CANADA: An Introduction to Private Banks

Cidel is a global private bank focused on wealth management. It partners with high net worth individuals, their families and institutions to smartly structure and securely grow wealth. The bank’s view is that a holistic approach to wealth is more important than ever. Prior to the COVID-19 pandemic, equities were experiencing a historic bull market and most other asset classes were performing strongly. When the ramifications of the virus were realised in March of 2020, a prevailing sense of uncertainty caused volatility in the market and interest rates declined sharply. Government spending increased and unemployment numbers continued to climb. Simultaneously, many countries witnessed significant political/social unrest and increasing demand for social change. The implications of these factors have affected most people in one way or another.

Wealth is often built through a concentration of investments, frequently in active business, but it is almost always maintained by prudent diversification. With new risks emerging at a record pace, a client’s total wealth picture must be considered and fully integrated with their investment strategy. It is critical to ensure that concentration is addressed, and risks are mitigated. It is important to look beyond the assets themselves and to ensure the way the assets are held is robust. Would you build a house without consulting an architect? Of course not. Similarly, successfully preserving and building your wealth requires planning and preparation. It takes patience and expertise to identify all the elements of your personal wealth and understand all the factors at play.

Many families and entities have done considerable planning work over the years and have received excellent advice from their legal and tax advisers, but execution and maintenance are equally as important. In searching for a partner to execute and maintain these plans, it is crucial to find someone who not only understands the plans but has the capability to implement them. An asset manager alone will often not suffice. Instead, a private bank with expanded capabilities in terms of investments, banking and fiduciary services should be considered.

Under this business model, clients benefit from integrated service offerings and asset management solutions can be implemented within the context of an overall wealth plan. There are no silos and clients can access a full suite of offerings, often via their one point of contact who maintains a view of their total wealth. Banking capabilities allow clients to transact in a variety of currencies, all around the globe, while fiduciary services can provide corporate trustees for a variety of trusts and estates, and administer private foundations and other philanthropic vehicles. Together, these three areas ensure that a firm can take care of its clients in all aspects of their wealth planning.

Beyond the work that investment advisers do, the ability to establish and maintain relationships is vital. A holistic approach allows advisers to be aware of the many facets that make up their clients’ lives, allowing them to provide customised solutions, effectively managing risk and constantly reassessing goals, time horizons and investment objectives. It is also important that there is a high degree of alignment between the firm and its clients, which can more readily be achieved by a firm that is privately owned by its employees.

As the world continues to change in the wake of the most recent pandemic and the current political temperature, the role of the adviser remains at the forefront. Complexity only continues to grow and the right investment adviser can play a critical role in ensuring the growth and preservation of wealth now and for generations to come.

A holistic approach to investment takes the following principles into account:

1. Everything is related – an investment portfolio, real estate holdings, succession plans – all the pieces of a person’s financial life form a single picture. Looking at the details is the only way to understand how they fit together, and it is the best way to ensure that wealth stays sharply focused.

2. Build on solid ground – when it comes to money, planning and structuring with a purpose is always better than making things up along the way. A strong foundation brings an investor closer to their goals.

3. Simplicity is the sharpest tool – the financial world is inherently complicated. With so many options and opportunities to consider, it can be difficult to see straight. A competent wealth manager will cut through the clutter.

4. People make the difference – numbers may be a central feature of the landscape, but it is real people and genuine relationships that bring wealth management to life. 

5. If it does not fit, then it is not a solution – all clients are unique and they do not want cookie-cutter solutions. Instead, they need customised solutions that are singularly perfect for them.