September 21, 2023
Louis Diamond Quoted
by Bruce Kelly
Big banks can struggle when they’re trying to figure out a wealth management strategy that works for everyday retail investors.
Look no further than Goldman Sachs Group Inc.’s decision to dump the retail financial advisor business, Personal Financial Management, that it bought just four years ago. Goldman is returning to its roots and focusing on wealthy clients with tens of millions of dollars in assets.
Or take a gander at Citigroup Inc. It got rid of its prized Smith Barney franchise of financial advisors, selling it in 2009 for $13.5 billion to James Gorman and Morgan Stanley, where the percentage of the firm’s pretax profit from its wealth and investment management group is now above 50%.
Indeed, HSBC Holdings recently said it was significantly scaling back its retail bank operations, locations where HSBC bank-based financial advisors would have met clients. In 2021, the bank said it was “exiting” 90 of its 148 branches in the United States.
With all that said, one industry observer noted that Oden has an opportunity to build a franchise at HSBC.
“The narrative around banks being in wealth management makes a ton of sense,” said Louis Diamond, an industry recruiter. “Banks have affluent clients, and they may as well try to sell them wealth management services and keep those assets in-house rather than see clients go to Schwab or Fidelity.”
“The challenge is to scale up a business to size,” Diamond said. “And experienced advisors can be skeptical of banks.
“Because it’s based outside the U.S., HSBC has an opportunity to work with wealth clients like ex-patriots or wealthy foreign clients with interests here,” he added. “It’s clearly a potential opportunity but it will be an uphill battle to get quality people to come and join her there.”
Best of luck then to Oden in her new position. All bankers toiling in the financial advice side of the industry need it.
