egyii blog

The following is an article from the Singapore Business Times, January 13, 2010, written by the Managing Director and Head of Private Banking Southeast Asia and Australasia for Credit Suisse, Dr. Francois Monnett.

He gets it, but do they really “walk the talk?”

Retaining clients, rebuilding trust

The sustainability of the private banking business model comes under scrutiny in the wake of the massive industry shake-up. In the aftermath of the massive industry shake-up which has taken place over the last 18 months, we are confronted with a very different operating landscape in private banking. Together with a significant loss of trust and confidence in the markets and industry, clients are also expecting higher standards of service and advice, as well as greater transparency and disclosure over products and services. There is also a shift towards safer, simpler and more liquid investment solutions.

One major implication is the critical question of the sustainability of the private banking business model. During the boom period, many institutions built their private banking model primarily based on the assumption of continued growth and perhaps a certain belief in its immunity to economic cyclicality. The infrastructure that many private banks have put in place to deliver value to clients and the fact that much growth has been built through expensive acquisition of bankers have also resulted in a costly model.

Revenue generation in private banking, particularly in the Asia-Pacific, has been very much volume-driven with a heavy reliance on a sales culture. With slowing revenue generation and increasing cost-income ratios in the past 18 months, the sustainability of this business model has been seriously tested. Much of the pressure is also coming from outside, namely from regulators and clients, that will propel the industry towards more radical and dramatic changes to the business model.

In the rapidly changing regulatory environment, investment suitability is here to stay and investor protection will become an even more important dimension in this business. There is also a lot of discussion on offshore banking, capital requirement and bankers’ compensation.

But the most important driver for change is the disillusioned clients. There has been a significant loss of investors’ trust and confidence in the markets, in regulators, in the financial institutions as well as their advisers. We have also observed among clients a flight to safety and quality, a shift from risk aversion to loss aversion, and a back-to-basic type of appeal for more direct and liquid investment vehicles.

Very importantly, there is a much greater need for transparency and disclosure. This is not just about the products, but also the service levels that clients pay for, fee structures, performance of their investments, as well as transparency regarding business partners and counterparty risk.

Client segmentation

For private banks to reclaim and reaffirm their critical status as trusted advisers, we need to enhance our value proposition on a few levels. First and foremost, we need to focus on client segmentation and differentiation to significantly lift service levels.

To put the client at the centre of a segmentation strategy is the only way to avoid the ‘one size fits all’ approach, which doesn’t work to lift service levels. This requires a disciplined, systematic and structured approach to defining client segmentation that goes well beyond assets under management. It has to consider the source of the client’s wealth – is it inherited or built? It has to consider the investor’s behaviour – is he or she a delegator, a participator or self-directed?

We also need to understand better the investor’s knowledge, experience, sophistication as well as domicile. Once these dimensions are clearly mapped out, the resulting value proposition has to deliver a tiered service offering in a disciplined and consistent way that will define different access to product specialist or management as well as the depth and breadth of the service offering.

Eventually, we will be measured as well in terms of the level of transparency and interaction we achieve with our clients. Risk management has to be an integral part of the advisory process and an investment suitability framework is the ultimate transparent guide to portfolio construction.

This involves the profiling of clients – the detailed and structured assessment of their knowledge and experience vis-Ã -vis the complexity of the portfolio solution, and their risk and loss tolerance. This profile is used to build a portfolio which is simulated in terms of asset allocation and is fully disclosed to the client.

Consistent client experience

The private banking business is all about execution. We need to deliver on the promise of being a trusted adviser in a consistent way. A major pre-requisite for a consistent client experience lies in the bank’s IT-based processes. From the relationship manager (RM) accessing an open architecture platform with thousands of solutions for the client, implementing a common advisory process, to utilising portfolio construction tools that build asset allocation against the client’s profile and analyses of risk scenarios – this level of consistency can only be achieved through a control process.

