In the latest in the series, Chris Thomson, director of private banking and head of Edinburgh at Kleinwort Hambros, tells us why he fears technology may lead to a more homogenised service.
Why did you choose to go into the world of private banking?
Until my mid 30s I had been in investment banking, spending time both on Wall Street and in the City, specialising in various forms of debt finance. I decided that my future lay in my native Scotland where, in the absence of corporate finance, I reviewed what type of role would suit my expertise and aspirations. The key factors for me were that I had gained considerable financial expertise and I enjoyed working with people. Private banking has proved to be an excellent fit as it combines both these elements and my technical knowledge enables me to ask the difficult questions on behalf of my clients.
What do you love most about your job?
Most definitely the people. We have a very collaborative culture in Kleinwort Hambros which makes the day-to-day working environment a positive and productive one, but the clients are what really makes the work enjoyable. People often ask me what a typical client looks like and the honest answer is that we do not have one. Everyone comes with an interesting story, as well as unique aspirations. I am brought into contact with a wide range of fascinating people and relating the financial advice back to the person is very rewarding.
What’s the next big development in private banking?
The industry spends a lot of time talking about technology, but there is a risk that the offering is homogenised. Younger people predictably expect to see everything grounded in modern technology, whereas more established clients like to speak to their private banker more and prefer paper-based communications. While digitalisation is a core element of our service, it is important not to lose sight of the human factor. In a relationship driven business, it is vital that we continue to stick to our core strengths. Digital should enhance what we do, rather than replace it.
What are you doing to adapt your offering to ensure you remain competitive?
We need to make sure that we keep in personal contact with our clients. This is something which does not change. Our clients expect a wider range of communication channels which includes the option, but not the obligation, to interact with us in the digital world. As such, our approach is a hybrid blend of physical and digital – we call it 'phygital'. We absolutely believe that the relationship is core to the service and personal interaction remains at the heart of what we do at Kleinwort Hambros.
What is the single most common concern amongst your clients about where we are in the economic cycle at the moment?
Brexit. Although the concern is seldom over the logistics of interacting with our European neighbours, rather their concern is more focused on what it means for financial markets and the impact on their net wealth. Quite often the impact can be counterintuitive as, at this stage, a lot of the sentiment concerning Brexit is expressed in the currency markets.
The impact of a weakened sterling traces through to inflation over time, but it tends to provide an immediate boost to UK equity markets as a majority of earnings for British-based companies come
from overseas. If a client has an internationally diverse and balanced portfolio, what at first may appear to be an issue might well turn out to be positive for investors.
Banker or tanker?
Predicting the future is an uncertain pastime and generally prone to failure. So we stick to our guiding principles for investing at Kleinwort Hambros, which focus on value, momentum and sentiment. In 2018 there has been an impressive rise in US corporate profits, while the equity market has moved sideways. This makes the market cheaper and with the US economy performing as well as any, this bodes well for 2019 and we have recently added to our US exposure. Bonds will likely cost you; cash may suffer simply through the constant erosion of value from inflation and possible loss of international buying power via currency depreciation, but domestic bonds carry the added risk of adverse interest rate moves. Investing in a diverse collection of asset classes and geographies is most likely to serve you well.