. Ninety percent of the more than 1,700 visas granted since Australia launched its Significant Investor Visa (SIV) program in 2012, where individuals and their families get permanent residence once they invest A$5 million in the country for a certain period, were from China.
«More than half said that there are looking into more governance via a Family Office vehicle»
The concept of a Family Office is still not as developed as in the U.S. or Europe, but there are an estimated several hundred single-family offices (SFO) across Australia, and an increasing number of multi-family offices (MFO). In a recent survey among Australian UHNWI clients, only a small percentage mentioned that their family wealth is looked after through a SFO or MFO set-up. However, more than half said that there are looking into more governance via SFO/MFO vehicle.
The Myer family, of the retailing dynasty, runs the most internationally well-known multi-family office in Australia. Myer Family Company is currently in merger talks with Mutual Trust – the MFO of another Melbourne dynasty – to become a powerhouse of $3 billion in assets. Other family offices were created or expanded into other capitals of the country.
Koda Capital became operatively led by the former head of JBWere, Melbourne-based Escada Partners expanded into Sydney by hiring senior bankers from the now-defunct Deutsche Bank office, and Hume Partners morphed from devoting its resources to just one family into a multi-family office.
«Silver lining for the industry in Australia»
Much like the U.S., Australia has a strong home bias when it comes to investments. But Australia is not only attracting overseas wealth, according to ANZ Opportunity Asia Report 2016 – there is also estimated revenue pool for Australian businesses in Asia of $138 billion.
Therefore UHNWI are often on the lookout for new opportunities for their direct and portfolio investments. It will be key for Australian players to offer a network beyond the country to attract and retain this client base. A good example is Myer's Wigmore Association, where CEOs and investment chiefs from eight leading family offices across seven countries and four continents have collaborated since 2011.
Family Offices have a great opportunity to close the gap in servicing the segment of wealthy families and individuals. Connecting them with their peers and opportunities across borders – one of the strength of the traditional private wealth service offering – is a clear silver lining for the industry in Australia.
Swiss-born Mario Bassi has held roles as a senior advisor for sales and business initiatives in Asia Pacific for UHNWI/FO service providers including global head of business management for ANZ Private Bank in Australasia.
Previously he worked for Zurich-based Vontobel, Credit Suisse and Deutsche Bank in relationship management, business and financial planning, training and development, strategy, business development and marketing communications in both Europe and Asia. He was also managing director for Synpulse Management Consulting, leading its growth in Singapore.
Previous contributions: Rudi Bogni, Peter Kurer, Oliver Berger, Rolf Banz, Dieter Ruloff, Samuel Gerber, Werner Vogt, Walter Wittmann, Alfred Mettler, Peter Hody, Robert Holzach, Craig Murray, David Zollinger, Arthur Bolliger, Beat Kappeler, Chris Rowe, Stefan Gerlach, Marc Lussy, Nuno Fernandes, Beat Wittmann, Richard Egger, Maurice Pedergnana, Marco Bargel, Steve Hanke, Andreas Britt, Urs Schoettli, Ursula Finsterwald, Stefan Kreuzkamp, Katharina Bart, Oliver Bussmann, Michael Benz, Peter Hody, Albert Steck, Andreas Britt, Martin Dahinden, Thomas Fedier, Alfred Mettler, Brigitte Strebel, Peter Hody, Mirjam Staub-Bisang, Guido Schilling, Adriano B. Lucatelli, Nicolas Roth, Thorsten Polleit, Kim Iskyan, Dan Steinbock, Stephen Dover, Denise Kenyon-Rouvinez, Christian Dreyer, Peter Kurer, Kinan Khadam-Al-Jame, Werner E. Rutsch, Robert Hemmi, Claude Baumann, Anton Affentranger, Yves Mirabaud, Katharina Bart, Frédéric Papp, Hans-Martin Kraus, Gerard Guerdat and Didier Saint-Georges.