The re-engineering of processes is critical not so much for productivity gains, but has enormous impact on how much time the RM is able to spend with clients and the quality of the client experience. A recent study shows that RMs spend as much of their time marketing services to new clients as solving and dealing with administrative matters. If we are not able to free RMs from the loss in valuable client-interacting time, we will not live up to the promise of being a trusted adviser.

From a client perspective, there is also a constant request for better, more consolidated and comprehensive client reporting. They also want more direct access to almost real time data through client portals.

As private banking continues to grow in the Asia-Pacific, automation, IT systems and the re-engineering of processes will increasingly become the backbone of the business. How good a bank’s infrastructure is will be the cornerstone in delivering quality client experience. It will optimise relationship management time with clients and ensure a culture of consistency throughout the firm.

Re-skilling of RMs

If we want to differentiate ourselves in terms of providing an advice-centric operating model to clients, we will also have to consider the extent to which we need to re-skill our RMs. The permanent education of RMs is of paramount importance. Particularly in Asia-Pacific where the industry is still young and fast-growing, there is an immediate need to make sure that the culture of a firm is being consistently instilled into the new joiners that all bankers interact with their clients through a consistent and structured advisory process.

Eventually, as front organisations continue to expand, we also need to enable RMs to grow in their roles over time, from a junior level adviser, to an expert RM or a manager and leader. This requires a long-term, modular and state-of-the-art training curriculum and development model that captures the career cycle of each RM. It is also important to align reward systems with the clients’ satisfaction. When we measure performance, we need to focus not only on ‘What financial performance did you achieve?’ but also the ‘How did you achieve it?’ metric. This softer side of performance measurement has to be benchmarked against the values of the bank and how it wants its RMs to run the business, and against the client’s satisfaction. This will involve tracking the degree of adherence to the sales and advisory process, risk management tools and control standards, as well as client satisfaction surveys.

This greater alignment is a condition for regaining and earning more trust with our clients in the new landscape, acknowledging the new landscape, refining and sharpening the value position and eventually delivering on a bank’s brand promise.

Trip Allen, Team Egyii, Singapore

I have been out of the radar for a while as last week I was fortunate enough to be a part of the Trusted Advisors Associates  programme “Being a Trusted Advisor” held in Washington D.C. on December 8th and 9th.

The reason why I was there was to participate in a live programme conducted by Charlie Green and Andrea Howe, along with Sandy Styer and Stewart Hirsch, the programme leaders of the Trusted Advisor Associates team. The one and a half day programme, “Being a Trusted Advisor,” was attended by approximately 31 people with approximately 21 attendees from various backgrounds and companies from consulting firms, to bio-tech companies, to non-profit organizations, Etc.

I was also there to “earn my stripes” as a programme developer and facilitator for Trusted Advisor Associates in Singapore and Asia. There were about 10 of us there for coaching and facilitating purposes coming from as far away as the UK, Israel and Singapore (yes, that is me).

There was great enthusiasm from everyone, and I believe that is due to the content, the validity and the  timeliness of the topic of trust. Everyone seems to believe that trust REALLY works (I am and have been convinced from the beginning). But what really caught me and made me believe (also probably true for others) as to why trust is so powerful was how the Trusted Advisors Associates team led the programme with their trust values and beliefs.

All in all I observed the following (and more) in action:

Collaboration

Transparency

Authenticity

Empathy

“Zero” ego

Intimacy

…and more.

All of this made me feel even more strongly that I wanted to be a part of a winning team. But, what struck me the most was how Charlie handled the contract situation. Rather than sign documents for NDAs, various agreements, Etc. for intellectual property, we simply raised our hands and repeated an oath.

WOW! Business made simple. Faster. Easier. All based on trust.

To quote Charlie, ”It’s a win-win. Except maybe for the lawyers.”

Just imagine. I am an actual ”client” of the Trusted Advisors Associates team (as I will pay them licensing fees). How does this “treatment of trust” make me feel? To be honest, great. Now, put yourself in the shoes of your client, practice these principles (and more) and see how effective all of this can be. Imagine how they will feel?

