Wealth management: evolution and disruption

Today’s Wealth Management professionals are called upon to respond quickly and creatively to technological challenges, to provide a menu of diverse products and act as personal advisers as well as Wealth Managers. Athena Shipilli Tsingi, Director of Wealth Services at Bank of Cyprus, talked to GOLD magazine about the evolution of Wealth Management and the weight of responsibility that comes with her current role.

How have your previous posts prepared you for your current position?

I have been involved in the financial services industry from the start of my career, which has covered external audit, internal audit, compliance, AML compliance and risk management of regulated entities in London, Cyprus and Greece. By being immersed in financial services from both the control function and the numbers side, I became cognisant of how investments should be risk-managed under a proper stewardship. I further participated in investment committees, always having the preservation of client capital as the core principle. My previous role involved the risk management and oversight of a large portfolio of a multi-national group of regulated entities with investments mainly comprising listed liquid financial instruments. Coordinating the risk management of investments allowed me to familiarise myself with the nuances of managing risk in large and diverse investment portfolios across escalation thresholds and via a coordinated team approach. Through its award-winning Wealth Services Division – to which I am now privileged to belong – and its Wealth Services professionals, Bank of Cyprus offers its clients a comprehensive range of investment products and specialised services across all areas of wealth. We cater for the needs of our individual and institutional clients with propositions ranging from Private & Affluent Wealth Management and Lending to Institutional Wealth & Custody, Depository and Prime Broker Services for Funds, Brokerage Platforms and Asset Management.

How have Wealth Management services evolved over the years? Is the personal relationship between Wealth Managers and their clients as important as it was before COVID-19 changed so many aspects of how they worked together?

The Wealth Management industry has evolved dramatically, particularly as fintech disruptors have introduced technological advancements via multi-asset platforms. This has spurred the traditional banks to reinvent their services and their product offering, always in tandem with the corresponding regulatory powers. The 2008 financial crisis demonstrated that the industry was in need of sweeping reform, in terms of investor protection, the introduction of conflict control mechanisms and the revision of the remuneration of Wealth Managers. Banks’ risk management departments took centre stage and evolved into a protection mechanism for internal capital and shareholder wealth and their influence also led to the portfolio protection of client capital at Wealth Management desks across the globe. The black swan event of COVID-19 re-introduced risk and volatility to the markets that had enjoyed more than a decade of relative stability and increases in asset prices. These headwinds affecting the preservation of investors’ wealth were then accentuated by the subsequent war in Ukraine, the second of two crises in quick succession. Wealth Managers had to dig deep and challenge themselves on their asset allocations in an effort to combat high inflation and the corrections suffered by the markets. From the estate planning side, COVID-19 rocked many families and forced professionals to rethink how wealth needs to be managed and preserved. It further highlighted the essential need for long-term planning for loved ones, rendering the role of the Family Wealth Manager even more prevalent and of the utmost responsibility. Financial planning should focus across generations by placing emphasis on asset protection and by creating future income streams for the education and financial safeguarding of dependants.

What are the key service attributes that Wealth Managers should focus on to retain existing clients and attract new ones?

The Wealth Manager’s role is one that should evoke trust, accountability and responsibility in the eyes of the client. Managing a person’s money is both a privilege and a great responsibility for advisers who forge long-term relationships with their clients and utilise the synergies and research mechanisms of Bank of Cyprus Wealth Services teams to tailor investment proposals. Each client is special and unique in terms of their needs and priorities, which requires individual attention to the construction, maintenance and re-balancing of their asset portfolio. The Wealth Manager should be committed, drawing support from research teams, and focusing on the client’s individual circumstances in order to recommend the best investment strategy.

To what extent do issues such as sustainability, the rising cost of living, the energy crisis, increasing inflation, etc., affect your High Net Worth clients and your operations? How do you respond if they feel the need to change their investment strategy?

Any market shocks, like inflation or soaring energy prices, will spur volatility and invite Wealth Managers to revisit their clients’ portfolios to assess if any re-balancing actions are required. Wealth Management is a long-term play, usually with an investment horizon of five years or more. Hence, when an investment proposal is made to a client, this has a long duration to play out and some volatility during this journey should be expected and anticipated. Market changes should not necessarily trigger emotional responses but should instead make a Wealth Manager look at the portfolio via technical analysis with the research experts. Each re-balancing change should be meticulously assessed, based on the long-term investment horizon strategy mapped out for the specific client. Structural reforms in the investment process, like ESG and sustainability policies governing our decision making, have gained a more profound role in Wealth Management and the products offered to clients. The Wealth Services product selection process is required to include ESG-compliant products and the challenge is to anticipate the effect of sustainability policies on industries and geographies alike.

How is the rapid development of digitisation and the explosion of fintech solutions affecting your line of work? Does this move towards the democratisation of investment solutions pose a challenge for you?

The fintech and invest-tech revolutions of automated investment platforms, robo-advisers, copy trading, social trading and algorithmic trading and more, which are offered easily to the masses, have transformed the core of the Wealth Management industry. We note that technological advancement and digital transformation should not be exclusively available to fintechs but should also be used to transform more traditional banking institutions, including BOC Wealth Management Services. Digital transformation has helped us provide both our institutional and private banking desks with synergies and access to real-time data analyses, which was previously not possible. What is worth noting, however, is the importance of blending technology with the personal touch of a Relationship Manager, which gives the client a tailored and personalised solution.

In such a competitive area, what are the advantages that Bank of Cyprus’ Wealth Management Services have over those of your competitors?

The competitive Wealth Management landscape is divided between the challenger fintech banks that offer automated non-personalised solutions, local banks that compete directly in the market, and international players that perform fly-ins and try to cherry pick HNWI and ultra-HNWI clients. BOC Wealth Services welcomes competition, as it ensures our consistent improvement and allows us to constantly generate solutions that are ahead of the curve in the Wealth Management industry. As mentioned earlier, we challenge the fintechs on technology but avail clients with a personal touch and a solid credit rating, which provides investors with certainty when it comes to preserving their capital with us. Locally, BOC is a market leader in most banking service lines, which enables our Wealth Management services to be equally successful, as evidenced by our recent Euromoney award as “Best Private Banking & Wealth Management Bank” in Cyprus for 2022. With regard to international banks, BOC competes head-to-head for local clients via its strategic collaborations, which allow the Bank to offer equally unique solutions through External Asset Managers whilst enjoying home advantage of having Wealth Managers available to meet on every occasion and to address each client’s specific needs.

(This interview first appeared in the February 2023 issue of GOLD magazine. Click here to view it.)