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Although the profiles of private banking clients and their expectations have changed significantly in recent years, the fundamentals remain the same. More than ever, private banks must offer support to ensure the preservation and enhancement of their clients' capital.

Read the interview with Luc Rodesch, Head of Private Banking and member of the Executive Committee at Banque de Luxembourg, in Paperjam’s special feature on Wealth Management:


Digitalisation, increased regulation, and health, energy and economic crises... Private banks have had to face numerous challenges in recent years. Are investors expressing new expectations from their private banker? Has the typology of clients changed? “The profile of clients has certainly changed," acknowledges Luc Rodesch, Head of Private Banking and member of the Executive Committee of Banque de Luxembourg. Our clientele is still mainly made up of entrepreneurs, but it is increasingly European, whereas a few years ago it was more international. Today, European capital represents 85% of the total assets managed by Luxembourg private banks. "A key explanation for this trend is the evolution of European regulations, which make supporting clients outside the eurozone conditional on expertise in the tax and asset regulations specific to each country of residence.

Expectations in terms of sustainability

Clients are also showing increasing interest in responsible and sustainable investments. “Not only are they keen to know what their money is going to be used for, but they also want to be sure that their bank does not finance certain industries," says Luc Rodesch. To respond to this growing interest, we have decided to offer only responsible management mandates that meet the requirements of Article 8 of the SFDR – Sustainable Finance Disclosure Regulation. "We are already obliged by European regulations to record our clients’ ESG preferences but, at Banque de Luxembourg, we want to take this a step further by integrating ESG criteria into the management of our portfolios and also by offering impact investments.

We have decided to offer only responsible management mandates Luc Rodesch, Head of Private Banking and member of the Executive Committee at Banque de Luxembourg

Valuable cross-border experience

While half our clients now opt for discretionary management (this proportion was 20% eight years ago), they are also increasingly turning to private banking to finance their projects. Banque de Luxembourg’s recognised cross-border expertise is a critical factor. “If a German resident wants to buy a flat in Paris, for example, German consumer protection law applies at the same time as French mortgage law," explains Luc Rodesch. This instantly raises problems of language, knowledge of the regulations, etc. The Luxembourg private bank, which is multilingual and very knowledgeable about the various national legal subtleties, is therefore a valuable ally.” 

Expectations beyond asset management

In recent years, Luxembourg bankers have also seen a gradual increase in their clients' wealth. Today, clients with assets of over €5 million account for 80% of the assets we manage. These clients are not content with the private banker’s traditional role of investment adviser. "We support them in succession planning and passing on their estate, and we help them with the process of transferring their business and their desire to create a philanthropic foundation. As a consequence, we have developed a range of services to meet the needs of these clients," says Luc Rodesch.

And we cannot ignore the trend towards digitalisation. "Our customers still want to interact with their adviser, they don't want to go 'fully digital'. This is a good thing, because it’s what differentiates us from retail banks," adds Luc Rodesch. "But on the other hand, they also want to be able to interact with their bank at the weekend, in the evening, on bank holidays, etc. So we also offer digital interfaces that are accessible 24/7.” ”

Stability a prerequisite

These various developments have a major consequence: they represent a cost in human and material resources. A certain critical mass is required to absorb these investments – hence the consolidation movements seen in the private banking sector, in Luxembourg and elsewhere. However, despite these developments, the fundamental demand of private banking clients remains the same. "The mission of the private bank has always been to preserve and enhance its clients' wealth. This is even more the case in the current crisis. It is why Luxembourg private banks remain attractive. Located in an economically and politically stable country, they are very solid and their sales teams change very little. These elements all contribute to the loyalty of our clients from generation to generation," concludes Luc Rodesch.

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