Mikael Pauli, head of Wealth Management at Catella, has outlined expected developments in this relatively new part of the Swedish financial group.
Pauli says that the business relies on an investment management group, which is responsible for allocation across all the model portfolios. It also relies on an advisory board, which is responsible for strategy regarding different asset classes.
The advisory board relies on analysis at the macro level to develop its allocation preferences, which also considers themes, which then lead to decisions on taking over- or underweight positions on specific asset classes within each of the portfolios.
As of March, Catella had not yet decided on which specific risk monitoring system to adopt to support its operations.
In terms of its search for risk-adjusted returns, Catella will look at how any individual manager achieved his/her return. The idea is to check the return against how it was actually delivered.
Private equity opportunities have not been available, but Pauli says he is thinking about how to handle this in future. Catella has hedge funds in-house and part ownership in another HF provider.
The key future challenge to private banking businesses are costs, which are set to keep rising, Pauli says.
New regulations are being added, which are adding costs and therefore mean businesses must be scalable. It means having to find as smart and efficient a set-up as possible and a way to “grow the business quickly”.
The regulatory cost increase is occurring at the same time as other questions are being debated, such as around so-called ‘kickbacks’ in the industry: rebate and/or commission. Catella Förmögenhetsförvaltning itself is focused on offering fixed fees and transparency to clients, in order to avoid reliance on rebate or commission.