August 2007, a relaxed summer holiday morning.
At the beach, I was reading my daily copy of the Financial Times and pondering on what next.
This was not the usual summer for me. I was sitting on a very interesting job offer from a London-based financial services institution, while also sitting on a good, permanent role in Milan. I was 26, soon to turn 27, with a master degree and nearly 7 years of solid experience behind me.
The newspaper I was holding in my hands was burning hot, and not only because of the tropical August sun. I did not know yet but I was reading the initial chapters of one of the worst economical and financial meltdowns in history. Ben Bernake was reportedly confirming that the sub-prime crisis would be contained. Bush did not know where to turn; the world was watching the struggle to rescue the American financial system from collapse.
Europe watched in distress too, and soon after its economy would find itself in the midst of the deepest recession since the 1930s, with real GDP projected to shrink by 4% in two years, the sharpest contraction in the history of the European Union. Meanwhile what was described later as “the worst M&A takeover deal ever” was happening, Royal Bank of Scotland had set out to acquire its Dutch rival ABN Amro.
In all this, I decided to take the plunge, accept the offer, and get a better look at the banking industry from its then European financial heart, London. It was 2007.
The financial sector was THE sector to work for for many. If you lived in London in 2007 you had to be a banker, possibly an investment banker working for a large corporation. Eleven years on, times and trends have changed significantly.
The financial crunch of those years? Much has been said and written and too many bankers were unfairly accused. Looking at it from where we stand today, it was approximately a 5% of black sheep that ran free and caused havoc that drove in the mud the financial industry in those years. And many, bankers, tax payers and everyone in between paid the catastrophic consequences of the greed of a few delinquents. Is the financial industry a good environment now?
Its reputation has suffered major damage, however innovation and new technologies are changing its face steadily. Good or bad? Neither probably, it is called change and history has seen this over and over.
The culture that imbues the industry still needs a great deal of improvement. Personally, I have met incredibly smart, kind, good-hearted people in the sector. I have also met an incredible amount of incompetent arrogance that thrives in a culture that is soaked with too many short-sighted egoes who have the self awareness of a petrol tanker. Their loud, testorenone-driven professional days might come to an end soon. However looking at the bigger picture, what industry is not soaked in similar interest and ego? Should we look at the food or pharma industries and a few companies in those sectors for a second? We will wish we never had.
I have worked in the financial services industry for many years, specifically in banking for the last seven. Six months ago I started my own business, focusing on providing value in the form of business strategy and communications, positioning, self-brand, raising awareness on genuine thought-leaders and themes that have a real impact on our world. So I have been busy, and I nearly missed a growing trend until it came knocking at my door.
Turns out, tables for large financial institutions seem to have turned, just last week Finews published an interesting piece called “Swiss banking self-destructs”. Ouch.
So what are “the bankers” doing? I only barely realized of their whereabouts until I had a coffee with one of the smartest minds and dear friend who spelled it out loud. Yes, she was a banker too, now running her successful business.
“Hey so what you are saying is that many of your clients are ex colleagues or come from the financial world?” She asks me. Well, not exclusively, probably 50 -50, but yes. “How did you find them?” she asks. “Actually I did not, they found me”.
What we were wrapping our head around was the fact that many smart minds who used to be bankers and worked for large financial institutions are now steadily and out of own initiative leaving the big Mother ship and going solo. And, being very successful at that too. A few, I may have helped a tiny bit.
I went to dig a little deeper:
- “A growing number of people are eschewing traditional legal or financial career routes for a chance to launch their own businesses or join startups. They are enticed by the opportunity to do what they consider to be more innovative and more meaningful work.” (Source: The Muse)
- “Why Bankers and Lawyers Are So Yesterday. Among Stanford Graduate School of Business graduates, tech companies overtook financial services for the first time this year, with 32% of new grads accepting tech jobs and just 26% opting to head into finance. Just two years ago, those figures were 13% and 36%, respectively.
