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Selecting the ‘right’ firm for your needs

Peter Clive Charrington

By Peter Clive Charrington

Global Head, Citi Private Bank

March 10, 2016Posted InFamily Office and Wealth Advisory

I am often asked by families who have created or inherited significant wealth, “how does one go about selecting the “right” private bank or wealth management firm for me”?  Given the myriad choices available, and the frequently overlapping claims by banks, brokerage firms and wealth managers regarding their capabilities and services, it is an important question to answer.

Apart from the obvious need to research fundamental capabilities, performance track records and licensing matters, there are four important areas for families to consider that may often get overlooked.


Know your needs

Understanding your own specific needs and investment objectives is an essential starting-point.  Much like issuing a request for proposals, a family needs to articulate the scope of their requirements.  For example, are we seeking a broad array of wealth management services covering not only publicly-traded securities, but also alternative investments such as private equity, hedge funds and real estate, if suitable?   Do we want active as well as passive management of assets?  How important are risk management strategies to me?  Will we require trust, custody, banking or lending capabilities?

As in any another business, certain investment firms will possess strengths and weaknesses in such areas as multi-asset class research and due diligence experience, exposure to emerging or frontier markets, or the degree of sophistication when it comes to hedging portfolio, interest-rate or currency risks.  Specifying your needs and expectations around such factors as performance, your desire to access unique managers, or your preference for open-architecture solutions will form the basis for solid due diligence. 


Communication style

Knowing how YOU make important decisions is also critical.  Are you ‘data-driven’, do you want to hear the ‘bull and bear’ cases around an investment recommendation, or do you prefer to largely delegate decision-making?  Firms may approach communication and decision-making in different ways. This is particularly true for smaller firms who may have a one size fits all approach to how they interact with clients.  Ask to see samples of the reports they will provide you, discuss how frequently you can expect to meet and with whom, and review the backgrounds of the team who will support you.  Make certain you are well aligned with both the processes and people you will come to rely upon. 


Cultural fit

Each firm possesses a unique culture that informs how it approaches clients, sets fees, establishes service levels, communicates, and resolves problems.  Speaking with existing clients will often yield useful perspectives, although keep in mind that everyone’s needs and therefore their experiences are different. Some firms invest heavily in client education, helping you develop your knowledge and skill, while others partner willingly with third-party advisors such as your trusts and estates attorney or trusted accounting firm.  These are good indicators of cultural ‘fit’.  Understand the compensation method of the team and firm, as it can be an important predictor of behavior.  Define the culture you are most comfortable with by reflecting on past experiences with professional services firms, with a view toward what has worked best for you. Ask numerous questions that begin to tease out the true culture of the firm, as you will experience it.


Large or small?

Every client wants to experience personalized service from staff dedicated to meeting their needs. Inevitably, the question arises “should I select a small firm or one with a wide range of resources?”  Smaller firms often emphasize the ‘boutique’ nature of their services but may lack depth in such important areas as tax, research, or access to more complex strategies.  Be alert for dependencies upon one or two key people.  Conversely, larger firms may describe a vast array of services and people, but may not take a ‘small team’ approach to you.  While both models may be effective, creating a ’boutique‘ experience with a larger firm often affords the best of both.  Look for firms that have favorable client-to-staff ratios in core services but can also call upon specialists to deliver the very best in world-class ideas, global reach, and execution.