LUẬN văn THẠC sĩ (KINH tế) did private wealth management and customers’ behavior change after the financial crisis of 2008 in france

Did private wealth management and customers’ behavior change after the financial crisis of 2008 in France?... Chapter8 -Appendices...13 Chapter2 -LiteratureReview...14 Introduction.....

Did private wealth management and customers’ behavior change after the financial crisis of 2008 in France?

Table ofContents

Declaration 1

Acknowledgments 2

Abstract 3

List ofFigures 4

List ofAbbreviations 4

Chapter1 -Introduction 5

I Understanding theconceptofWealthandWealthManagement 5

1 Wealth 5

2 WealthManagement 5

II Backgroundofthe Issue 7

III Researchaim 8

IV Researchobjectives 9

V Approachtothedissertation 10

VI Suitabilityofthe researcherandInterestinthesubject 10

VII Scopeandlimitationsofthe research 10

VIII Limitations 11

IX Organisation ofthedissertation 12

1 Chapter1–Introduction 12

2 Chapter2 -LiteratureReview 12

3 Chapter3 -ResearchMethodologyandResearchMethods 12

4 Chapter4 -ResearchFindingsandDataanalysis 13

5 Chapter5 -ConclusionsandRecommendations 13

6 Chapter6 -Self-reflectiononownLearning 13

7 Chapter7 -Bibliography 13

8 Chapter8 -Appendices 13

Chapter2 -LiteratureReview 14

Introduction 14

I PrivateWealthManagement 16

1 NatureandObjectiveofPrivateWealthManagement 16

2 TheWealthmanagementprocess 19

3 Privatewealthmanagementindustrypostcrisis 21

4 PrivatewealthmanagementinFrance 25

II Customer behavior 27

1 Thehigh-net-worthindividuals 27

2 Changesincustomerbehaviorwiththefinancialcrisisof 2008 28

3 ChangesincustomerbehaviorinFrance 31

III Conclusion 33

Chapter3 -ResearchMethodologyandResearchMethods 34

Introduction 34

I Researchquestions 34

II ResearchPhilosophies 35

1 ResearchOntology 37

 Realism 37

 Positivism 37

 Pragmatism 37

 Interpretivism 37

2 Researchapproaches 38

 Deductive 38

 Inductive 38

3 Researchstrategies 39

 Experiment 39

 Survey 39

 Actionresearch 39

 Groundedtheory 39

 Ethnography 40

 Archivalresearch 40

 Casestudy–(IndepthInterviews) 40

4 Researchchoices 41

 Monomethod–Qualitativeresearch 41

5 ResearchTimehorizons 42

6 Structureoftheresearchmethod-Framework 42

Sequencestructure 42

7 Datacollectionanddataanalysis 43

 Datacollection 43

 Primarydatacollection 43

 Secondarydatacollection 43

 Dataanalysis 45

8 Sample 45

9 Ethics 46

10 Limitation 46

Chapter4 -ResearchFindingsandDataanalysis 47

Introduction 47

I Indepthinterviews 47

II Structuredinterviewanalysis 48

III Findings 48

Researchquestion1 48

1 Wealthmanagerfindings 49

2 Customerfindings 50

Researchquestion2 52

1 Wealthmanagerfindings 52

2 Customerfindings 53

Researchquestion3 54

1 Wealthmanagerfindings 54

2 Customerfindings 55

MBAin finance-2013

Chapter5 -Conclusionsandrecommendations 56

Introduction 56

I FindingsandConclusions 56

II Recommendations 59

III LimitationandSuggestionsforFurtherResearch 60

Chapter6 -Self-Reflectiononownlearning 61

Introduction 61

I Learningstyles 61

 Accommodator/Activist 62

 Diverger/reflector 62

 Assimilator/theorist 62

 Converger/pragmatist 62

II Reviewoflearning 63

III MasterofBusinessAdministration’sexperienceandlearning 64

IV Conclusion 65

Appendix 66

Appendix 1 66

Interviewquestions-Wealthmanagers 66

Thebanks 66

Theclients 66

TheSales 66

Appendix 2 67

Interviewquestions-Privatebankingcustomers 67

Theclients 67

Thebanks 67

Bibliography 68

1 Jean-AntoineBAUX

Furthermore,Iherebycertifythatthisdissertationisentirelybasedonmyownwork,unlessreferencedinthetextasaspecificsourceandthewordshavebeenplacedininvertedcommas(“”),andhasn

o t b e e n s u b m i t t e d i n parto r i n w h o l e t o anyo t h e r C o l l e g e /

