Interviews with Private Bankers (Sunday Times)

[Musicwhiz]

This is Part 1 of a 4-part series conducted by Lorna Tan with various private bankers and their views on investment. Enjoy!

Jun 5, 2011
Banking on his 'private' expertise
In the first of a four-part series, Senior Correspondent Lorna Tan invites a private banker for lunch and asks for investment tips.

Singapore is fast becoming one of the world's biggest wealth management hubs, with thousands of private bankers based here.

Every day, these bankers talk to million-dollar clients from Singapore and all over the world, pitching new ideas on how to invest their money.

Given that their high-powered clients are usually no slouches themselves when it comes to the business world and financial markets, a private banker not only has to keep abreast with the very latest developments, but also earn his keep with the very best strategies.

So if you had the rare chance to sit down with one of these experienced professionals for lunch, what would you ask?

I start by complimenting 44-year-old Jeffrey Tan on his youthful looks before attempting to milk him for money-making ideas.

The managing director of Bank of Singapore, the wholly owned private banking arm of OCBC Bank, thanks me but adds that in his profession, it is not always better to look younger than your age.

'Clients want to know if I have seen the crisis,' he says, explaining that more 'mature-looking' private bankers look like they have had 10 to 20 years of experience dealing with the recent financial crises and violent market cycles.

'How can I suggest that they buy something without experiencing at first-hand the hectic market situation when markets fell? Customers want to know how to react, what can be done.'

It is perhaps for this reason that Mr Tan is decked out in a sombre and discreet black suit as he tucks into his prawn salad at Peach Garden restaurant in OCBC Centre.

The youngest child in a family of nine, Mr Tan graduated from Monash University in Melbourne, Australia, with a business degree specialising in banking and finance in 1992.

A Malaysian who grew up in Johor, he initially intended to work in his home country but kept his options open. His siblings were already working and had settled down in Singapore so he decided to follow suit.

After a career mostly in corporate banking, he entered the profession exactly 10 years ago when he was headhunted in 2001 to join the private banking arm of Merrill Lynch as its chief representative of its Singapore representative office.

There, he worked extensively on a new type of insurance product for the very rich called 'universal life plans' which gave customers the flexibility of deciding the amount and frequency of additional premiums after paying a minimum initial premium.

Such plans, which range from US$500,000 (S$618,000) to more than US$25 million in life coverage, are clearly out of the reach of most investors, so I wait until the sauteed garoupa arrives before fishing for more 'down-to-earth' investment tips.

United States stocks is his first recommendation. So far, 75 per cent of US corporates have beaten analysts' expectations for first-quarter earnings, he points out.

'Some US companies with international product penetration reported strong revenue contributions from emerging markets (especially Asia) in the past few years,' he said.

He especially likes firms like Apple and McDonald's, which have benefited from the strong economic conditions and increasing consumer consumption in this region. US stocks can be traded online through many local brokers now, with commissions as low as 0.35 per cent.

For example, Apple's sales in the Asia-Pacific grew strongly by an average of 89 per cent a year between 2008 and last year. Mr Tan also likes Apple for its key strengths of product innovation, strategic foresight and careful brand management. The company recently reported better than expected second-quarter results and its products remain very mainstream and highly in demand.

In the case of McDonald's, sales in the Asia-Pacific and Middle East hit US$5 billion last year from US$4.2 billion in 2008.

Emerging market economies are another bright spot, says Mr Tan. Countries like Brazil and Russia are benefiting from high commodity and oil prices, and many Asian economies are also in a position of strength as a result of high savings and domestic consumption.

Because the fundamentals are strong in these markets and benchmark interest rates in the US are expected to remain low, investors should be overweight in emerging market bonds, reckons Mr Tan.

His advice for those with a mid- to long-term investment horizon is to buy emerging market corporate bonds through bond funds such as the Lion Global Emerging Markets Bond Fund.

Another fixed income option would be to invest in the investment-grade sovereign bonds and currencies of emerging markets through funds such as the Templeton Global Bond Fund.

I ask him for his views on investment instruments closer to home. What Singapore stocks would he recommend investors look into?

He likes high-yield dividend stocks as they offer investors regular income streams and can be used to hedge against the high inflation rate in Asia.

