METHOD­OL­OGY

Financial Mail - Investors Monthly - - Cover Story - For more de­tails visit www.in­tel­lidex.co.za

The Top Pri­vate Banks and Wealth Man­agers awards is re­searched and pre­pared by In­tel­lidex, a spe­cial­ist fi­nan­cial ser­vices re­search house. This is the sixth year we have un­der­taken the sur­vey and we de­velop it ev­ery year to en­sure the sur­vey best re­flects the dynamics of the wealth man­age­ment in­dus­try and that we are de­liv­er­ing a prod­uct that meets the needs of clients who make use of such firms. Our re­search process has two main el­e­ments.

The first is a com­pre­hen­sive ques­tion­naire that the firms com­plete. The main part of this is five typ­i­cal client archetypes for which we ask the firms to de­velop a ser­vice pro­posal. The in­ten­tion is to clar­ify just what ar­eas of the mar­ket the firms spe­cialise in and their own ca­pa­bil­i­ties.

The five are: the pas­sive lump-sum in­vestor, the up-and-com­ing pro­fes­sional, the suc­cess­ful en­tre­pre­neur, the wealthy ex­ec­u­tive and the in­ter­na­tion­ally wealthy fam­ily. We also in­ter­ro­gate the de­ci­sion-mak­ing pro­cesses at the firms and their costs, and ob­tain de­tails about staffing lev­els, of­fices and the size of the busi­nesses. The re­sponses to that ques­tion­naire form the core part of the scor­ing process un­der­taken by the judges.

The sec­ond prong is the on­line client sur­vey from which the Peo­ple’s Choice award is de­ter­mined. The ques­tions are wide-rang­ing and de­signed to as­sess the dif­fer­ent strengths and weak­nesses of the pri­vate banks and wealth man­agers. The main ar­eas of fo­cus, though, are on sat­is­fac­tion lev­els with prod­ucts and ser­vices, and whether clients be­lieve they are get­ting value for money, for fees charged. We also ask ques­tions re­lat­ing to why clients use pri­vate banks and wealth man­agers and whether their spe­cific needs are be­ing met.

Clients also add com­ments on as­pects not cov­ered by our mul­ti­ple-choice for­mat of ques­tions. Here we re­ceived some valu­able in­sights and these were used to in­form the judg­ing process.

This year 5,977 clients started the sur­vey and 3,642 peo­ple com­pleted it — a huge in­crease on last year when 2,732 clients par­tic­i­pated.

Judg­ing

In terms of the over­all judg­ing, we un­der­stand that firms have dif­fer­ent ar­eas of fo­cus. Thus, in our minds, the in­di­vid­ual archetype win­ners are at least as im­por­tant as the over­all awards. If a firm is the best in the in­dus­try in its spe­cific area of fo­cus and does not pre­tend to be all things to all peo­ple, it de­serves recog­ni­tion for that area of ex­cel­lence. If a firm does not com­pete in a par­tic­u­lar mar­ket seg­ment, we do not pe­nalise it for not hav­ing an of­fer­ing for that archetype.

How­ever, the na­ture of such a sur­vey does re­ward the all-rounder — those firms with com­pre­hen­sive of­fer­ings across all cat­e­gories — when it comes to the over­all award. That is one of the rea­sons that last year we re­vised the for­mat of the awards: we no longer split pri­vate banks (firms with trans­ac­tional bank­ing) from wealth man­agers in all cat­e­gories. We thus have one over­all win­ner, the best wealth man­ager, with two sup­ple­men­tary awards — Top Wealth Man­age­ment Bou­tique and Top Bank­ing Ser­vices Firm — to recog­nise other seg­ments. We also ac­knowl­edge the best in­sti­tu­tions for five dif­fer­ent client archetypes with in­di­vid­ual awards.

Over the years that we have been con­duct­ing this sur­vey, the im­prove­ment al­most across the board has been no­tice­able. As a re­sult, in cer­tain cat­e­gories it has be­come more and more dif­fi­cult to dif­fer­en­ti­ate be­tween providers. Here the ex­per­tise of in­de­pen­dent judge Prem Govender was in­valu­able. Govender is a former chair of the Fi­nan­cial Plan­ning In­sti­tute, chair of the SA Sav­ings In­sti­tute and a trustee of the Fi­nan­cial Ser­vices Con­sumer Ed­u­ca­tion Foun­da­tion set up by the Fi­nan­cial Ser­vices Board. The other judges were In­tel­lidex chair­man Stu­art Theobald; fi­nan­cial an­a­lyst Orin Tambo and project edi­tor Colin An­thony.

The first round of as­sess­ment in­volves each judge scor­ing each firm separately for each archetype. Un­der the judg­ing guide­lines, we’ve tried to make this phase as quan­ti­ta­tive as pos­si­ble, though a sub­jec­tive el­e­ment is un­avoid­able.

In the sec­ond phase, scores are com­pared and “out­lier” scores are dis­cussed. So, if three judges gave a firm good scores but one scored it very badly, it will be in­ter­ro­gated.

Next we tackle the tiebreak­ers. When firms re­ceive equal scores in a cat­e­gory, judges go through each sub­mis­sion again, as­sess­ing strengths and weak­nesses, to de­ter­mine which will be the win­ner.

In de­ter­min­ing over­all rank­ings, we av­er­age the scores from each judge per archetype and weight them ac­cord­ing to the client seg­ment break­down pro­vided by each firm.

We are al­ways keen to widen the sur­vey to in­clude more in­sti­tu­tions. We are in­ter­ested in firms that strad­dle the gap be­tween wealth man­ager and fi­nan­cial ad­viser. We would like to in­clude firms that meet these two cri­te­ria: 1. Ex­clu­siv­ity in client se­lec­tion such that clients on av­er­age have in­vestable as­sets of over R3m. 2. Ad­vise on to­tal as­sets of at least R50m.

Such firms, how­ever, will be in­cluded only if they ask to be. We re­serve the right to de­ter­mine el­i­gi­bil­ity at our sole dis­cre­tion.

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