For more on this, Charlie wrote the following article Can Trust Replace Contracts?

I am truly impressed, happy and proud  to be a part of this amazing  team and programme. Thank you Charlie, Andrea, Sandy and Stewart.

Trip Allen, Team Egyii, Singapore

 (A true story)

Successful.

Uneducated.

Wealthy.

Four priority bank accounts.

Four banks.

Four different Relationship Managers.

There is a fifth bank that also wants his business.

The fifth bank will get his business- if they do it right.

Why and how?

This particular “prospect” is an acquainance of one of the bank executives. The prospect is open with the executive, shares his personal life, discusses business matters and financial matters, socializes regularly with him, talks sports and even shares aspects of  his social life. He respects the bank executive for his knowledge and there appears to be no threat. He is comfortable with the relationship. They are friends. 

Interestingly enough, the bank executive is not a relationship manager- he is not in sales.

How does the bank executive do what is best for the bank, and “convert” this into a sale? That is the dilemma.

Clearly the “prospect” is an unsettled man. He has new-found wealth and is somewhat leery of the people around him. This is probably why he spreads his wealth between four banks and four relationship managers.

How many times have you come across this or a similar situation to this?  A situation where there is a bond or relationship between a client or prospect and a non-sales related executive? From my experience in my days of technology sales, quite often the relationship was between the client and the sales engineer. Is that because there was no “threat” from the sales engineer? Was he providing more value? Was he not chasing the sales for the close?  Most probably.

So why is this happening and why does it happen? And how do we turn the banking scenario around and turn it into a “sale?” I will let you figure that out on your own.

For related articles (and for a clue to why this may happen) see:

Two Simple Keys to Success in Sales

Want to Add Value in Your Sales “Process?” Try Adding Trust

The Agile Mind of a Salesperson: Motivation

Trip Allen, Team Egyii, Singapore

No longer can global or major accounts programmes rely on decisions being made in mother countries. Decisions now need to be made on a local, Asia Pacific level, whether it is in Sydney, Singapore, Hong Kong, Mumbai, Shanghai or Tokyo.

And no longer can account teams rely on relationships alone. They must also add value.

Adding value means understanding what is on the mind of the client and giving them the tools to meet their personal and business goals. It’s not all about bits and bytes, bandwidth or speed or bells and whistles. To meet the goals, it’s all about understanding their problems and where they are in the decision making cycle…and being sensitive to that.

Neil Rackham, of Huthwaite and SPIN, was not a salesperson, but a behavioural psychologist. He studied how buyers bought and did not focus on how sellers should sell. He built a simple yet powerful tool to understand the buying cycle, or decision making process. He added sensitivity to the buying cycle.

In the buying cycle, there are multiple stages..changes over time, recognition of needs, evaluation of options, resolution of concerns, decision, implementation. No matter where you enter the buying cycle, you need to work (by continually adding value) with your client until he enters the “recognition of needs” area. This is the crucial time to be side by side, collaborating with your client to build the solution. (Rackham  also recognises that all of this takes time, so focus on medium-long term, not short term).

Once you are at the recognition of needs phase, you should understand how the client makes the decision.

What motivates him to buy?

The client (or buyer) typically has four levels of questions when it comes to the question of motivation when buying:

1) The product and its characteristics/features

2) A solution to the problem

3) A good business partner

4) Someone we can trust

Buyers state that they want want the first or second and ocassionally the third. Most sales programmes/processes focus on levels two and three- focusing on identifying the buyers’ needs through consultative selling.

Levels one through three are rational and impersonal. The fourth level, a person we can trust, is far more powerful.

If you understand the buying cycle and ultimately what motivates your client when buying, you are one step ahead of your competitors.

There is a lot more to it than that for global/major accounts selling but understanding the crucial aspects of buying are vital.

*Derived from Trust-based Selling by Charles H. Green.

Trip Allen, Team Egyii, Singapore

(The author ran the Anixter Asia Pacific Global Accounts programme in the earlier part of this century. There are certainly a few things he did well but there are a lot of things he could have done better. He wishes he had known all of this then.)

