Private Wealth — Netting Rich Returns
He believes there is a “communications gap” between sustainability-minded portfolio managers and researchers on one side, and more sales-oriented, client-facing teams on the other. To overcome this, he points to the training and awareness-raising work being done by Sustainable Finance Geneva, an association of investors based in the Swiss financial centre. It has started to host workshops on sustainability for private banking professionals.
Faced with disorganised wealth managers, high net worth individuals often look elsewhere for new investment opportunities. Rather than trust wealth managers, family offices tend to call each other for advice on sustainable investment options, according to the Eurosif survey. High net worth individuals source just 28% of their sustainable investment products from private wealth managers. They source 37% of their investments via private consultants or advisers, and 35% directly from investment vehicles, such as venture capital funds.
But it is possible for wealth managers to bridge this internal gap. One organisation that has done so is Bank Sarasin, a Swiss private bank with $70bn assets under management. The bank has created a team of five experts who train its 400 relationship managers in sustainability. They accompany managers when meeting private clients to help explain, and sell, sustainable investment products. The team has in part grown out of the bank’s sustainable investment research and asset management team. Head of client services and sustainable investment Erol Bilecen explains: “We simply changed focus from the factory to the front line.”
Bilecen says Sarasin’s model is unusual. In many organisations, portfolio managers and analysts double up as internal consultants to client-facing relationship managers. There is not a dedicated group to make this connection, he says. From 1 April, all of Sarasin’s private banking clients will have their investments screened against sustainability criteria, unless they opt out. Aside from shares and bonds, the bank offers clients alternative investments – in private equity funds for clean technology, and in microcredit.
Sarasin is clearly banking on a growing demand from high net worth individuals for sustainable investment in the coming years. Bilecen says the financial crisis has boosted demand from private clients for ethical products. “They are asking: what’s happening? How can I avoid this?” he says.