Private bankers need an industry-wide ‘Hippocratic oath’ to ensure uniform standards of knowledge and behaviour, Robert Taylor, the CEO of Kleinwort Benson Private Bank, said today. ‘As long as there’s nothing that binds us as an industry, our clients are going to take a long time trust us again after 2008,’ he said.
by Josh Spero
Private bankers need an industry-wide ‘Hippocratic oath’ to ensure uniform standards of knowledge and behaviour, Robert Taylor, the CEO of Kleinwort Benson Private Bank, said today. ‘As long as there’s nothing that binds us as an industry, our clients are going to take a long time trust us again after 2008,’ he said.
On his attempt to buy Kleinwort Benson last year, he said it was the best thing his management team had ever done: ‘If you want to understand the health of your business, try and buy it.’
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Speaking at a private wealth management conference organised by the Chartered Institute for Securities & Investment (CISI), Taylor expanded on the idea that there was no qualification which made someone a private banker, an essentially unregulated term: ‘No-one who uses the term is actually a private banker – they have investment management qualifications, IMD certificates, financial planning certificates.
‘But we haven’t designed a standard set of qualifications for what a private banker is. We don’t use the same language to talk about things. We need to professionalise that.’ He called for an assocaited ‘code of conduct’.
He added that there were academic efforts being made – the Cass Business School were planning a private banking programme, and Kleinwort Benson had put a graduate trainee through the British Bankers’ Association’s curriculum – but because private banking ‘fits in the middle’ of banking and investment management, it was not an easy task.
An attendee at the conference, James Maunsell-Thomas of Standard and Poor’s, the financial research and analysis business, said that S&P would be supporting this curriculum-broadening effort by holding economics seminars for wealth managers as part of CISI’s professional development programme.
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Taylor described the situation this absence had led to as ‘a liability-avoiding process’: relationship managers who did not fully understand the risks of the products they had to push (but who were being remunerated for pushing them) were getting clients who did not understand the risks either to sign disclaimers for any future losses. Taylor emphasised that relationship managers especially needed a lot more knowledge than they currently had, across the industry.
But he also said that clients needed to manage their unreasonable expectations, and that a much more personalised service would require private banks to charge more.
One wealth manager from Lloyds TSB Wealth Management said the lack of qualification and hence standardisation was a problem: ‘People get to a point when they think they have good skills and decide they’ll be a private banker. There’s no direct route to this job – it’s just a career move.
‘At Bank of Scotland [now part of the Lloyds Banking Group] they just have private bankers, whereas at Lloyds they just have investment managers. It’s all skewed.’
Taylor, the chairman of the Whitechapel Gallery, also spoke about his efforts to buy Kleinwort Benson last year with a management team after new owners Commerzbank were told they had to dispose of it. He said you have to know the business inside-out: ‘You have to take a look and prove to a group of investors that you’re worthy of managing the business, but you also have to know what the business needs to grow.’ The business was eventually sold to RHJ International, a Belgian Bank.
He said that Kleinwort now had a Tier I capital ratio of 23 per cent, but the new higher capital requirements across the industry made him wonder how any bank could make money.