Mr Tan recommends CDL Hospitality Trust as he says it is a beneficiary of strong tourist arrivals here, with 80 per cent of its net property income derived from its Singapore hotels. The dividend yield is also attractive, being last estimated at 5.2 per cent.

But is it generally a good time to be investing more, I ask. Or should investors start to become more cautious?

'Considering the very low interest rate environment and the relatively higher inflation in Asia, it is still worthwhile to have some exposure in the equity market.

'However, the markets have been quite volatile in recent months, and I would suggest that investors remain vigilant and selective,' he said.

He warns of possible spikes in oil price from escalating tensions in the Middle East and North Africa, a deterioration in the euro zone sovereign debt crisis and a hard landing in Asian economies from overly aggressive policy tightening to control inflation.

As lunch draws to an end, he debunks the common belief that private bankers are at the beck and call of their ever-demanding clients.

'We are contactable anytime but in reality, weekend appointments, if any, are pre-fixed so there are seldom any nasty surprises or last-minute demands,' he said.

Besides, even if work eats into a weekend, it is a small price to pay for a rewarding career where one gets to meet successful people, help them with their financial objectives and build trustworthy relationships, he adds.

lorna@sph.com.sg

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Taking stock

'Considering the very low interest rate environment and the relatively higher inflation in Asia, it is still worthwhile to have some exposure in the equity market. However, the markets have been quite volatile in recent months, and I would suggest that investors remain vigilant and selective.'

MR JEFFREY TAN

BUY, SELL OR HOLD?

Technology stocks: BUY

'I'm positive on the IT sector as it is a growth sector with upside leverage to any global growth. At the same time, it is defensive, given its high margins. The average pre-tax earnings of 26-27 per cent and the net margins of 15-16 per cent are high compared to 23 per cent and 9 per cent respectively for the rest of the market.

Most IT firms are also cashed up, implying they have the balance sheet buffer to make acquisitions. Investable long-term tech names, on the back of recent price weakness, include Apple, Google and Microsoft.'

Gold: BUY

'Gold has dipped from an all-time high of US$1,575 an ounce on May 2, dragged down by declines across the commodity complex and silver specifically. Gold remains a buy on dip in my view. I continue to expect gold to test US$1,600 an ounce over the next three to six months. Resurfacing of sovereign debt concerns set against a backdrop of still low interest rates should keep gold price supported.

However, gold may not be a long-term investment. Gold price may peak sometime late this year, especially once the US Federal Reserve starts to flag tighter monetary policy ahead.'

Aussie dollars (AUD): BUY

'AUD has fallen back after breaching the US$1.10 level as risk sentiment soured and commodity prices fell. I think it is vulnerable to a further pull-back to about $1.01-$1.03 over the one-two months' horizon. But I believe AUD can make new gains and reach near to the US1.10 highs again over the next three to six months. Supported by a multi-year investment boom in the resource sector, Australian economic growth and given the links to Asia's economic boom, AUD should enjoy renewed strength.'

[dydx]

I ever overheard a middle-aged, retired investment banker - who has quite obviously accumulated his millions from many years of professional work and smart investing - said of private bankers: "If they are really good in investing, they should be rich-enough and investing their own money, either on their own or managing a fund in which they have put in quite a large chunk of their own money." I thought there is some truth in what he said.

I suppose it is quite fair to say many private bankers are merely high-class salesmen (who still need a salary job) employed to talk to those rich people who do not know how to invest on their own into parting their money, so that their employers (the private banks) can make some commissions or price differences for the transactions, and hopefully build a larger client portfolio.

[WolfT]

I ever overheard a middle-aged, retired investment banker - who has quite obviously accumulated his millions from many years of professional work and smart investing - said of private bankers: "If they are really good in investing, they should be rich-enough and investing their own money, either on their own or managing a fund in which they have put in quite a large chunk of their own money." I thought there is some truth in what he said.

I suppose it is quite fair to say many private bankers are merely high-class salesmen (who still need a salary job) employed to talk to those rich people who do not know how to invest on their own into parting their money, so that their employers (the private banks) can make some commissions or price differences for the transactions, and hopefully build a larger client portfolio.

Yes, you are correct!
Why pay for something extra when u know what to buy,
but bankers gives me unsecured credits when i need them.

