In this episode of Beyond Markets, we are joined by Nicolas de Skowronski, Head Wealth Management Solutions and member of the Executive Board, and Sonia Goessi, Head Region Switzerland and Europe and member of the Executive Board, to discuss Julius Baer’s 360-degree approach to wealth management and why it is important for everyone. Listen below, or keep reading for the full conversation.
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First and foremost, what exactly is 360 Degree Wealth Management?
Sonia: It’s really a holistic way of looking at life events and how we – wealth managers, private bankers – can support our clients to achieve their goals in life and support them in their life events as they occur. Concretely, what are the major life events that might or might not have a financial impact for the family? One of them might be sending your kids to university. Another one might be a difficult illness, and how you can provide for the financial needs of family members in such a situation. It might also, unfortunately, be a divorce situation. [The child of a client] might get a divorce, or it could be the client themselves. All of that has financial implications that you can plan for. We help our clients to look at those implications, deal with the planning, consider the cash flow events that could happen, and also support them in looking at their financials holistically.
Some people might not realise that this sort of work falls under wealth management. You look at a company like Julius Baer and you think, “They’ll deal with my investments.” But this is obviously much broader.
Sonia: It’s really accompanying life planning with wealth planning. How do you plan your wealth to support achieving your dreams, and also to support you through important life events? Depending on what we’re talking about, it can have tax implications – you may need tax advisory services. It might be relocation services. We employ a range of specialists to support the realisation of all sorts of dreams and objectives.
So what would that look like for somebody buying a house, for example? How would the discussion with the relationship manager work?
Nicolas: Buying a house, usually people would think about which house to choose and how they can finance it. But it’s a significant decision with major impacts, and you need to take many different aspects into consideration. Where do you buy the house? What would happen if you buy it on a standalone basis, or if you buy it with your wife? What would happen if you pass away? Do you need to plan for life insurance? You need to think about long-term planning. How do you want to structure your mortgage? Do you want to leverage your portfolio less or more? What will happen with the next generation?
It’s very easy to plan. But if you don’t do it in advance and some sort of unfortunate event does happen, this can have devastating consequences on your family. You want to make sure that you can plan for [those eventualities] correctly.
What other benefits can 360 Wealth Management offer besides this zoomed-out perspective?
Sonia: One of the strongest is the personal conversations with a client advisor or relationship manager. These are difficult and emotional questions that you need to ask and address, and you might not be exploring these sorts of topics in normal conversations with other people. A good relationship manager helps clients through this thought process – through all the options and difficult situations that might happen during a lifetime. They make sure that whatever happens is accounted for, at least on the financial side.
What does the process look like with Julius Baer? You come in to discuss buying a house, for example. How do we support clients with that and introduce this full-spectrum concept?
Sonia: Clients complete our “360 application”, which helps us to make sure we’re covering all the topics we should be talking about. Buying a house is just one area we might help with. That could lead into other conversations – the client may start thinking about other long-term priorities; children, marriage, education. Or maybe it’s grandchildren, moving somewhere new, or buying a summer holiday home. You start really thinking long term and about all sorts of implications. We create a time map including the main events that the client decides are important for them. Then together with the client, we start thinking of the cash flows that will be necessary during those life events.
What sets Julius Baer’s approach apart from competitors?
Nicolas: In many cases, people don’t want to disclose their entire situation to a banker. They view wealth planning as something they can do alone – they’ll sit down at the computer one evening and sort everything out.
But there are a few absolutely crucial elements that a good wealth manager provides. First, it’s somebody who is emotionally independent and has a lot of experience assisting you – a high-quality relationship manager. The second element is about asking the right questions. There is a lot of complexity involved in personal finance, especially when regulation is considered. If you have an international footprint, what are the right questions to ask and to follow up on?
One of the key value propositions for us as a bank is our network of approved providers – handpicked collaborators we can guarantee are highly competent and able to provide clients with the right support. As an example, if I decided to move to Germany, I’d need to manage a different tax situation. Julius Baer would set me up with the best tax advisor in Dusseldorf. That’s an invaluable service for clients.
As you say, families are increasingly global and individual circumstances are ever more complex. Has this complexity made the 360 Degree approach more important?
Sonia: When you have a complex situation, it’s all about asking the right questions. You don’t know what you don’t know. This is why it’s so important to have conversations with an experienced relationship manager. Specialists can ask the right questions and identify potential difficulties and challenges early. To your point, we’re seeing a major generational wealth transfer in Europe and in other places around the world. That makes it even more important to have those conversations, especially if you run your own company. Business owners can put all their energy into their enterprises and might not give much thought to their private wealth outside of the company. It’s super important to conduct this holistic planning and think about both your personal and company finances. The beauty of having the opportunity to speak to a specialist is that he or she’s will ask the the right questions to identify the potential challenges you might be confronted with as time passes.
On the topic of the Great Wealth Transfer – do we see a more proactive approach to holistic planning from the younger generation versus the older? Or is there no difference discernible at the moment?
Sonia: Sometimes you meet entrepreneurs that are in their 70s and they have no plan whatsoever. And these are the clients that you really need to help, because they’re more vulnerable to unexpected events. Of course, the company is their baby – it’s like one of their children. As much as it is an emotional conversation, it is an important one. It’s maybe a conversation they didn’t want to have with the other family members. So hence the importance of having a banker addressing those issues.
Is there ever a point where it’s too late to support a client? If you were creating a roadmap, I think many people might assume this needs to be done early. Or is it beneficial at every stage?
Sonia: It’s certainly beneficial at every stage, and the earlier the better. And it’s also important to do it continuously. Your situation today might change two years down the road, so you will need to revise your objectives frequently. Whenever your circumstances change, make sure you talk to your relationship manager – those changes might have implications for your portfolio or your financial planning.
Is 360 Degree Wealth Management aimed at a specific demographic? Or is it broadly applicable?
Sonia: Everybody should have a dream for their life, and everybody should have a plan. Everybody should also have conversations about their finances to support the realisations of those plans and dreams.
Nicolas: I did it personally. As Sonia said, they are not easy conversations – even though I knew what to expect to an extent. We looked at my assets and liabilities, but when my relationship manager asked me, “What do you want to achieve in life?” I started to think about it. When do I want to retire? I have to say, I don’t know. What do I want to do later? I had a vague idea.
I started to realise that I had a lot of these dreams and ideas – like everybody – about real estate and moving and travelling, but I never thought if I could really afford it. And how can I make sure that I can have always provide a safe and good situation for my kids? I realised that the conversation with my private banker was not about investment. It was about emotion. It was about my life. And it’s not about, whether I buy Nestlé or Novartis – that’s irrelevant. It’s about how I want to plan my entire life. And this was a completely different situation for me. Now I’m actively looking at my plan and I’m changing it from time to time.
I think that will be very reassuring for people to hear. What are the key takeaways that you would give to those thinking about wealth planning?
Nicolas: You need to have a plan. You have your dream – make sure that you can put that in a roadmap and assess how you can realise it.
Sonia: It’s never too late to have a plan, but it’s also never too early to have a plan. And the plan might change, and then you will have to go back and revise. The financial component is an important part of that plan. If you have no plan, it’s a lot harder to reach your goals. I think it’s as simple as that.