Managers aim to ensure clients' wealth prevails even during these turbulent times
The fallout from the financial meltdown continues to send shock waves around the world, drying up credit markets and wiping out trillions of dollars in stock values. But a top private banker believes the crisis underpins the importance of adhering to traditional private banking fundamentals.
Fidelis Goetz, head of the international division and member of the executive committee at Bank Sarasin, said as the world's financial markets were being tossed about by uncertainty and volatility, one of the biggest issues for private banks was ensuring that their clients' assets were properly managed.
'It is not the main job of a private bank to grow client wealth by 20 per cent year on year. The real task of typical, old-fashioned Swiss-style private banking is asset protection and to ensure that assets prevail regardless of market conditions. Suddenly, investments selected based on firm fundamentals that grow by 2 or 3 per cent per year - and in the past seemed to some investors a bit boring - have now become interesting,' Mr Goetz said.
The goal is to identify key themes based on strong fundamentals and the broader aspects of financial asset allocation for short- and long-term investments.
However, this is not to say that the industry has been unaffected by the crisis. Turmoil in the financial markets has delivered a sharp blow to the value of assets managed by private banks, leading to a decrease in management fees. Clients have also reacted to market turmoil by buying fewer investment products and by shifting their assets into cash.
Mr Goetz said the first step in safeguarding clients' assets was understanding their appetite for risk, closely followed by structuring portfolios that met the risk appetite.