[touzi]

[Yes, you are correct!
Why pay for something extra when u know what to buy,
but bankers gives me unsecured credits when i need them.

I thought it is the other round..Banks only lend you money when you don't need them, they will never lend you when you are desperately in need of money...

For me, even though I am always interested to have a relationship with those hot babe Relationship Manager, none of them seems interested..

[dydx]

Rarely you will find among private bankers experienced lending managers. Private bankers are more supposed to sell you investment products, and less to lend you easy money. If you want to borrow from them, they will first look at the types and qualities (which include market liquidity as the key important criterion) of your investments which you are prepared to pledge to them as security. Their main concern always seems to be: If there is problem, can they quite easily dispose of the investment assets pledged to settle their loan to you. So apart from their attractive interest rates (usually subject o big-enough loan amounts), don't expect easy and flexible loans from private banks, but you must also add their custodian and other fees to arrive at the total effective cost of borrowing from them.

To be smart, you should talk to your bankers to set up a loan facility when you are in prettty good financial shape and the market/economic conditions are at least benign, instead of when you are in desperate need for money and there are dark clouds everywhere. Banks are run by people, and most of them prefer to write new loan applications for easy, straight-foward cases, and with few dark clouds in the horizon. The fact is, experienced lending managers - those who are willing to take on more complex cases - are an exception, and certainly not the norm in most banks. That's why there is these popular terms: "Fair Weather Bankers"; "Banks are fair-weather institutions."

[tanjm]

Rarely you will find among private bankers experienced lending managers. Private bankers are more supposed to sell you investment products, and less to lend you easy money. If you want to borrow from them, they will first look at the types and qualities (which include market liquidity as the key important criterion) of your investments which you are prepared to pledge to them as security. Their main concern always seems to be: If there is problem, can they quite easily dispose of the investment assets pledged to settle their loan to you. So apart from their attractive interest rates (usually subject o big-enough loan amounts), don't expect easy and flexible loans from private banks, but you must also add their custodian and other fees to arrive at the total effective cost of borrowing from them.

To be smart, you should talk to your bankers to set up a loan facility when you are in prettty good financial shape and the market/economic conditions are at least benign, instead of when you are in desperate need for money and there are dark clouds everywhere. Banks are run by people, and most of them prefer to write new loan applications for easy, straight-foward cases, and with few dark clouds in the horizon. The fact is, experienced lending managers - those who are willing to take on more complex cases - are an exception, and certainly not the norm in most banks. That's why there is these popular terms: "Fair Weather Bankers"; "Banks are fair-weather institutions."

In a big enough crisis, expect your private banker to be very quick on a margin call trigger. I personally know someone who got his holdings force-sold (he claims he was within requirements still at the time). You also see such stories in the media (though with a pinch of salt since someone who is litigating to not pay up or to get money back would naturally tell a story to his benefit).

[Musicwhiz]

Rarely you will find among private bankers experienced lending managers. Private bankers are more supposed to sell you investment products, and less to lend you easy money. If you want to borrow from them, they will first look at the types and qualities (which include market liquidity as the key important criterion) of your investments which you are prepared to pledge to them as security. Their main concern always seems to be: If there is problem, can they quite easily dispose of the investment assets pledged to settle their loan to you. So apart from their attractive interest rates (usually subject o big-enough loan amounts), don't expect easy and flexible loans from private banks, but you must also add their custodian and other fees to arrive at the total effective cost of borrowing from them.

To be smart, you should talk to your bankers to set up a loan facility when you are in prettty good financial shape and the market/economic conditions are at least benign, instead of when you are in desperate need for money and there are dark clouds everywhere. Banks are run by people, and most of them prefer to write new loan applications for easy, straight-foward cases, and with few dark clouds in the horizon. The fact is, experienced lending managers - those who are willing to take on more complex cases - are an exception, and certainly not the norm in most banks. That's why there is these popular terms: "Fair Weather Bankers"; "Banks are fair-weather institutions."

Thanks for the info on private bankers. I'm not from the banking sector so it's good to get some information and views on how bankers behave.

