Wealth Management and Private Banking

15 July 2018James Goad

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There are multiple external and internal factors feeding into a company’s brand, marketing communications and brand crisis management. These factors, for example data security breaches or employee dismissal cases are likely to rise up the ladder of importance for wealth managers. Firms need to be ready and prepared to go through various scenarios.


  • Be prepared for reputational risk damage. There has been an explosion of physical and reputational risk management firms in this space to support the wealth industry.
  • Scenario planning is a really useful tool for businesses to implement. Identify who should deal with the crisis and create an informal network of crisis management partners across the UK and Europe.
  • The FCA’s focus on conduct risk (the conduct of individuals) has changed things the most.

Key Issues and challenges:

  • Reputation management should no longer be a reactive process for wealth managers and private banks. Scenario planning, cyber and data security planning and embedding good culture should all be used to prepare firms for reputational crisis.
  • An important question for businesses to ask should be: “What is the culture within the organisation and does it deal with the root cause of crisis management?” as the wrong culture can lead to terminal crisis - the people and the organisation are under intense scrutiny. Behaviour and reputation are now analysed in such close detail that it leaves almost no margin for error.                              
  • The first example that was discussed centred on sport and the elite performance program in professional cycling. In this case there was a policies and procedures failure by management.
  • Sport more generally is susceptible to reputational damage which is led in part by the aggressive pursuit from the media.
  • Equally the recent example of Bell Pottinger in South Africa – where it became clear that there needs to be a stronger culture to do the right thing, from the top of the business, particularly as the firm battles against the current media climate.
  • Another example could be phishing emails, where an email with a virus link has been sent from a fake email account that is made to look like an email from senior management. In this type of situation preparation is key – role play and practice help in crisis management.
  • One delegate shared an example of a role play where a business had been struck with a data breach case and they had 12 hours to respond. Along with military and political adviser guidance, senior management needed to react, understand the situation and find ways to react before a real life crisis hits the firm.
  • Focussing on reporting of alleged tax invasion, Mossack Fonseca is another example where the formal conduct and risk management procedures had fallen short of the required standard. We know that the structures individuals and business had were perfectly legitimate but this information is used by the media to suggest that the individual or client has been immoral.
  • Tax avoidance is a legitimate practice but has come under scrutiny in the public eye with media attention often citing incorrect information. The solution can be to put the newspapers on notice. Where “reputation is all”, the first reaction to media and journalist enquiries are typically “no comment” but this can vary depending on the newspaper.  For example if The Financial Times or other broadsheet approached and asked for comment: “Unless there are hard facts about a particular client query we would not even disclose they are clients.”
  • Typically wealth managers can use a procedure called a “not for publication response” to put the journalist on notice and help to avoid a misleading or damaging story. It was suggested that a law firm very rarely advises clients to sue, unless it will really provide vindication to them and is: “dependent on the level of damage that could be inflicted.”
  • How do you put a price on reputation? It is often “hugely costly” to sue, so it comes down to the cost of your reputation. Procedures can be put in place to avoid damage – with the right procedures and the right culture the business and client can solve the root cause of the problem.
  • Reputation management is fundamentally a question around brand and marketing – if reputation management is a part of the DNA of the business then it is implicit in everything alongside the way a firm manages its reputation.
  • For wealth managers it is even more important than for a consumer brand like Coca Cola, where it is all about brand awareness. Wealth management thrives with a strong and often private reputational awareness for its clients.

Conclusions and solutions:

  • Focus more on prevention in the short term rather than simply crisis management – put prevention in place to stop reputation damage.
  • Virtual signalling – have a conversation with clients rather than publically going out and ‘advertising’ that the business is fully risk protected and safe.
  • Insurance consideration (for example cyber security insurance) can hamper what the business can say and do. It is important to review policies in place when dealing with this.

Expert: Farrer & Co