After several years of record returns from a booming stock market, Australian high net worth individuals are learning to live in an entirely different universe. And in the private banks which advise the growing number of HNWs, the advisory part of the business is working harder, in many cases, than it has ever worked before. “Our most popular person in the private bank at the moment is the head of investment research,” Edward Tait, executive general manager for private client services at Australia’s biggest lender, the Commonwealth Bank of Australia, told WealthBriefing. “He’s been preaching almost evangelically this story of risk and reward which has almost been completely forgotten over the boom times and now people are saying ‘Oh, I can see that I should really have done something about it’.” Australian market sectors, such as the major banks, which have driven the record share market have been particularly hard hit by the recent correction. Several stocks, such as ANZ and the CBA itself, are down as much as 25 to 30 per cent since the record levels of last October and November. “This I think is a turning point for our advisory business,” says Mr Tait, who was headhunted from Macquarie Bank to the CBA, where he also has responsibility for the CBA Private Bank. “A lot of people have never been in the market while the banks have fallen 25 per cent, and what has happened has really brought the focus onto risk.” Mr Tait said the CBA has hired advisors to provide “robust portfolio construction advice” and brought an “asset allocation team” into the private bank. In-house accountants and lawyers are also talking with clients’ external service providers to help devise the most optimal structure for their affairs. “The market correction has brought home the importance of a lot of things that people have in fact forgotten during the good times,” says Mr Tait. “That’s where the advisory function has become critical: to advise on portfolios and look at the critical issue of risk and return. “We are of the view that providing advice on specific stock selection is currently difficult, but there are some really easy wins in terms of structuring properly and also investing for after tax returns and people have forgotten that.” Despite the market falls, Mr Tait told WealthBriefing that CBA’s advice was “not necessarily in defensive mode.” “A lot of our clients would say it’s great to be buying when everyone else is selling,” he said. “We would obviously be advising some degree of caution and that message is getting through, because until the market contraction the idea of getting advice was all about which stock to pick rather than anything else, and that sort of advice is less important these days. “We are seeing clients who were previously wanting equity advice now change their perspective and now they want more holistic advice, and we are developing our bank to make sure that this is our strong suit.”