True about the part on being fair weather. Banks only lend to you if you have a stable income and a good Balance Sheet, otherwise the irony is that you can't get them to dispense any loan to you at all. That's why people who are not credit-worthy often turn to money-lenders or loan sharks.

[Musicwhiz]

This is the 2nd interview with private bankers. He is Mr. Desmond Koh, a senior RM working at DBS Private Banking. Enjoy the interview!

(Note: I actually expected more regarding the recommendations, but he simply sticks to avoid property and buy REITS!).

Jun 12, 2011
No junk bonds, no junk food
Private banker and nature lover dishes out investment and healthy living tips to clients
By Fiona Chan Assistant Money Editor

For better or worse, there are certain stereotypes that most people associate with private bankers in Asia.

Which is why I am surprised when I invite one out for lunch and, instead of opting to meet at a swanky downtown joint, he suggests going to a low-key vegetarian restaurant in Bishan Park.

But then Mr Desmond Koh, a senior relationship manager and client adviser at DBS Private Bank, is not your typical banker.

For one thing, he was an Olympic swimmer who had participated in three Olympic Games by the time he turned 23. He was captain of the national team and represented Singapore at international swimming competitions for more than 10 years.

Mr Koh, now 38, was also a Rhodes scholar and a graduate of Oxford University in Britain, where he earned a Master of Philosophy in management studies.

But as I read his bio while waiting for him at The Green Room Cafe - whose speciality is raw vegetables intimidatingly described as 'ethno-botanical living cuisine' - what jump out at me the most are the last two lines.

It turns out that while green may signify the colour of money to most bankers, it represents a deep-seated passion for nature where Mr Koh is concerned.

By day, he deals with mega-wealthy clients and regularly jets to Indonesia, Malaysia and Hong Kong. But in his free time, he is a 'vegetarian and environmentalist' who 'enjoys working on his edible garden' with his family on weekends.

That explains our lunch venue, which is largely empty at 1.30pm on a Thursday. It is not all that surprising, since most people are not gourmet rabbits.

But as I am putting buck teeth and a chef's hat to my mental picture of Mr Koh, he finally arrives at the restaurant - 20 minutes late as a result of taking a phone call outside - and I find myself having to re-evaluate my assessment of him.

In person, he looks every bit the successful carnivorous banker.

He is tall, energetic and gregarious and decked out in a well-fitting grey suit lined with purple silk - made-to-order, like most of his other clothes, because of his unusually broad shoulders, he confesses sheepishly.

Those shoulders are the legacy of years of intensive swimming. From the time he was eight, he was training in the pool eight to 12 times a week, starting at 5am.

At least he was not alone: His two brothers were also national swimmers. They are now working in finance as well.

In fact, Mr Koh - who did his undergraduate degree in electrical engineering at the University of Southern California - was inspired to go into banking by his older brother, who was then an economist at JP Morgan.

The discipline involved in being a world-class swimmer and former Ironman participant has stood Mr Koh in good stead in his 15 years in banking. During those years, he had worked at Goldman Sachs, Credit Suisse and Barclays Capital, and lived in London, New York and Hong Kong.

These days, he wakes up at 6am to swim, run or cycle before he goes to the office. After a full day of work and meetings with clients, he returns home at 7pm to spend time with his younger children before they sleep at 8pm - after which he hits the documents again, squeezes in time for more exercise and then heads to bed close to midnight.

'I really multi-task,' he says, when I ask how he fits so much into one day. As he pedals away on his stationary bicycle at home, he checks his BlackBerry at the same time.

Other lifestyle quirks of this unconventional banker: He does not 'hang out' at bars or clubs at night, preferring to spend time with his family at home; he is currently a teetotaller; and he 'doesn't really lunch', often grabbing a wrap and eating it in his car after a noontime swim instead.

As he says this, the waitress comes to take our orders. I gingerly pick the least exotic choices: vegetable soup, rice pancakes and apple juice.

Mr Koh, on the other hand, demonstrates his familiarity with the restaurant by first observing that the menu has changed from what it was two weeks ago. He then proceeds to order edamame and aloe vera soup, a 'living' vegetable and herb sausage, and an 'all the greens' juice that includes, among other things, broccoli, coriander and spinach.

Does his penchant for a healthy lifestyle ever get in the way of a job synonymous with wining, dining and socialising, I ask him curiously.