“Effective networking is about building relationships with others who can refer you once they’ve come to trust you, have confidence in you and feel loyal to you. This truly is the key to networking success. And this process takes time.”  Duct Tape Marketing, “The Keys to a Referral Relationship.”

What is the easiest way to get new business? Referrals.

Is it easy to get referrals? No and yes.

The Dilemma

Most salespeople and managers agree that referrals are the best way to get leads for new business. There are methods for getting referrals, however it sill remains “difficult” for a salesperson to get them.

So how do we “speed up” the process and make it simple?

Build the Relationship

As for “speeding up” the process, there are no methodologies that can really get you to where you need to be to ask for referrals quickly. Too often salespeople jump on the opportunity too early, at the wrong time. It takes time. So be patient.

Where to start? Make steps to build the relationship and add commercial and personal value. The best way to build a relationship and add value is by establishing  trust. In order to build trust for refferals, you should understand the components of trustworthiness. 

The Components of Trustworthiness

The components of trustworthiness, in the world of the The Trusted Advisor, reside in the Trust Quotient.

The Trust Quotient consists of the Trust Equation=

C=Credibility

R=Reliability

I=Intimacy

S=Self-orientation

C=Credibility has to do with the words we speak. In a sentence, we might say, “I can trust what she says about intellectual property; she is very credible on the subject.*

By contrast, reliability has to do with actions. We might say, for example, “If he says he’ll deliver the product tomorrow, I trust him, because he’s dependable.” *

Intimacy refers to the safety or security that we feel when entrusting someone with something. We might say, “I can trust her with that information; she’s never violated my confidentiality before, and she would never embarrass me.” *

Self-orientation refers to the focus of the person in question. In particular, whether the person’s focus is primarily on himself or herself or on the other person. We might say, “I can’t trust him on this deal—I don’t think he cares enough about me, he’s focused on what he gets out of the deal.” Or—more commonly—“I don’t trust him—I think he was too concerned about how he was appearing, so he wasn’t really paying attention.”

Keep in mind that Credibility and Reliability are the easiest aspects of the Trust Equation. Intimacy and Self Orientation are by far more difficult to attain.

(*for more information, see Trust in Business: The Core Concepts from Charles H. Green, Trusted Advisor Associates)

Simply Ask for Referrals

So, once you establish the relationship, you can simply ask for referrals. The biggest problem is, salespeople just don’t bother approaching clients for referrals. How many times do salespeople actually ask for a referral? rarely. Ray Silverstein suggests a few simple but great pointers in his article, Get More Referrals by Asking.

So, build the relationship and ask. It may take some time but it sure is simple.

Trip Allen, Team Egyii, Singapore

“We need to constantly be adding value to our client base,”  a comment said recently by a business leader in the South Asia territory for a major US medical company.

Yes I agree wholeheartedly. But how do salespeople and support teams add value?

Value add can be defined in numerous ways, for example…

Offering the best solutions to a clients’ problems

Support throughout the whole sales cycle- pre, implementation, post.

Overall by positioning the product, the comapny and the salesperson himself

…and more

Value add as defined  by Tom Reilly, who wrote the book Value Added Selling ….”the only differentiation that may exist in this competitive comparison could rest with the salesperson.  Two Fortune-100 companies surveyed their customers to determine how much value their salespeople contributed to the sale; they discovered that 35-37% of the value that customers receive comes from the salespeople with whom they deal. Value added salespeople don’t make sales calls; they go on job interviews with customers. They ask customers to hire them to be their personal representative with the supplier’s company.”

So Tom’s definition of value add  is the salesperson as the company differentiator. I agree.

But, building trust through trustworthiness is also a value add. How? By putting the client first.

When you put the client first, the client sees that you care about him and his interests and not just about pushing a product or service.

And, as Charlie Green says in Trust-based Selling “It is possible for selling to be a genuinely value adding, beneficial process for the buyer AND seller alike.”

