Tuesday 19, June 2018 by Jessica Combes

A universal proposition

 

Naushid Mithani, Market Head, Global South Asian Community, EMEA and Head, Private Banking, UAE, Standard Chartered, speaks to WEALTH Arabia about covering the totality of what elite customers need

What are your HNWI/ UHNWI clients most looking for from a private bank, and how is Standard Chartered uniquely positioned to offer products and services to address those needs?
Our clients have a range of needs, which span wealth management and growth to succession planning and philanthropy. Many of our clients are also entrepreneurs whose personal and business banking needs are closely linked.

From a personal wealth management perspective, we help them meet their investment goals through a team of senior relationship managers who have experience across multiple market cycles, and they are supported by investment strategists and product specialists in each market. Our 'open architecture' wealth management model means we can access multiple third-party sources of market insights and our products are sourced externally, with no bias towards our own proprietary products. This allows us to put our clients’ needs at the forefront of our business and source solutions best suited to their needs.

One of our most compelling advantages is our ability to offer more objective investment advice based inhouse Global Investment Committee, a diverse group of market experts. The success of our process is based on the diversity of the sources of market information we curate from, the diversity of perspectives within our investment committee and our decision-making process behind our investment themes for the weeks and months ahead.

Our ability to offer a universal banking proposition also means that clients can leverage our global Commercial Banking and Corporate & Institutional Banking capabilities for their business needs across Asia, Africa and the Middle East, with solutions tailored to where they are in their growth journey. With our presence in 70 per cent of the countries along the Belt and Road corridors—including parts of the Middle East—we expect strong growth opportunities for businesses and exciting new avenues for personal investments and have teams on the ground to help our clients capture these opportunities.

Could you tell us about ADVICE, and how has implementation gone since its introduction?
Our clients look to their relationship managers and investment advisors to help them navigate market complexity and reach their investment goals. For us, digitisation is a complementary force. We are investing to give our relationship managers more innovative tools and enhancing our infrastructure to continuously enhance client experience.

The introduction of our award-winning ADVICE platform last year is an example of how we are using technology to enable our frontline colleagues to deliver timely, actionable investment advice to clients faster and more effectively. The one-stop digital advisory tool integrates our house views and investment recommendations with the Thomson Reuters’ platform, allowing our relationship managers to give clients investment proposals much faster, enabling a visibly superior client experience.

What have been the other key initiatives that Standard Chartered has recently implemented?
We aim to provide differentiated value to our clients across relationship management, digital channels and the quality of investment advice and global insights we offer. Digitisation is a crucial agenda for us to meet the expectations of our increasingly tech-savvy clients. To further enhance the capabilities of ADVICE, we have initiated a proof-of-concept with a robo-advisory fintech to build a digital advisory tool integrated within ADVICE to allow our investment advisors to respond faster and more credibly to clients’ queries on equities ideas. We are also continuously looking to improve ADVICE’s user interface and allow our frontline colleagues to customise the platform based on both their preference and clients’ needs. Complementing our digital advances is our ability to provide our clients with insights into major global trends before they become mainstream. We have partnered with the Economist Intelligence Unit to produce a series of reports to provide our private banking clients with the latest trends in investment, the changing nature of work, personal health and leisure, allowing them to take advantage of innovative developments as they unfold.

How do you see private banking evolving in the future, and how are you planning to stay ahead of those changes?
We are going beyond clientfacing solutions and capabilities to empowering our relationship managers to continuously enhance our client experience. As clients become more digitally savvy, they also expect their banks to similarly deliver digital innovation to make their user experience more convenient, accessible and personalised. However, we believe that the human advisor model is still central to our client relationships, as investors still prefer the 'human' touch especially when making complex investment decisions. That is why we are investing to give our relationship managers more innovative digital tools and enhancing our infrastructure to continuously raise the bar on our client experience.

In addition to ADVICE, we are also investing in enhancing our trading platforms across fixed income and equities with industryleading capabilities such as the ability to price in real-time to further reduce our turnaround times to execute on client requests. Across our key markets, a lot of wealth is set to change hands to the next generation. Our clients can tap our strong legacy planning and trust solutions. Additionally, we offer a unique next generation programme which is focused on helping the sons and daughters of our high net-worth clients to hone their talents across leadership and entrepreneurship, philanthropy, sustainability and communication.

How do the needs of clients in the region differ from those in other markets? Are they more hands-on or hands-off with their portfolios? Do they accept more risk?
In the Middle East and Africa, we find that clients across our footprint are often have multiple private banking relationships. These clients also tend to be time-starved and look to their private banks to provide them with investment ideas suited to their needs and objectives. While they have a good grasp of market trends, many are interested in thematic ideas.

Most of our high net-worth (HNW) and ultra-high net-worth clients are also entrepreneurs and are looking for a wealth partner that can help them with both their personal and business needs. With most of their wealth tied up in their businesses, the ability of an investment advisor who can help them to monetise their businesses is important to them. As a universal bank, we are able to provide them access to corporate and investment banking capabilities which can help them with the banking needs of their businesses. Given that most of them are still the first or second-generation business owners, they are concerned about the transfer of wealth and their businesses to the next generation, so succession planning is a major need.

 

How do you select your relationship managers, and how do you ensure that they are to the quality that Standard Chartered demands?
Our clients need fast, relevant investment advice to meet the challenges of fast-moving markets. It’s critical that private banking professionals are well experienced and equipped to adapt to the change in the industry and to be able to support their clients through the market cycles. In addition to our talent acquisition strategy (in 2017, we hired 60 senior relationship managers globally), we are committed to developing our talent to stay relevant to the fast-evolving needs of our clients.

Last year, we launched our Private Banking Academy, and have partnered with Fitch Learning, a pre-eminent training and professional development firm, and INSEAD, a leading business school, to create a bespoke training programme for our global front-line colleagues. The Academy seeks to equip them with the skills they need to deliver an exceptional level of service and advice to our private banking clients.

What are your thoughts on the investment landscape in 2018? Global equity valuations have come off from multi-year highs and earnings expectations remain strong but worries about global trade tensions, rising oil prices and a renewed rise in bond yields continue to impact the markets. We maintain our preference for global equities, given that global growth remains robust, despite softening of some economic activity indicators from multi-year highs. While the current economic recovery cycle is mature, history suggests some of the strongest equity market returns tend to occur late in the cycle. Our preference for Asia ex-Japan equities, and our preference for China within the region, remains in place, with the attractive valuations relative to developed markets (DMs) still offering room for further outperformance.

We have also raised our preference for US equities, given the more attractive valuations following the equity pullback earlier this year and strong earnings growth expectations. Rising inflation expectations have been a major driver of the rise in US bond yields, but we believe further yields gains are likely to be limited short of an inflation overshoot. Corporate and EM bond valuations (as measured by credit spreads) have also eased year-to-date alongside moderating equity valuations. A further easing of valuations (credit spread widening) is unlikely as usually valuations tend to hold around elevated levels late in the business cycle.

We still believe corporate bonds form a solid core holding, particularly in Asia ex-Japan, where they remain less volatile than in other regions. However, we still see more attractive relative value in EM USD government bonds than in corporate bonds. EM local currency bonds also offer the advantage of diversification into bond markets that are less correlated with rising US Treasury yields. Overall, we continue to prefer an aggregated exposure via multi-asset income strategies.