Last week we asked readers about the link between the continued global success of private banking and the state of the world’s equity market...

Last week we asked readers about the link between the continued global success of private banking and the state of the world’s equity markets. Did WealthBriefing readers think that the positive correlation of these two was fundamental to the growth in wealth management? The answer came back as a resounding “yes” from 71 per cent of respondents to our Poll of the Week. The FTSE 100 almost fell as low as 5500 during May but is now pushing back to 5800 area, which technical analysts think is a crucial barrier which must be broken if the upward trend is to be resumed. The least that can be said is that the outlook for global equity markets is uncertain. But must this necessarily spell disaster for private banking? Twenty-nine per cent of those who responded to the poll thought not, echoing a senior UK-based private banker who recently told WealthBriefing: “The number and wealth of HNWs show no sign of slowing down, so from that point of view we shouldn’t be too worried about the industry grinding to a halt. It is not dependent upon a continued bull run in equities.” Recent stock market wobbles, be they what analysts might refer to as “a pullback in an uptrend” or a terminal reversal of the bull run, serve as a reminder to all wealth managers that stock picking alone will not satisfy the modern sophisticated client. It also underlines what the smart money has known for years – that the pursuit of alpha is of over-riding importance in any HNW portfolio. The good news is that the uncertainty over the future of global equities, allied with rising bond yields and increasingly capricious commodity markets gives private bankers a further opportunity to sell clients products with little or no correlation to these markets and those with a guarantee or downside protection Step forward not only structured products, but alternative asset classes such as currency and art funds, fine wine and stamps, real estate and antique coins. These may, in the near future, become at least as important in client portfolios as equity-based products.