You just have to align trust properly. And if you align trust properly, it will be your value add and the differentiator.

Trip Allen, Team Egyii, Singapore

There are  two things that typically motivate a salesperson- money and personal success. (Personal success = achieving goals, positioning a product you admire in an industry you like, building personal and business relationships, Etc)

I will be touching on building successful relationships as the important aspect of personal success in this article.

Money

Most people assume that all salespeople are driven by money, and most salespeople say they are purely in it for the money (just to pound their chests and impress their boss).

Money is a big factor for sales, otherwise why would anyone put up with the daily grind of forecasting,  threats from management when the numbers are not met, getting down on your hands and knees begging for a deal, Etc.

Relationship Success

Many salespeople are in sales because they love the people aspect of it. They like to connect, build a relationship, add value and become a trusted advisor. They like to walk hand-in-hand with the client, bringing them the best advice and solutions available. Overall, they feel a great sense of accomplishment – it is a great feeling. There are great advantages to this as it builds loyalty and therefore better medium to long term business. And it builds friendship.

Money and Relationship Success

In many instances, salespeople are driven by both motivators. Is this the best of both worlds? Maybe.

In Conclusion

So, as much as many would like not to believe,  sales and salespeople are not all about money. And money may not be the best single factor for motivation because  there are alternative methods of obtaining money through commissions and bonuses without having to bury yourself with the company dogma and the personal quota pressure.

These alternative methods of obtaining money (and rewards) can be found through other personal drivers (or personal successes), which ultimately lead to sales and therefore commissions (=money).

But if it is all done right, then money can be one of  the many rewards.

Do you see or know of any other things that motivate salespeople?

Do you think it is best to be motivated by money or personal satisfaction or a combination of the two?

Please comment.

 (You may also be interested in Why Don’t Companies Focus More on Relationships?)

Trip Allen, Team Egyii, Singapore

“It’s all about long-term professional relation building. Leverage & greed were the cause of the financial crisis.” JP Cuoni, CEO EFG Bank

Jean Pierre Cuoni, Co-Founder & Chairman of Swiss based EFG bank, saw the light early on in the private banking industry.

Mr. Cuoni retired in 1994 from Coutts as the CEO, and held numerous senior positions at Handelsbank NatWest and Citibank.

In 1995 he and Mr. Lonnie Howell set up EFG bank.

Mr. Cuoni, in the business since 1960, realised that little had changed in private banking. He said (and still says) that banking is personal and all about relationships, relationships that lead to trust and confidence in the bank relationship manager and the bank itself.

However, in the 1990′s, he started to see things fall apart in the banks’ operations. The banks were changing the way they operated. “Hedge funds, structured products, funds of funds, alternative investments… All these are new products that only started in the 1990s.”

The business was becoming less personalized and was lacking the proper client focus.

So, in response to the shock of this, EFG was born.

EFG is very unique in the way it operates. EFG woos older, experienced bankers who are looking to be on their own, however, would like an infrastructure to support them. They use their skills to become “private bank entrepreneurs”- running their own business off of EFG’s physical platforms.

This, combined with a caring philosophy and approach to clients and relationships, has lead to a huge success. Although business is down, as we all expect, EFG continues to flourish ahead of many of the “fallen” banks who focused purely on the bank’s motives (vs the client’s motives).

On a local level, I have met Mr. Kees Stoute, Managing Director of EFG Singapore. Mr. Stoute worked his way up in the  banking business from roles in IT and as the COO and MD in other banks before joining EFG. Why did he make the change to EFG? He saw EFG was following  the core beliefs and principles that make a bank successful.

I had a conversation with Mr. Stoute on trust, an integral part of both his and EFG’s business philosophy. The following is an excerpt from that conversation:

“Trust is not a soft skill. It makes the difference in the business. Trust is the core of business,” said Mr. Stoute.

EFG is and should be the model bank of the future.

For more information on EFG Bank, click here. You will be greeted with the following important message:

“What is the essence of private banking?

