Camille Van Vyve
14 Feb 2024
5 bad reasons to stay with your private banker
The digitization of retail banks has made switching from one provider to another quite easy. But when it comes to private banking, the step is even more difficult to take. Why so much friction? What are the factors, often purely psychological, that prevent us from moving from one wealth manager to another? Why is financial return not the main decision criterion?
1. We have always been a customer at his house in the family
This historical attachment to an institution is often very difficult to untie. However, when you sign a management contract, you are not signing a marriage contract, “for better or for worse”! Of course, your banker will be disappointed if you turn to another manager. But you are in a business relationship. If you have rational arguments for making this decision – below-market returns, high fees, administrative burden… – no one will hold it against you for this “infidelity”.
2. He knows me personally
Over time, you have built a close, even intimate, relationship with your banker. Of course, he knows your personal and family situation: you inherited last year, you made a gift to your three children, you sold part of your portfolio to buy real estate, you must now pay child support your ex-spouse… He knows everything! But ask yourself the question: is this intimacy a real plus for the management of your wealth? Most wealth managers are familiar with these types of situations. The important thing is above all that they offer you the most profitable solution... which is not necessarily "in-house funds".
3. It is a prestigious bank, I like the idea of being a customer there
Very often, the simple fact of being a client in a renowned institution flatters the ego. In conversations, referring to it can lead to a certain social recognition. While there's no denying the power of this emotional argument...it's still strictly emotional. Yes, emotion takes precedence in many other types of services (a night in a hotel, a dinner in a restaurant, etc.), but the ultimate purpose of an investment remains the return, 100% factual data. Of course, emotional criteria can come into play, such as the availability of the manager and the quality of his advice or the customer interface. But in the context of an investment, they should be more of the “cherry on the cake”.
4. It gives me the best returns
Are you absolutely sure? Did you know that even Warren Buffet, often described as the best investor in the world, is not doing better than the market? At Easyvest, we have done the analysis: in Belgium, only 38% of private bankers beat the market in a given year, i.e. their portfolio generates a higher return than that which would be made up of all listed shares in the world. They are only 15% to beat it two years in a row. And after five years… only 1% succeed! So you would be very, very lucky to have set your sights on whoever – maybe just by chance? – manages to achieve this performance. Conversely, thanks to ETFs, building a portfolio that replicates the performance of the global market is extremely simple and inexpensive. Because costs are also important: 1% less costs can correspond over 40 years to an additional gain of €500,000! Think about it when you decide (or not) to change managers.
5. I am reluctant to change
In many cases, change is synonymous with discomfort. It is associated with a cost (either purely logistical and administrative, or also financial) that we prefer to avoid – even if the expected benefits are higher! In the case of asset management, Easyvest offers a free audit of your existing portfolio which allow you to objectify things. Send us a management report and within 24 hours, we will send you a detailed report in the form of an infographic. This audit report details the level of risk, costs and performance of your existing portfolio and compares them to the index approach recommended by Easyvest. You can then discuss it in person with one of our managers to decide whether or not to take the plunge!