- “We are definitely seeing more students who want to either start their own business or join a startup, students are attracted by the wealth of experience they can get working for a young, entrepreneurial company. Some former Wall Street professionals say that their finance backgrounds have actually given them invaluable experience when it came time to launch their own businesses. Of course, plenty of new law and business grads still jump at the chance to work 100-hour weeks for major firms and banks in exchange for a big paycheck and good job security. But it’s no longer a sure sell.” (Source: Bloomberg )
- And then of course there are the Brexit-Bankers. “Frankfurt has emerged as the biggest winner in the fight for thousands of London-based jobs that will have to be relocated to new hubs inside the European Union after Brexit.” (Source: Bloomberg)
So what are some of my ex colleagues doing and where are they heading to? What will the picture look like for smaller financial boutiques and for large banks, how is the industry transforming itself and shaping the landscape? Are they, are we, ex-bankers and corporates, unknowingly-knowingly, leading one of the next disruptive trends, becoming some of the new shakers and movers of our economy and society?
I met with Roberto Rodriguez, a friend and ex banking colleague, now partner in a successful firm that exclusively combines wealth management and investment bank into a unique platform.
Q. Roberto, can you tell us a bit about you and your past?
A. Hi Manuela, sure. My professional life has been characterized by three main factors; the fact of being always surrounded by extraordinary people that inspired all my steps (family particularly), the opportunity of following what I liked the most every day and the “Wall Street” movie at the end of the eighties.
Fresh from my studies, I started my career as a junior trader in foreign exchange with the dream of trading in the “Ring”, a six-meter diameter circle where trading activity occurred, that soon disappeared with the introduction of the electronic exchanges. At that point of my life, I did not know what to do. I loved the adrenaline from trading and the strong performance competition but I knew also that the foreign exchange market was going to face a transformation accelerated by the technological development and the arrival of the Euro currency.
One day, a good friend called me and after a couple of months I was trading and structuring derivatives on different asset classes. Instead of making money for the bank I was working for, I was making money for my clients with few limitations as I could trade any underlying I believed to be a good opportunity.
My learning curve “exploded”, I had the opportunity to meet smart personalities from which I learned a lot and my clients, over time, became more sophisticated, challenging and demanding.
I loved it so much that I kept doing it for 16 years, until the banking industry became victim to its own abuses leading to a financial market characterized by an important regulatory framework forcing big institutions to the standardization of their services at increased costs with very high limitations of risks and/or balance sheet utilization.
Q. That is a very inspiring story. What are you doing now?
A. Together with my partners, we successfully launched TRIUS Partners AG to become one of the major players on what we believe to be the future of the financial industry.
Q. What is the unique selling proposition of TRIUS Partners?
A. We believe on a radical digitization of the financial industry with the transformation of today’s unilateral services into an open banking ecosystem. We see multiple and highly specialized providers simultaneously serving clients that will be empowered with state-of-the-art services at competitive prices.
Imagine one unique and fully personalized platform around you where you can handle all your wealth and banking assets. You will be able to decide how and who can use your data, identify all available service providers with their respective strength and costs and the freedom of choosing the best service provider, advisor, bank and/or family office for each service you might need. A complete and fully personalized experience here clients are at the center of the ecosystem.
TRIUS Partners’ ultimate goal is exactly this, an open banking ecosystem fully personalized with multiple and highly specialized providers simultaneously serving clients.
Q. This sounds very interesting and forward-looking. How will you deliver such an ecosystem?
A. By steadily achieving milestones and constantly working on delivering value. Our first milestone was achieved with the Foreign Exchange and Precious Metal direct access. We empower clients with direct access to leading wealth management platforms and to the best Foreign Exchange and Precious Metals tailored institutional services; normally accessible to large players only.
Q. Can you elaborate on how you interpret the growing trend of ex-corporates moving into different smaller, leaner companies?
A. I believe the end-client will benefit the most from the current financial market transformation. I see a growing number of people moving to new or specialized companies very often, smaller ones with an agile corporate structure and decision process, that are able to provide and to maintain strong client benefits on multiple levels; technology, experience, flexibility, pricing and services.
