Page 1 of 3

Falko Paetzold fled Communist East Germany in the trunk of a Mercedes – today he teaches the super-rich how to invest sustainably. finews.com met the University of Zurich expert.

Falko Paetzold, you teach wealthy private investors how to invest sustainably. How did you get here?

The roots are in Berlin: I was born in Communist East Germany. As a child, I fled to West Berlin in the trunk of a car via Hungary and Austria. Because of the stark differences between east and west, it was often difficult at school for me, and I suspect that's what aroused my interest in social justice – and the determination for issues I believe in. That's often helpful in the area of sustainability, even more so earlier than it is today.

Then you realized while studying business that sustainable finance is the right thing for you?

I finished my Ph.D. while I was still working at a Swiss bank, Vontobel, because I wanted to collect data that until then, we hadn't even been able to collect: interviews with high net worth individuals and also with private bankers.

«Private bankers would simply say the bank didn't have any sustainable products»

No academic had that kind of information yet: the topic is normally a very private one, and no one had access to these extremely private wealth holders. I found out through the interviews and surveys that usually it's actually the private bankers at many firms which are in clients' way when it comes to sustainability. 

Could you elaborate on that?

Usually, banks have experts who educate private bankers on sustainable products. Then a CEO, who wants his or her private bankers to talk to clients about these products, and clients who ask about sustainable investing. Even so, we found that private bankers frequently didn't pass on the information about sustainable investment products. They would simply say that the bank didn't provide that type of thing at all.

Why would they keep quiet about this?

We interviewed many private bankers at big, so-called mainstream banks, as well as specialized banks focused on sustainability. We found out that sustainable finance is actually too complicated for private bankers.

«Private bankers aren't given enough information about the topic»

We heard things like «It's a Pandora's box. If I bring it up, it's inevitably a two-hour discussion with clients – and I still don't really know what they want» or «I know the issue would be good to reinforce my relationship to the client, and that it doesn't negatively affect performance, but it's just too complicated for me.»

Is it genuinely too complicated for private bankers?

Private bankers frequently have many clients: in high net worth, it can run more than 100 clients per adviser, not to mention an enormous amount of time devoted to reporting, legal, and so on. They have to write down everything they discuss with their clients.