He grins broadly and shakes his head. 'Many of my clients in fact ask me for recommendations on healthy restaurants and where to buy groceries,' he says.

Mr Koh is an expert in this area partly because of his eco-activist wife. Indeed, in some circles, he is better known as the husband of former model and MTV video jockey Nadya Hutagalung, 37.

The couple have a non-profit sustainable living website, Green Kampong. They also have three children, two of whom are from Ms Hutagalung's previous relationships. Mr Koh himself has also been married previously.

Perhaps fittingly, given that Ms Hutagalung is half-Indonesian, Mr Koh now spends most of his travelling time in Indonesia, where the bulk of his clients are based.

When I grab this chance to ask for investment tips, he hesitates for a while.

Most of his clients are extremely wealthy entrepreneurs, he explains, whose main priorities are to preserve and transfer the wealth they have created to the next generation while generating liquidity from their often illiquid assets for current use.

His expertise does not translate well to the interests of retail investors. But never one to pass up on a challenge, Mr Koh gives it his best shot.

'Over this summer, we have been winding down on risk,' he says. This involves reducing exposure to commodities and equities and ramping up on bonds and even cash, 'although not for too long because inflation is still high'.

He believes, on the whole, that the macro environment is 'a bit shaky' right now.

Citing the long-standing sovereign debt issues in Europe and the faltering recovery in the United States, he says he expects markets to keep moving 'sideways or downwards'.

It does not help that liquidity levels drop over summer as investors go on holidays, making markets even more lacklustre, he adds.

Given this, Mr Koh recommends that investors put their money into fixed income. Bonds are a good choice, he says, pointing to some new debt issues by Asian companies.

One of them is Temasek Holdings-linked shipping firm Neptune Orient Lines (NOL), which announced an issue of 4.4 per cent notes last week. Demand for the notes was so strong that it raised its offering from $200 million to $300 million within the day on Wednesday. The notes will be due in 2021.

'It opened in the morning and by the afternoon it had already closed,' Mr Koh said of the NOL issue, for which DBS was the global coordinator. 'It's such an easy issue, it's a name that clients are comfortable with.'

On the currency front, he is bullish on the Singapore dollar because persistently high inflation will prompt it to continually appreciate.

He also likes the Australian dollar because of the boom expected in resource- and commodities-rich countries, and the Chinese yuan because of the country's growth story.

'One of my favourite pieces of advice to clients this year is to re-base their US dollar investments to Chinese yuan or Singapore dollars,' he says. This allows investors to benefit from the currency appreciation as well.

The time that Mr Koh spends in Indonesia has also convinced him of the country's growth potential over the next 10 years. It is one of his long-term investment ideas, along with China and India.

Investors looking for a more interesting avenue for their money could turn to coffee shops, he adds.

'Some of the yields on coffee shops are 6 per cent to 8 per cent.'

But while coffee shops may be good investments, their fare has nothing on The Green Room Cafe's, as it turns out.

The food, when it comes, is as much of a surprise as Mr Koh himself - richly flavourful with hidden layers of texture and taste.

As I munch on more vegetables than I have eaten in a week, contemplating all the stereotypes I have had to overturn in one day, he provides some final food for thought.

'It's not what the best investment idea is in general, but what suits individual clients,' he says.

It is sound advice, to be sure.

But it also serves as a timely reminder, from an unusual banker, not to succumb to generalisations - whether about investment strategies, food, or even people.

fiochan@sph.com.sg

This is the second of a four-part series on lunch conversations with a private banker.

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BUY, SELL OR HOLD?

Desmond Koh's investment picks:

Property stocks: SELL

'We've been switching out of property counters into higher- yield instruments like Reits, the real estate investment trusts.

'The Singapore election and the subsequent issues surrounding housing, that's one catalyst. But also the run-up of some of those prices has been quite high.

'There are signs, already, that the Government will... because of the unhappiness of home buyers on the ground, take measures to help them.'

Reits: BUY

'If clients still like real estate, we would prefer to go into Reits, versus the real estate developers in general.

'We prefer the industrial or commercial Reits - on a cycle basis, those are good now.

'Even things like Parkway (Life) Reit, it's good for hedging against rising inflation.'

