Peter Flavel
Peter Flavel is chief executive officer of JP Morgan Private Wealth Management in Asia, a division which serves clients with a net worth from US$10-30 million. Here, he tells WealthBriefingAsia where he believes the future of private banking in the region is heading.
WBA: How do you think private bank advice is evolving?
Peter Flavel: Our view is that wealth management advice should be delivered by an integrated team. Every private client at JP Morgan has a dedicated banker and investor coverage team. They’re co-partners in understanding client needs and delivering the best thinking of our whole bank for the benefit of our clients.
We believe the team-based model is the future for advice in our industry. Other models in the market do make use of what are generally called investment consultants but usually less than 10 per cent of clients get to see both a relationship manager and an investor. And when they do, the role of the investor is usually more of a part time specialist support role rather than being a dedicated, active, long term accountable member of the client coverage team.
WBA: How does the team model work in practice?
Peter Flavel: In our team coverage model, every client has both a dedicated banker and investor. In addition, when there is a credit need, we have a dedicated capital advisor. When there is a need for trust and estate planning, we provide a dedicated wealth advisor. And for day-to-day client service, we have two allocated client service specialists. Delivering advice for us is a ‘team sport’. It is the future for advice in our industry.
WBA: What type of advisor does your model best suit? Who is attracted to your team based model?
Peter Flavel: Our advisors understand the best way to deliver first-class advice is to leverage all the specialist resources of JP Morgan, whether that is our multi-asset class specialists or our asset class leaders. Our bankers recognise that global markets are way too complex and volatile to understand every asset class and have detailed real time knowledge of multiple markets, the entirety of our solutions platform and then also be responsible for every additional element of client coverage. It's just too much workload for one person. First-class client service today requires a team-based approach.
So why does it work? The team approach provides our bankers with the resources they need to meet their client needs across all asset classes and to bring the very best ideas and thinking of the whole bank for the benefit of clients. The extra coverage resources mean our bankers then have time available to prospect for new clients as well as cover their existing relationships. And when our bankers are out of the office, they do so with the comfort and knowledge they have their first class coverage team partners back in the office helping them develop and deepen client relationships.
It’s a very banker friendly model once you understand the resources provided to help the banker deepen their client relationships. In contrast, I believe the model commonly adopted in the Asian market over the past 10 years has placed too many burdens on bankers. When you ask Asia-based bankers about their personal workload, many of them feel simply overloaded.
WBA: How do you see prospects for offshore banking?
Peter Flavel: Offshore banking remains strong with both Hong Kong and Singapore continuing to grow. It's about peace of mind that your investment portfolio is being well managed in a secure, safe environment with strong regulation and transparency. Some parts of the world can be more exposed to risk particularly for the wealthy. Having a part of your wealth invested in a safe place will remain a valid business model for some time to come.
WBA: How do you view competition of international vs regional/domestic banks going forward?
Peter Flavel: There's room for each of the different types of players meaning international, regional and purely domestic private banks. Each will play to its strengths. Clearly for JP Morgan that means bringing the huge breadth and depth of our resources and detailed research we deliver globally for the benefit of our Asian clients. It could mean distressed debt opportunities in Europe, commercial real estate plays in the USA or local Asia focused investments. We have a particular focus on private equity where we see ourselves having considerable knowledge and specialist access. We have some very interesting unique private equity vehicles tailored to the specific needs of high net worth clients.
WBA: What will be the key elements to deliver value to clients nowadays? Is investment performance most important?
Peter Flavel: What is required to deliver value in today's environment is the much-used term of being a trusted family advisor. Our goal is to deliver superior risk adjusted returns over the long term through the natural different investment cycles. We have a much higher percentage of our client money managed in our bespoke discretionary portfolios. This is an important issue for us, we seek to be in a fiduciary relationship with our clients. We see that as a key element of being a trusted advisor.
WBA: Have wealth management firms managed to provide service to meet with the complex needs of Asian entrepreneurs?
Peter Flavel: Not all private banks are well set up for all the complex needs of the Asian entrepreneur. You need the strong links and global capabilities we have with our investment bank and commercial bank partners. You also need to have a liquid balance sheet able to help fund a client's legitimate need for leverage. For instance, providing access to single stock lending with the proceeds then used to diversify our client's investment portfolio and reduce risk.
WBA: How can you achieve a profitable wealth management business in this region?
Peter Flavel: Achieving a profitable wealth management business in Asia has to be about taking the long view. We are fortunate to be in the region growing HNW wealth faster than elsewhere in the world. It means we are probably the most exciting wealth market globally. But as with any business there is the right rate of growth, neither too slow nor too fast. I see some in the market continue to simply talk about their hiring plan targets. Our goal is to be the best private bank, not the biggest. It's about the right rate of measured growth and maintaining an absolute focus on delivering first class team-based advice while you grow.