The independent asset manager model can help wealth managers find the best deals.
Gilles Rollet, CEO, Mirabaud (Middle East), explains why the independent asset manager (IAM) model can help the region's wealth managers and their clients find the best deals from a range of product providers.
How can the IAM model benefit the Middle East?
We’re a plug and play kind of outfit.
What we're hoping is that seasoned private bankers will see the advantage of it once they become more familiar with it and these people will evolve into either setting up their own or joining us because we offer the platform. We're a plug and play kind of outfit.
If someone wants to come in and say, ‘Listen, I have $500m-worth of clients, I'm fed up because I cannot have access to these products, my bank prevents me from doing that,' or ‘I'm tired because I'm spending half of my time going to internal meetings, I actually want to work with my clients,' then we have the platform for them.
We've already got networks organised with various banks, agreements set up already, and the IT platform. Basically, they can be an entrepreneur within their own business.
The model ensures that people who come to us get a big chunk of their business; they make a substantial part of the revenues that they generate.
Mirabaud (Middle East) has relationships with Credit Suisse and Société Générale. How many partner banks will you use?
It becomes messy if it's too many. It's also complicated because each bank has financial statements in a different form, each bank has Know Your Customer procedures to do in a certain way, and some banks we manage to negotiate better with than others.
That being said, to justify opening a new relationship you need at least $100m to go to that particular bank. For us, right now we're in the set-up phase so we want to be able to go to our clients with another big Swiss bank, with an Asian bank or a bank that has operations in Asia [SocGen], a bank in Dubai, and with another alternative to Credit Suisse.
At that point we'll probably stop and grow, and then we'll see if business justifies setting up a new relationship. Already with five you can really arbitrage between them.
Does independent asset management improve client loyalty?
The whole focus in the firm is purely on clients and purely on delivering superior performance, so as a result of that the clients feel much closer to their bank, much closer to their asset manager.
We talk to them more often, we see them more often, we spend more time with them searching the very high quality products. In a large bank, of course you're always concerned about losing clients, but if you lose a client it's not that much of a big deal.
In our set-up, it's crucial to keep the clients, to make them happy, to service them - it's our lifeblood.
Does the model help with spreading risk more effectively?
Most IAMs come from big organisations so they know where their quirks are, they know where the risks are, they know where the problems can be, they know how to analyse the pricing.
They know how to spot difficulties at certain firms, and so on, so the fact that we're on the side of the clients helping them with that does spread the risk. And the fact that they can use multi-custodians also spreads the risk.
What size of client is the IAM model best suited to?
It depends. Some IAMs say nothing below $10m, and just focus on that segment. We're not like that, we're not exclusive. As long as it makes sense for our business, as long as it makes sense for the person handling the relationship.
Because our relationship managers get directly compensated on the revenues they generate, they know whether it's worth it to spend their time with a $500,000 client or not, and if for them it's essential they do it, then they will do it.
But I would say ideally it's a better suited system for people who have $3-5m.
What has the reaction been to independent asset management in this region so far?
Clients have been very positive. We've had very good success ratios in terms of getting clients to give us mandates or to ask us to assist them with their investments and to sign up with us, to the point that we even have one client that has funds in another bank, but he's just come to us purely for our financial advice.
So we don't even have that relationship with his bank, but he just comes to us because he feels, ‘These guys are so focused on performance, I'm bound to get a better service than I will get at my bank'.