[Musicwhiz]

This is Part 3 of 4 for interviews with private bankers. This time it's a lady!

Jun 19, 2011
She's always there for her clients
Stanchart's private banker says her work is all about building relationships around trust and respect
By Aaron Low

When I first suggested lunch venues for an interview with one of Standard Chartered's top private bankers, I thought I had done a pretty good job of choosing classy places within a decent budget.

After all, I had carefully picked a cosy Italian restaurant, rated one of the best such in Singapore, and a Cantonese restaurant at a five-star hotel.

Instead, the bank's public relations officer politely suggested their exclusive dining club, situated in their office building at Marina Bay Financial Centre.

This way, they could let me see where the bank hosts some of its top clients.

She did not, of course, say they did not like my choices but when I went to their suggested place, I quickly figured out why they preferred to dine there.

Located on the 32nd floor of the Marina Bay Financial Centre, with a view overlooking Marina Bay and much of Singapore's skyline, the bank's dining club for its clients lived up to the expectation of being expensive and exclusive.

The food came from award-winning French restaurant St Pierre's and we even had a personal waiter, who looked and sounded French.

With dining like this, one could be forgiven for believing the talk that private bankers' lives are all glitz and glamour.

However, my lunch companion, Stanchart's private banking director Susan Heah, says that is a gross misconception.

'Is this what people are telling you? That private bankers just go to glamorous parties? Good thing I get to talk to you,' she says, with a laugh.

'There is more hard work than meets the eye.'

Dressed in a crisp grey skirt-suit, and toting a Bottega bag, Ms Heah, who would only say she is in her mid-40s and married with two children, cuts the stereotypical figure of a professional banker.

But instead, she comes off as a warm, kind and, dare I say, even motherly figure, who seems genuinely interested in who you are and what you do.

Indeed, for Ms Heah, who was a corporate banker for more than a decade before switching to private banking, the work of a private banker is all about building relationships around trust and respect.

'As a corporate banker, you worked on banking solutions and earned his respect and trust. As a private banker, you almost become part of his extended family,' says Ms Heah, whose clients are primarily wealthy Singaporeans.

'So (you) are there when he breaks a big deal, you are there when his children get married and you are there when he retires. And sometimes you are present when the family gets into disagreements.'

She admits that sometimes her clients call her on weekends, and in the middle of the night to ask for advice. Sometimes, they even ask her to meet their children who are in Singapore for a short stint.

'I enjoy the interpersonal aspect of private banking and I don't see it as a burden but part of building my relationship with them,' she says, in between small mouthfuls of codfish.

Being there for her client builds the trust but the other half of the relationship is respect for her as a professional banker.

Being wealthy, many of her clients are savvy with their money and investments.

Instead of simply leaving the banker to manage all the money, most of them already have an idea of what they want out of it, whether it is simple wealth preservation or wealth transfer to their children or investing for specific goals in life, she says.

And as such, she cannot be a simple executor of her clients' will.

'They are looking for a partner, someone they trust to manage their money for them. So you better know your stuff,' says Ms Heah, who majored in economics, statistics and sociology at the National University of Singapore.

She trots out economic data like the many economists I speak to: United States growth is likely to slow while Europe's debt crisis creates deep uncertainty over the advanced economies' ability to grow.

China's growth is also likely to cool, although it remains on track to become an economic powerhouse, she notes.

Most of her views are taken from the research teams who support bankers like her but she also makes it a point to read and monitor the markets on a daily basis.

So when asked what her tips are for someone like me, aged about 30, with a three-month time horizon, with a million dollars to spare (which I don't), she gamely takes me on.

Given that the market is volatile, with no clear direction now, she proposes 55 per cent in equities, 20 per cent in alternative investments or hedge funds, 15 per cent in bonds, 5 per cent in cash and 5 per cent in commodities.

Equities, she says, is still king despite the turmoil in the markets.

In particular, she singles out the Chinese market, which experienced flat growth for the better part of the past two years.

'This makes stocks cheap there. I like defensive stocks, such as health care and telcos, although Chinese banks are good too,' she says.

In particular, stock prices of health-care companies in China, despite the sluggish performance of the stock exchange there, have gone up 13 per cent since the start of this year, she says.

