CHIP PACKARD

  • Title: Managing Director and Co-Head of Wealth Management, Americas
  • Time in Current Position: 11 months
  • Time with Firm: 7 years
  • Previous Employer/Title: Credit Suisse
  • Years in the Industry: 17
  • First Job in Industry: Client Advisor/Investment Representative
  • Alma Mater: University of San Diego 

 

HAIG ARIYAN

 

  • Title: Managing Director and Co-Head of Wealth Management, Americas
  • Time in Current Position: 11 months
  • Time with Firm: 17 years
  • Previous employer/Title: Alex. Brown & Sons
  • Years in the Industry: 21
  • First Job in Industry: Client Advisor/Investment Representative
  • Alma mater: Rutgers University

 
What lessons has the wealth management industry learned from the past five years?
Haig Ariyan: Not just for us as management at Deutsche Bank, but for the industry as a whole, the learning experience of the past decade has been extraordinary. I think as investment professionals we are far better than we've ever been historically, and I speak for the whole industry when I say that. Products have also evolved to be much more efficient and effective from both a performance and a cost standpoint for clients than they were more than a decade ago. But, also from a risk and performance standpoint, I would suggest that we are much more effective in mitigating risk and delivering performance.

Chip Packard: That's an important point. The crisis reinforced what true advisors should be doing for their clients, which is not just to look for the highest blended return. It's also to keep a very close watch on risk—risk in the portfolio and risk across all their assets.

 

Many firms are shifting their attention and investment away from the IB side of the firm and toward wealth management as a revenue generator. How has that shift affected you here at Deutsche?
CP: I'm not sure our experiences have been that different from anyone else's. There's been more of an emphasis on supporting the asset and wealth management division, spending on technology and introducing clients to the division. That's really where we're seeing the most impact. I think the shift is also very visible to our clients because, more than ever, they're meeting with our co-CEOs and other management board members who want to be helpful and want to be involved in these relationships.

HA: I would agree. The desire for senior management to spend time with wealth management clients is really much greater than it was historically. We're one year into the integration of asset and wealth management as a division under one leader, Michele Faissola, and I think that consolidation is an example of the focus on those recurring revenue businesses. But at Deutsche Bank, the investment bank has for many years played a vital role as a real driver of the bank's success, and I think more than ever, the effort to support the wealth management franchise and the asset management franchise within a broader frame of the Deutsche Bank is right now definitely at an all-time high.

CP: I think it's also part of a bigger trend that we're very focused on, which is really delivering the institution's capabilities more broadly to respond to increasing client demand. One example of that is lending. We work at a global bank that has the ability to lend in different ways to clients—commercial real estate finance, aviation finance, art finance. Those deals won't show up in an advisor's AUM, but it's an important part of what we deliver to clients across both sides of their personal balance sheet.

HA: There's a revenue credit structure in place to make sure that proper credit is given on those deals, whatever product solution the client advisor is using.

CA: We think our client advisors' job is to anticipate and understand what their client needs are and find the right solution within the bank broadly to deliver that.

What do you think the impact of this fundamental shift within the industry away from the investment bank as revenue driver will be on availability of capital?
CP: I think we fully expect to see more consolidation. We think there'll be more market share concentrated in the top five banks globally that provide those services as different banks exit businesses. You might have the corollary impact of less liquidity in certain markets, and less overall financing available. But that might not be a bad thing in all cases, depending on what the financing was being used for. Look at the mortgage market, for example.

Do you think the RIA and independent model will continue to take market share from traditional wirehouses and the employee advisor channel as it has over the past few years?
HA: The RIA trend and the flight to RIAs happened post-crisis and sent a fear through the industry that it was the model that was going to dilute the success of our industry. That tide is definitely turning. You're seeing many of these people, who went out on their own as RIAs and believed they had the full infrastructure and capability and all that was needed to service their clients, now coming back with the concern that they don't have a balance sheet to deliver to their clients, and that they don't necessarily have all the infrastructure that is needed to provide a holistic solution to clients. The RIA model is a great model, but it can't be viewed as being all things that you get from the more robust and well-rounded wealth management firms such as the wirehouses and such as our peer group in the boutique space. We're seeing numerous candidates coming back, seeking the opportunity to rejoin the banks, ourselves included. They are three or four years into being an RIA, and they're already coming back. It's not an easy business.

CP: There's room for many different models in this business because the client base is so heterogeneous. But our experiences for wealth-creating, high net worth and ultrahigh net worth families is that they are better served by a global bank that can deliver broad solutions across both sides of the personal balance sheet. Those families can't find solutions in RIAs.

 

DEUTSCHE BANK:

  • Number of Employee Channel Advisors: 300
  • Total AUM: $100+ billion
  • Average Employee Advisor 12-Month Trailing Production: $3 million
  • Average Employee Advisor AUM: $350 million
  • % Women Advisors (Not including registered associates): Not provided
  • % Minority Advisors: Not provided

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