John Bahnken on wealth management | Bank of the West

Transcript

Bank of the West Wealth Management provides wealth planning, investment management, personal banking, and trust services. The group is part of BNP Paribas, one of the six highest-rated banks in the world. Telling us more about wealth management is John Bahnken, Senior Executive Vice President at Bank of the West.

World Finance: Tell us about the dynamics of wealth management in the US

John Bahnken: So the wealth management business is I think quite different in the US to other parts of the world, certainly here in Europe and probably Asia as well. The primary reason for that is history, so if you think back to the early 1930s, Glass Steagall for 60 or 70 years did a very effective job at splitting the banking and investing businesses and it was really only until the late 90s when the industry began to come back together again. So the way clients are served in the US continues to be very segregated between investing and banking and the larger institutions today are beginning to bring the value proposition back together which is proving to be very very popular with people, but it’s created a very fragmented environment.

“It’s very much a universal style, this 360 view to clients”

World Finance: So how today do you approach wealth management with your clients?

John Bahnken: So at Bank of the West, Bank of the West Wealth Management, we are part of BNP Paribas. BNP Paribas basically began wealth management here in Europe so it’s very much a universal style, this 360 view to clients delivering integrated banking and investing, and when we launched our new model for serving clients at Bank of the West, we drew a lot of inspiration from BNP Paribas. But obviously we tailored it to the regulatory environment, the cultural environment, in the United States and so we deliver a 360 value proposition to clients helping them serve all of their financial needs.

World Finance: I’m interested in what you say about the 360 approach, a holistic understanding of people’s wealth management needs, tell us more about that

John Bahnken: Well yeah, that gets back to what I was saying where the industry has been separated, we tend not to think of our clients financial lives as being investments or banking, we tend to think of them much more- to use your word, and I think it’s a good one- holistically. So we don’t push products on clients, we work hard to make sure that we understand what clients need and then develop the solutions that they require. Sometimes they might be investment solutions, and other times they could be wealth strategies, estate planning strategies or things like that, so we tend to think we work very closely with clients to help them solve all of their financial needs.

“We’re actually quite small so we can traverse the organisation to the benefit of our clients very effectively”

World Finance: And in this way you’re very different from a standard private banking or brokerage operation?

John Bahnken: Yeah I think there are a few, some of the more progressive wealth managers in the United States are moving more in that direction but, candidly, in the large companies it’s much much harder to deliver the full 360 value proposition. They’re very fine competitors but it’s hard to work across some of those organisations, an advantage that we have at Bank of the West is that we’re actually quite small so we can traverse the organisation to the benefit of our clients very effectively.

World Finance: You’ve experienced an 80 percent growth in your client base since your re-envisioning in 2011 that you mentioned, what’s been driving that growth?

John Bahnken: Yeah, it’s actually now over 100 percent in just about 2 years time, so we’ve been pretty happy with that. I think the reason for that is that since the financial crisis in the United States, having trust and confidence in long term relationships with your providers are increasingly important. And the way we have been building our business at Bank of the West is based on building on existing customers, so we’re not trying to bring clients in from other competitors at the moment, we’re identifying clients who have been doing business with us for many years and making them aware of this broader value proposition that we can offer to them. And so client advocacy is very high, their trust in our institution is very high, and a very high percentage of the time we offer them the value proposition they step in and say sure, we’d like to do that. That’s the beginning of the relationship though, not the end. The beginning of that relationship is to identify the profile of the client to understand what the client need is and then work hard on solving that client’s problems. So not only have we doubled the size of the client base, but the depth of the relationship with clients has grown typically 70 or 80 percent in the first year, so we really substantially increase the overall size of the relationship. And that’s based on the trust and confidence that they have in us.

“Not only have we doubled the size of the client base, but the depth of the relationship with clients has grown typically 70 or 80 percent”

World Finance: And finally, how do your wealth management services fit into the overall banking picture?

John Bahnken: Well I think they fit in quite naturally, Bank of the West prides itself on being a relationship organisation and so we’re very much clients that start as retail clients and as their wealth grows and evolves, we welcome them into the affluent and higher net-worth segments of how we serve clients. But equally important, one of the things that’s different about the western part of the United States from other parts of the world is many people make their wealth as private business owners, and so we have the good fortune of being able to work with them as they’re building their business from a commercial perspective and then as they become older and monetise the value of their businesses we step in as their wealth manager. So it fits very naturally and logically into how we serve clients.

World Finance: John, thank you.

John Bahnken: Thank you very much.