With the addition of a potential 3 per cent to 5 per cent dividend yield, this could well come up to 15 per cent or more, she notes.

Another way to ride the turmoil is to park money with hedge funds, which can do both long and shorting of the markets, she advises.

For bonds, she suggests taking a look at local currency emerging market bonds that offer good yields and potential currency appreciation.

Lastly, she favours holding some of the assets in cash and holding on to gold.

'The cash component is there to take advantage of the bottoms, which can make some stocks extremely cheap,' she says.

In all, a portfolio like this, which is considered to be 'moderately risky', can be expected to generate about 8 per cent to 10 per cent in returns in a volatile market.

'In a good year, this could go as high as maybe 12 per cent, although again it really depends on what the client wants,' she says.

Asked if she had to deal with difficult clients who may have unreasonable expectations of returns and the kinds of risk required, she says it is a matter of managing expectations.

'So far, none of my clients have been that way, where they are not prepared to deal with losses,' she says.

'It's important to set targets early on and manage expectations professionally.'

aaronl@sph.com.sg

This is the third of a four-part series on lunch conversations with a private banker.

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Part of the extended family

'So (you) are there when he breaks a big deal, you are there when his children get married and you are there when he retires. And sometimes you are present when the family gets into disagreements.'

MS SUSAN HEAH, Stanchart's private banking director, on a private banker's relationship with his or her clients

A trusted financial partner

'They are looking for a partner, someone they trust to manage their money for them. So you better know your stuff.'

MS HEAH, on her clients, most of whom are savvy with their money and have an idea of what they want out of their investments

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BUY, SELL OR HOLD?

Ms Susan Heah's investment picks:

Asian currencies: BUY

In Asia, the trend for currency appreciation remains, especially for the Singdollar, the Chinese yuan, the New Taiwan dollar, the South Korean won and the Indonesian rupiah.

China is likely to keep its yuan on an appreciating trend for now, and this should support Asian currencies. Asian currencies, including the Singdollar, still continue to appreciate due to strong fundamentals.

Gold: BUY

Gold is our commodity of choice. We recommend up to a 2 per cent to 5 per cent portfolio weighting.

Possible near-term consolidation followed by new highs in the second half of the year will provide potential entry points.

There are many ways to invest in the gold cycle: buying physical gold or buying gold exchange-traded funds, which are often backed by physical gold, and can be viewed as a proxy for gold.

One can also invest in gold companies - majors, mid-tiers and juniors. We think the juniors, if filtered properly, can offer very handsome returns.

Long duration G-3 bonds: SELL

G-3 (the United States, Europe and Japan) bonds are expected to generate negative returns over the next 12 months. Softer economic data led bonds to rally in the past month.

While this may continue in the short term, the longer-term outlook remains bleak as we expect economies to recover from the temporary soft-spot while inflation rises and monetary tightening is pursued.

[Musicwhiz]

This is the final part 4 of 4 on interviews with private bankers.

Jun 26, 2011
Banking on a 3P strategy to serve
'People, product and platform' sum up UBS managing director's work philosophy
By Joanne Lee

Lunch plans with this private banker turned out to be, well, private.

When I approached UBS for an interview with its managing director Henk de Glint, I wondered where we would eat.

Given the smogasboard of new restaurants that opened in the past year, and that my relationship with this bank has tended to yield some pretty good lunches, I waited with bated breath to see where Mr de Glint's people would choose.

'May we host you at our premises?' I was asked. 'It'd be more private and easier for you to take notes.'

It was a kind suggestion, and with an obvious message: Let's keep things private, please.

Arriving at UBS' top-drawer offices at One Raffles Quay, my ears popped as the lift propelled me to the 50th floor where I was well met with a catered bento box lunch in a private room.

Mr de Glint, 44, hails from Groningen in the Netherlands. The way he talks about food, however, is entirely Singaporean.

Heartily agreeing to dine before talking shop, he spent a good five minutes pondering my likening of Swiss fondue to our local steamboat. Polishing off our Japanese lunch, he naturally segued into how he had become head of the Swiss bank's ultra-high net worth business here.

'I like it so much here I never wanted to change any more. So I stayed on and started to become part of Singapore. I don't really look back,' he mused.