Financial services companies offering a simple exposure to asset classes (i.e. Equity, Bonds and Investment Funds/ETFs) as value proposition might have difficulties on keeping their profitability unless they start to cooperate with specialized third-party providers within the financial ecosystem.
Q. And what about the positioning of large wealth managers versus boutique wealth managers?
A. The competitive advantage of large wealth managers is evident but it is impossible to pretend to be leader on all the fields linked to the management of wealth. The internalization of all these capabilities might not be economically justified even for large players. Consequently, outsourcing high quality and skilled services to specialized boutiques might be very interesting and a successful strategy under different aspects.
It does not come as a surprise to see the majority of our clients being professional wealth managers and individual family offices. With a fraction of the investment necessary to the required technology skills and talents, they have access to high standards of advice and services for all their clients, independently from their custodian bank.
Q. What does impact mean for you? And how can we create new implementable role models for the financial services world?
A. For me impact is about everyone making a valuable contribution, even with small gestures, and by coming together, hopefully, we can achieve life changing results. My contribution is very simple, I place clients’ interests first and I behave accordingly with integrity, respect and humility.
Q. Roberto, what drives you?
A. The desire of continuous growth as a person through new relationships, new experiences and by discovering and trying new things, thriving with the natural adrenaline that comes with this.
Q. There is a large debate going on around the future of work, talent retention, women and millennials` values. What do you think the future holds for old school organizations?
A. The future most probably will be represented by a merge of the two worlds with the best of each side but I really hope it to be less discriminating for women. I truly believe on the positive contribution and impact that women bring to the business. I always worked with miscellaneous business teams and the performance results have been absolutely outstanding. Regarding talent retention, successful teams and corporates naturally attract talents and that I believe is also the best retention instrument you might ever have.
Q. How must businesses change to successfully incorporate hybrid models? And how can digital technologies help reduce costs and serve clients better?
A. Years ago, banks were charging to their clients a perceptual amount while executing payments. Today, in Switzerland, we have banks executing payments free of charge. Consequently, how long will a client pay anybody to have a linear exposure towards Equity and Bonds markets? What is the real added value of having somebody advising you on the degree of bonds and equites necessary to achieve 5% return over the next 5-10 years? In my opinion, almost zero added value.
The most successful and best performing family offices globally have an estimated allocation between 45% and 55% on alternative investments (i.e. Private Equity, Co-Investment, Art, Commodities, Real Estate, Hedge Funds and other tangible assets) and the resources spent in general investment services represents less than 20% of their overall operational costs.
A. Successful wealth management players will be naturally selected by their clients based on real benefit contribution from different levels; performance, knowledge and management, security and reliability, opportunity access, expertise, technology and costs. Technology and cyber security will play a key element for the future of our financial system and, hopefully, the reiteration of current trends with the creation of a client-centric ecosystem.
Thank you Roberto!
The coming of age of a new type of client, the emergence of new digital technologies such as robo-advice platforms and a plethora of new regulations have completely transformed the face of wealth management. These changes demand a new kind of business model—one that’s built on digitally led hybrid advice, customized for individual investors, and focused on goal-based planning and outcome-oriented investing. Accordingly to Accenture, the five trends that have converged to create a new wealth management landscape are:
- Competition intensified also non-financial players like Google.
- Demographics shifted. Millennials are set to surpass Baby Boomers as the largest generation, and women will soon control a larger share of assets than ever before.
- Client expectations changed. As the share of millennial investors grows, so too do service demands and fee sensitivity. These investors want transparency and control in wealth management, and are vocal about their desire for lower fees.
- Digital technology arrived. Many firms remain skeptical of virtual interactions, but investors overwhelmingly value collaborative relationships enhanced by digital technologies.
- Regulation increased. Firms are being forced to reconstruct key areas of their businesses to comply with increased regulation concerning fraud prevention, fiduciary responsibility and more. Full Accenture report here.
In other words, the financial world is changing radically and the best way to predict the future, is to create it.