Relationship vs. competence investor practices.

PaulRen's picture

So called "Relationship banking" vs. competence investor practices too often reign in high-tower offices.

Many global financial centers like say Singapore/Zurich/Geneva foremost practice what is called relationship (vs. performance) banking, and it reigns!
Mostly so because of course its difficult if not impossible to predict real new trends, not just fads, into the future.  Relationship nurturing is much easier then successful investing.  Successful investing is not so such much about future predictions -as it is about sensing undervalued assets, at present.  Or,similarly mis-pricings due to mkt. inefficiencies. Like institutions only chasing very large cap stocks, as do traders which value their graphs. Often artificially so, ignoring the rest.

Many such banking institutions want to believe that clients value good/friendly smiling sincere relationships, over all else.  Dressing well, inviting clients to concerts, art shows or grand football sporting events, recommending private schools, remembering their children' names -and sending flowers over for birthdays' etc... Such are the practices what "private bankers" seem to value and believe their clients do above all else.  Its in their interest, but is this in the clients interest?   Also, endlessly advocating investor patience especially if it does not work out for some time/years.  Investor-patience can be overrated because it may have an inherent conflict of interest: continued at infinity, yearly fees.  Call it stale. While being hooked on the "good relationships".

Yet, investor competence along with high integrity rises above just relationships' banking, as relationships can be fleeting, n'est pas.  "Here today, gone tomorrow".  I often found people whom over-practice relationships, are often less astute/skilled at new wealth creating investing.  It almost seems a contracting of sorts.  Why?  Not sure, but perhaps its because such polished individuals over practice such skills from young on. This has little to nothing to do with superior investing.  Except maybe attracting/retaining a few clients which are, may we say, "blinded", by such at times cosmetic attributes.

Best Regards,

Paul A. Renaud.