He came to Singapore in 1994. After one year in ABN Amro's treasury markets department, he was going to move on again when he was asked to join the private banking arm instead.

The bachelor stayed, and now helms UBS' Singapore and Malaysia ultra-high net worth operations.

Mr de Glint, an economics and business administration graduate, describes private banking as very people-based.

'I feel very strongly that private banking is a people's business. Most think banking is a very number-based, spreadsheet-driven business. But you realise there are people out there and you must have a genuine interest in people and what they are motivated by,' he said.

'Clients are, in essence, concerned about their future and a consistent performance. We should always be in consultation with them. If they have time to listen to you, and give you the capacity to act, you need to be able to respond well.'

It is the cornerstone of his management philosophy, which he sums up as 'people, product, platform'.

The first P of his 3P strategy - people - he defines as the most important factor. 'We have to be good bankers because the environment has changed. Clients are more demanding and bankers need to be constantly educated.'

The second P - product - focuses on what best to offer clients as part of the advisory business. The third P - platform - refers to how products are assembled and delivered to clients efficiently, including IT and regulatory frameworks.

Mr de Glint described a private banker's role, in medical terms, as a general practitioner - one-up from a generic pharmacist but still secondary to a specialist.

'We have our views, but it's the specialist who will back us up. The doctor is there as the first point of contact, but we work with the specialist to find the solution.'

The specialist, in this case, is the asset manager or investment bank, which, in UBS' case, he describes as a 'hospital'.

Settling into the interview, he first described why people need a private banker.

'As we have seen in the wealth life cycle, you start to change your outlook from 'value to values'. Typically, you'd start with 'value creation' because you want to build your business and personal wealth. Later in life, 'values' become very important. Maybe there's a crisis, perhaps a life-threatening event, and then how you pass 'values' to the next generation becomes very important.'

This topic of philanthropy now, he said - in private banking - is more relevant as wealth moves along with the ageing population.

'We are seeing wealth being passed on from the first generation to the second or third generations. As this happens more, people are asking more out of their private bankers,' he explained.

When asked what personal investments he has made, he demurred a touch before launching into his personal portfolio.

'Gold investments have turned out to be lucrative. Real estate too, physical assets rather than equity ones. Of course, you will always have to keep a bit of cash holdings.'

Anything unusual?

'I have a little Vietnamese art from when I worked there before I came to Singapore. But no, I have no cars or wine. That's what the clients have,' he joked.

Winding up the enjoyable lunch with some hot tea, Mr de Glint summed up what it takes to be a good private banker.

Content is king - to be in this business means you are up to speed with the investment climate. Expertise and experience too - clients want the security of someone who knows his job.

And finally, personality.

'The job of a private banker is a difficult one. You need to serve the client but you also have to challenge the client. The total approach will then translate into consistent performance.'

joannel@sph.com.sg

This is the last in a four-part series on lunch conversations with a private banker

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Buy, sell or hold?

Here's a look at Mr Henk de Glint's investment picks.

High-dividend stocks: BUY

'In the current environment of elevated uncertainty, investing in dividend-yielding stocks may provide an income stream which can act as a support in declining markets. It may also have the potential long-term benefit of equity markets. We believe that investors often underestimate the cumulative effects of income returns. Since 1973, dividends have accounted for an average of one-third of total equity returns. In the Singapore market, our view is that there are a number of stocks providing attractive yields.'

Asian currencies: BUY

'With the three major currencies - the US dollar, euro and Japanese yen - all having serious, mostly debt-related issues, we expect most other developed and emerging market currencies to gain against those three. We believe that Asian currencies, including the Singapore dollar, are poised to gain further ground against these three currencies. High inflation may create an additional incentive for regional central banks to allow more appreciation, compared with the past. Many investors may still have large exposure to the greenback. We take the view that this exposure should be reduced by investing in currency-hedged instruments or through hedging.'

Government bonds: SELL

'We believe that inflation may become a more serious threat from next year onwards - not only in emerging markets but, more importantly, in the US and Europe. In an inflationary environment, interest rates would likely rise sharply and, therefore, hurt the prices of government bonds. While we do not think this is an immediate threat, our view is to stay away and focus on stocks, high-yield corporate bonds and commodities instead.'