Investment boutiques launched by experienced rainmakers became a common occurrence ten years ago. Now it seems that the trend may have reached private banking.
New laws, legal wrangles with no end and a massive pressure on margins: Swiss banking is in for stiffer winds, which may also make life a little more unpleasant at wealth management.
It is a move that would fit the picture well: Juerg Zeltner (pictured below), the former wealth management boss at UBS, is close to launching his own boutique firm, according to reports in the media.
Bergos Berenberg and Mbaer Merchant Bank
It may well be that Zeltner is about to jump on a bandwagon. In September 2018, Bergos Berenberg became the latest Zurich-based private bank after a management buyout.
In April, Mbaer Merchant Bank will launch – founded by Michael «Mike» Baer (pictured below), whose great grandfather Julius Baer 130 years ago had laid the foundations of what today is one of Switzerland’s biggest private banks. Michael Baer also wants to serve rich entrepreneurs.
Setting a Precedent: Investment Banking
The founding of new private-banking boutiques may be the beginning of a trend, according to «Euromoney» magazine. The same phenomenon became apparent first in investment banking some ten years ago, with the best of the rainmakers starting their own businesses. The same reasons behind the trend applied as the do today, namely a tighter regulatory framework and pressure on margins at major investment banks.
Two such examples are firms founded by former employees of the big Swiss banks. Moelis & Co, based in New York, was launched by Kenneth Moelis, the former co-head of investment banking at UBS. Weinberg Perella, also U.S.-based, became the new home for several ex-bankers of Credit Suisse.
Fewer Clients, Closer Contact
Michael Baer told «Euromoney» that rich entrepreneurs increasingly preferred a so-called boutique over the traditional big bank. At the big banks, clients are faced with dealing with a number of contacts at different divisions, which affects the quality of service, he said. He by contrast aims to serve fewer clients but to build closer bonds and to provide a service to match.
The quality of advise will become even more important in future, said a banker, who is still at a large bank in the same report. «The next decade is going to be more complex and clients will require more advice,» said Tom Naratil, the co-head of global wealth management at UBS. He emphasized the importance of being onshore to provide that service to the rich clientele coveted by Switzerland’s No.1.
The Fight for Talents
The proximity to clients is what makes a boutique unique. With a tailor-made offering, the boutiques typically can charge higher fees.
The boutiques also have an advantage in as much as that talented bankers can count on more liberty to develop their skills. This advantage turned them into important rivals for major banks in the fight for the best talents in the industry. The difficulties faced by the major banks today may yet provide emerging private-banking boutiques with a vital resource for their success.
