The human element remains at the heart of the business model, but it is time to make it evolve and to take a step back
Central banks have the mandate to protect our economies against the ravages of inflation in order to protect the purchasing power of economic agents and in particular savers. This is why it is interesting to note that they are no longer fulfilling their mission, without anyone really being offended by it.
A negative interest rate environment that lasts for years in a capitalist ecosystem is a sign of dysfunction, a sign of stress. The capitalism of the 20th century, the capitalism that triumphed over communism, that brought down the Berlin Wall, this capitalism is exhausted, worn out and now on life support. In fact, it has never recovered from the last financial crisis. It was necessary to avoid a brutal purge of the world economy in 2008. It was therefore decided to spread the fiasco over a number of years in the hope that everything would return to normal after a while. And it never did.
A negative interest rate environment is anxiety-provoking, it depresses the demand for credit, and banks are skittish because they cannot refinance with their central bank without losing money.
The current monetary policies are thus totally antagonistic to their objectives of stability and soundness of the economy and the banking system.
In this particular and long-lasting context, protecting clients' capital remains the main mission of wealth management. But meeting this challenge has become a challenge.
For private bankers it is time for a major reallocation of resources.
Digitalization, regulation and taxation have radically transformed the working environment. These changes represent a real opportunity to evolve the business. Service is now more important than financial products, and it is important to have a holistic and proactive view of all client needs, not just in the investment area.
Moreover, preserving the climate has become a major issue, and many asset managers have understood this. In order to save capitalism, it is now a question of reorienting it towards a form of "responsible" growth that favors the environment and, at the same time, makes it possible to pursue the objective of wealth creation, the very basis of the system.
Thus, ESG investment is becoming more widespread and financial intermediaries are vying with each other in their ingenuity to find the product or service that satisfies environmental, social and good governance criteria. But can we really say that the constant search for new products, no matter how sustainable, really contributes to climate protection? Not really.
Indeed, the result of such a policy is that financial institutions inundate their clients with more and more advice and transactions to implement, on a weekly or even daily basis. Clients are encouraged to look for short-term profits, which is totally contrary to an ESG philosophy. Because if you are concerned about reducing your carbon footprint, you need to reduce the number of transactions.
In the same way, good governance does not go hand in hand with the
Moreover, with the evolution of the regulatory framework, the activity of investment advice, i.e. when the client's agreement is required to proceed with an investment, becomes legally perilous. In addition, in most cases, the performance for clients is disappointing, and even more so when taxes are taken into account.
With a true vision of the future and sustainability, wealth management and asset management can become vectors of an environmentally friendly and long-term oriented capitalism, conscious of its responsibility. In this perspective, the investment advisory business has become obsolete. The future of private banking lies in a radical transformation. This means focusing exclusively on discretionary
on discretionary management mandates, with strong convictions resulting from the analysis and understanding of financial regimes, over cycles of several years. This evolution must also include the adoption of a modern and transparent communication platform, allowing this bank of the future to federate a network of internal and external competencies at the service of a community, that of its clients, within the framework of shared values.
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