– What differences do you find between traditional commercial banking and private banking? And personal banking?
The differences are significant. Commercial banks aim to sell financial products to their customers to generate margins and, therefore, profits. Their growth relies on a physical presence: the larger their branch network, the greater their potential customer base. To purchase products and services, customers must visit the branch in person, which functions like a "supermarket" of products.
Private banking, on the other hand, focuses on understanding the individual needs of each client's wealth; it is a service-oriented approach. Private banking is based on a personal relationship between the client and the wealth advisor, who has earned the client's trust by understanding their investment profile, their wealth management needs, and providing them with all the necessary tools.
– What are the basic guidelines when establishing a comprehensive advisory service?
In Private Banking, the wealth advisor begins their relationship with the client by precisely defining their financial "DNA," that is, their individual investment parameters that will help the advisor to make the exact asset allocation for each client.
To do this, the advisor needs to understand several criteria about the client, such as the level of risk they are willing to take. They must know the client's specific objectives, the timeframe in which they want to achieve them (their time horizon), the amount of investment they intend to make, whether they have liquidity needs, and, of course, their tax implications.
This information precisely defines each client's individual profile. In Private Banking, no two clients are alike.
It's important to keep in mind that advice must be comprehensive because it needs to address all of the client's needs, including financial—the client wants to maximize returns on their investments based on their risk level—tax—seeking tax efficiency for investments—and wealth management. Regarding this last aspect, it should be noted that wealth management advice addresses the financial, tax, legal, and even real estate needs of large fortunes belonging to family groups.
– How has the typical private banking client evolved?
The private banking client has evolved considerably. In the 60s, wealth management was limited to advising on investments in foreign stock markets and providing tax advice to a very small number of clients, primarily based in major cities like Madrid and Barcelona. This service was offered by highly specialized professional firms.
In the 70s, some banks began to provide wealth management services to some of their larger clients who demanded comprehensive advice for their assets.
In the 80s, coinciding with the boom in stock market investment in Spain, private banking began its "popularization" and banks created specialized entities, focused mainly on advising for stock market investments.
The 90s saw the consolidation of the private banking business, and the prevailing environment facilitated the explosion of this financial service. Lower interest rates, increased wealth, financial globalization, and the growing need for comprehensive advice among clients led to an influx of all kinds of national and international entities into this segment, with diverse origins: savings banks, traditional banks, securities firms and agencies, foreign banks, lawyers, consultants, and so on.
The goal is to meet the needs of a client who is currently more financially literate, has a very diversified portfolio of products and institutions, demands tailored financial, tax, and wealth management solutions, and wants to obtain the maximum return on their assets appropriate to their risk level with a confidential, personalized, and highly professional service.
– What types of financial products does BSN BANIF offer? Does it include alternative investment management? And if so, are there currently any restrictions imposed by Spanish authorities on this type of investment?
BSN BANIF offers the products and services best suited to each client's investment profile (their financial "DNA"). The wealth advisor has a precise understanding of each client's individual investment parameters: their risk aversion, time horizon, investment size, liquidity needs, and specific objectives, as well as the tax implications of their investments.
To achieve this, the BSN BANIF wealth advisor acts independently, providing his client with the products he needs, whether from his own company or from the competition, and monitoring his portfolio to seek the highest return for each level of risk - the efficient frontier.
Therefore, BSN BANIF customers can access all types of products: Fixed Income, Variable Income, Banking Products (Current Accounts, Pension Plans, Insurance, Unit Linked…), Structured Products, Derivatives, Investment Funds, Simcavs, etc.
Alternative Investment products, which leverage market inefficiencies to generate profits—such as arbitrage, mergers and acquisitions, and trend analysis—and are therefore not tied to the performance of traditional markets, are marketed by BSN BANIF to improve each investor's efficiency frontier. However, it's important to note that Spanish investors cannot invest directly in Alternative Investment products because Spanish law prohibits leverage (borrowing more than the amount held in the portfolio).
Other products such as real estate funds, venture capital and tailor-made products are marketed by BSN BANIF and also seek the same objective.
– How do new technologies like the Internet affect the concept of private banking?
At BSN BANIF we believe that Private Banking via the Internet, by its very definition, is not possible, given that the work of the wealth advisor, who earns the client's trust and operates in an environment of loyalty and confidentiality, cannot be offered by the internet.
The Internet channel is an ideal means to improve communication between the client and their private banking entity, but nothing more.
– What do you expect from the markets in 2002?
The second half of 2002 will mark the beginning of the recovery in corporate profits. Consumer confidence will recover a little later. We forecast a rise in the Ibex 35 of around 10% for 2002.
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