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Advising the ultra-rich

April 22, 2019 at 11:11am
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Over the past eight years, Phanos Theophanous, Managing Director, UK International Private Bank, Barclays  holds a key role:  to communicate, manage and above all to win the trust of the bank’s richest clients : to communicate, manage and above all to win the trust of the bank’s richest clients.

This is no mean feat but it is definitely an interesting task since, as he says, each day at the office is different. Mr Theophanous explains changes in recent years as regards high value clients, family offices and also how they work to service their needs.

As regards Cyprus and its role in this specific sector, he explains that as a destination it has its own special characteristics and offers many incentives to high value clients. It is therefore up to the private sector to take those steps that will attract them.

 Please give us a description of your duties as Managing Director in Barclays Private Bank. 

I joined Barclays as a Managing Director in October 2011. As a Managing Director my role is very broad and diverse. My team and I focus on advising family offices, large family holdings, and international ultra-high net worth as well as domestic private clients on their investment and wealth management affairs. We have clients based in Cyprus, Greece, Eastern Europe and UAE, as well as non-domicile clients from all over the world who are resident in the UK. Furthermore, by leveraging the expertise of colleagues from across Barclays’ investment bank and corporate bank, we can further support our clients and deepen these important relationships. An area which I am passionate about is developing young talent within the business and I mentor many colleagues at various levels, as well as other young professional or students.

Currently, what are the most important investment trends for Ultra High Net Worth individuals? Are they back to taking risks for higher returns or do they opt to play it safe?

What is particularly attractive in private banking is that no two clients or two days are the same. We have clients who are very conservative for whom we manage low risk fixed income mandates and clients who are very aggressive for whom we manage leveraged global equity portfolios, in addition to the classic multi asset class portfolios. There is definitely a trend emerging around Environmental Social Governance (ESG) and what we call Impact Investing. There is also an increased interest from clients looking to invest in ‘real assets and real businesses’ and direct investments, both in start-ups and unlisted companies. Many of our clients are investing through our entrepreneurial networking platform Barclays Accelerator (run by Techstars) into disruptive fintech start-ups.

Has the role of family offices changed in the last couple of years? What are the new trends?

I would not say that the role of the family office has changed over the last couple of years, rather as time passes more and more people have become aware of the concept of a family office. Similar to most clients, the trends within a family office are the same when it comes to investing, and we should not forget that behind a single family office there is typically one ultra-high net worth family. I would say that family offices are increasing their exposure in illiquid assets classes such as private equity and direct investments in start-ups and unlisted companies, and have a higher allocation of their assets in these areas.

Geographically, which areas of the world present increasing numbers of UHNW?

The challenge to answer this question comes from how we define an UHNW individual and many companies have different definitions. Many studies show that in most continents there is expectancy for a five-year growth in the number of UHNW in the region of 20-25%. Asia is without any doubt an area where wealth is created.

Reports indicate that nowadays UHNW are of younger age than a couple of years ago. Does this require a different approach on your behalf as well? 

Indeed, there is a new generation of UHNW which we approach and communicate with in a different way. But it’s private banking and there is no stereotype client. Every client is unique and should be treated differently according to their individual needs. At Barclays Private Bank we adjust to their needs and manage their portfolios based on their risk tolerance, and the wider relationship based on their preferences.

How does a professional approach these people and win their trust?

The answer is simple; the interests of the client come first and as a professional advisor you must understand what these are. Something that I reiterate frequently to my team is that a good advisor focuses on giving individual attention to client’s needs. They must have a tailor made plan to meet the client’s needs, and not be a salesman. In my opinion salesmen are behind the curve, advisors are ahead of the curve. A good advisor has to be quick off the mark and stay ahead of the curve. Our clients often tell us we are often one step ahead and I take pride in this.

Do you believe that Brexit will have a positive or negative effect on the City of London, and why?

I can only speak in a personal capacity, however, at this stage only time will tell what the impact is. Our focus is on servicing our existing clients and onboarding new ones.

When do you think the bull market will end?

My motto is to stay diversified and stay invested, with the right risk management. We are not in the business of managing returns, rather we manage risks to preserve the wealth of our clients.

How can a country such as Cyprus become a jurisdiction for family offices registration and servicing centre?

This might come as a surprise, but there are single family offices in Cyprus. However, the nature of the business of a family office means it’s not something that you will come across by making an internet search. Also many family offices have Cyprus companies in their structures. The challenge is whether Cyprus can attract more family offices from areas that did not use Cyprus in the past and increase its share of wallet from this industry. In my personal opinion CIPA is doing a good promotion of Cyprus and I do hope that their efforts will come to fruition.

How can Cyprus attract such people both for investments and for permanent residency?

In my personal opinion Cyprus has in place the right incentives and it’s up to the industry locally how it communicates these opportunities globally.

In your opinion, could Cyprus become a new Monte Carlo and how?

Cyprus is a place that is very close to my heart. Cyprus has some unique characteristics and should be left to grow in its own way and not be compared to other jurisdictions.

From your experience and knowledge, are UHNW interested in Cyprus’ “golden visa” scheme?

We have seen demand over the last few years for Cyprus’ passport and permanent residency scheme.