Wealth manager Julius Baer is targeting the disaffected bankers and high net worth clients of the industry leaders, whose brands have been damaged recently by poor performance and questions over their financial strength. This strategy is a wise one, particularly in Switzerland, where wealthy clients are very brand/image conscious.
Julius Baer, Switzerland’s third largest private bank, is keen to snap up disaffected HNWs and bankers from some of the largest private bankers, capitalizing on the recent damage to their competitors’ reputations.
Unlike many of its competitors, Julius Baer has an exclusive focus on wealth management, and has produced enviable earnings growth over the past few years, despite the challenging market environment. This week, the group announced a net profit of CHF510 million for the six months of 2008, just 2% below the CHF518 million of the first half of 2007.
In recent years, Julius Baer has not been shy of recruiting talent from other banks to fuel its growth. In 2007, it strengthened its European private client sector expertise by recruiting Josef Vogt (as market head), Peter Mueller (sector head), Matthias Erny (department head) and Roland Vogt (department head), all of whom were from Credit Suisse Private Banking. In addition, UBS has also proved to be fruitful recruiting ground for the company.
The strategy of targeting unhappy HNWs and bankers from the hard-hit industry leaders makes a lot of commercial sense, particularly in Switzerland. Datamonitor research shows that Swiss HNWs have a higher than average loyalty towards their wealth manager, meaning that there is a real risk of wealth managers taking their clients with them should they move from one company to another. Additionally, brand, image and reputation are much more important to Swiss HNWs in choosing their wealth management service than HNWs in any other Western European country.
“Now is the time for private bankers who have emerged unscathed from the toxic debt problems to capitalize on their competitors’ misfortune, and for the larger banks to hang onto their clients and staff for dear life,” says Rutherford. Retaining good staff may be costly, but probably not as costly as losing all of their clients. For those banks wanting to further minimize risk, it may be worth looking to build multiple relationships between team and client to reduce the importance of any single relationship.