One key ingredient in making the process work as smoothly as it has so far, according to Adam Horowitz, head of Julius Baer UK, is an approach he calls “dual hatting”. He explained what this meant when this publication recently met him at the Julius Baer offices in London. Horowitz is an ex-Merrill man who joined the bank as part of the process.
“What the dual hatting approach in the UK allows is for a relationship manager who has transitioned over to Julius Baer to still access the Merrill Lynch platforms in order to take care of their clients who are still contracted with Merrill Lynch. By doing the transaction this way, clients have not lost contact with their relationship manager for one moment during the changeover. It also affords the client time to consider the merits of moving to Julius Baer and making a personal choice rather than 'being sold' to an acquiring institution,” Horowitz said.
This approach can be labour-intensive, but the results are worth it, he said.
“Dual hatting definitely requires more work in terms of preparation, but the value and peace of mind our clients received, made it worthwhile. As an example of the ongoing client service, dual-hatted relationship managers had both a Julius Baer and a Merrill Lynch e-mail account as well as access to client accounts on both platforms to ensure uninterrupted service. There was also an internal `Dual Hatting Supervision and Control Team’ that monitored the business,” Horowitz continued, as he spelled out the grainier details of the approach.
“Relationship managers undertake specific training to ensure that clients are fully serviced according to the firm procedures that they are contracted with and during the period of dual hatting, clients are clearly communicated with, keeping them fully informed of the progress of their transition. Prior regulatory approval is required with details of process and controls clearly determined in advance,” he said.
So far, so good. According to latest figures published for the fourth quarter of 2013 and whole of that year, Julius Baer said that based on current expectations, it expects that by the end of the integration process in early 2015 the group will achieve the asset transfer target, towards the lower end of the SFr57 billion to SFr72 billion range, which would thereby also reduce the maximum total transaction price.
So how did the bank know that this “dual hatting” approach made most sense?
“We wanted to make the transition a smooth client experience from the very beginning and with the dual hatting approach clients remained in contact with their relationship manager and have taken time to make decisions. Our clients have complex portfolios and wealth planning structures so dual hatting was an important service to offer,” Horowitz continued.
This approach tends to be used, he said, where there is an M&A deal requiring banks to change booking centres for clients, repapering client contracts rather than a share sale. “Acquisitions of this type will certainly benefit from the positive client experience,” he said.
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