Relationships, and the conditions for them to flourish. A nurturing environment, that enables our people to excel at crafting solutions for you.

To us, the fundamental building blocks are people.

Professionals of the highest calibre, free to act in their clients’ best interests. Who strive to eradicate life’s inconveniences; who simplify complexity.

Welcome to EFG Bank, truly a private bank unlike any other.”

Trip Allen, Team Egyii, Singapore

How important is trust, trustworthiness and being a trusted advisor to your clients? Important enough to hold off the wedding for one late, but important, guest.

The following true story came directly from the mouth of a very senior private bank executive at a UK based (with large operations in Singapore) bank.

He was accentuating the importance of his relationship with a dedicated client.

“The wedding was to be a large Indian wedding- large as most Indian wedding are. This wedding happened to be on the mystical island of Bali.”

” So we packed up our bags and boarded the plane, ready for a relatively short trip to Bali.”

“Low and behold, the plane was late taking off. We would inevitably be late. What to do? This was my best private wealth client. This could embarrassing and more importantly, could seriously hurt my relationship.”

“We arrived about 30 minutes late, sped to the hotel to change. Of course, in Bali, the traffic can be horrific, and it was. After speeding to the hotel, bouncing off the traffic, we arrived one hour late. What was I to say?”

“When we got there, hundreds of people were waiting  for the wedding to start. Why hadn’t it started?”

“Well, my friend,” said the father of the bride, “we have delayed the wedding for you. You are an important guest.”

Wow. Trust can go far. 

This is a classic case of what happens when one is the trusted advisor.

It goes beyond the business relationship.

(for more on how to achieve the Trusted Advisor status based on the four levels of client relationships, see the following)

Trip Allen, Team Egyii, Singapore

(I am have just come back from United States as we speak so this write up is timely. These are general comments on business and society in the United States, which certainly afffects the whole world,  as I see it today. )

Values drive beliefs and beliefs drive actions. Most of us are aware of this.

The Allen/Coolidge family (my relatives) followed three (amongst many) important personal, work values and beliefs:

The “Protestant work ethic.” The Protestant work ethic is “based upon the notion that the Calvinist emphasis on the necessity for hard work is proponent of a person’s calling and worldly success is a sign of personal salvation.” (Wikipedia) Max Weber, a German economist and sociologist, penned a book called The Protestant Ethic and the Spirit of Capitalism. He believed that the Protestant work ethic (under Calvinism) was the driving force for capitalism. Capitalism (whether you like it or not) has clearly brought America its success, wealth and abundance today.  An interesting article to read on thsi matter is Whatever Happened to the Work Ethic?by Steven Malanga of City Journal.

Honesty. “Honesty is speaking truth and creating trust in minds of others.” (Wikipedia) Speak the truth. Never lie. Honesty is so vital to my family values and beliefs, that, my Grandfather, as a state Congressman, quit politics due to his belief in the lack of honesty in government.

Loyalty. The definition of loyalty is “feeling of duty: a feeling of devotion, duty, or attachment to somebody or something.” (Encarta) Loyalty was and is used across the board for our personal/family and business matters. Unfortunately, the term “loyalty,” from a business perspective, has been diluted with loyalty programmes for repeat buyers. This is not loyalty- this is convenience  for the buyer. Real loyalty, like trust, is personal.

With these values and beliefs, all we Americans prospered and continue to prosper. We need to continue to lead in such manner.

OK maybe I am a little old fashioned. But a lot of these and other important values and beliefs have been diluted or lost over a short period of time (sometimes I even tend to sway off track).

Many influences around us have affected these values and beliefs including:

Our immediate surrounding personal and business environments

The need for instant gratification and results (short term Vs. medium to long term thinking)

Greed

Transactional based scenarios

Think of “me” vs thinking of “you” 

…and more.

I believe that working hard (and of course smart), honesty, and loyalty are important in our personal and business relationships. Let’s go back to basics. It certainly is a lot easier.

Trip Allen, Team Egyii, Singapore