U n i v e r s i t y f o r assessmentorforawardofanyotherdegree

Jean-Antoine BAUX

DuringthisyearinIreland,manypeoplehavecontributedtomysuccessanddeserveaveryspecialthanksandacknowledgments

Firstly,Iwouldliketothankmyparentsandrelativesfortheirsupportandconstantencouragement,andespeciallytomygrandmotherwhohasalwaysbeeninmymindduringt h e t i m e Iwascarryingthisstudy

Secondly,withoutnaminganyoneinparticular,Iwouldliketothankallmyfriendswhohavealwayssupportedmethroughthisstudy

Finally,t h a n k s s h o u l d a l s o b e extendedt o t h e D u b l i n BusinessS c h o o l , mysupervisor,M rMichaelKealyfor

hisvaluablesupervision.IwouldliketoexpressmygratitudetotheFrenchbanksasCreditAgricoleSudMediterranneea n d BnpParibasPrivateBankingfort h e i r involvementandtheirwealthmanagerswhohaveacceptedto takepart ofthisstudy

Them a i n purposeoft h i s s t u d y is t o betteru n d e r s t a n d t h e impacto f t h e financialc r i s i s o f 2

0 0 8 onbothprivatewealthmanagementandcustomers‟ behaviour.This studyattemptstof i l

l a gapin theexistingprivate wealthmanagementserviceswiththeircustomers

AnumberofchangeshavetakenplaceintheFrenchprivatewealthmanagementindustryandi t appearstobeagapbetweenthosechangesandthecustomers‟expectations

Datau s e d i n t h i s studywerecollectedfromt w o sources,p r i m a r y ands e c o n d a r y data.Forp r i

m a r y

data,theywereobtainedthroughtheuseofindepth-interviewswithprivatewealthmanagersandw i t h customers.S e c o n d a r y datawerecollectedfro

mv a r i o u s sourcess u c h asbusinesslibrary,journalarticles,eBooks,catalogues,textbooksandinternet.Inthefirstparto f th is study,a r ev ie w o f de fi ni ti on s ande x p l a n a t i o n s aboutt h e wealth,t h e wealthmanagement,theprivatewealthmanagementandhigh-net-

worthindividualsisundertaken

Then,i n t h e s e c o n d p a r t o f t h i s s t u d y , t h e researchfindingsfromt h e implementationo

f p r i m a r y dataaredescribedandanalysed.Researchfindingsareaimedtohelpprivatewealthmanagerstobemoreresponsivetoencounterandmanagepotential

futurecrisis.Thisresearchw o u l d helpFrenchp r i v a t e wealthmanagementcompaniest o better

e v a l u a t e t h e changedlandscapebyadjustingtheirbusinessmodelsinordertoprovideabetterwealthmanagementt o theircustomers,whohavechangedtheirbehaviourshortlyafterthearrivalofthefinancialcrisisof2008

ItwasfoundthatunexpectedfactorshavedeeplyinfluencedtheFrenchprivatewealthmanagementi

n d u s t r y d u r i n g andaftert h e financialcrisiso f 2 0 0 8 Theo u t c o m e o f t h i s dissertationw o u l d haveidentifiedthingst o i m p r o v e andh e l p e d t o p r o v i d e a b e t t e r wealthmanagementfrom thewealthmanagersto theircustomers

able to generate to maintain a desired lifestyle by generating an adequate amount of income, without actively working, which ensures that one need not worry about meeting the various living or leisure expenses (Dun and Bradstreet, 2009, p1) In a matter of fact, there is no single “right” definition of wealth Each person has his or her own perspective on abundance (Bicknell, 2006) According to Daniell (2008), any strategy for wealthy family begins with anunderstanding of what family wealth means for that particular family Therefore, definitions

commoninstrumento f commercea n d o f measuremento f wealth.Int h i s study,wealthismeasure

dincurrencyasUS dollaror Euros

Goel(2009,p8)describeswealthmanagementasaprocesswiththree essentialcomponentswhichclearlyopposewealthmanagementto investmentmanagementormoney:

 Aconsultativeprocess

 Customizedchoicesandsolutions

 Deliveryin closeconsultationwith theclient

Asamatterof fact,wealth managementis abouta relationship betweena customerandanadvisorcalledwealthmanager.E v e n s k y ( 1 9 9 7 , p 2 ) e x p l a i n e d t h a t i n wealthmanagementeverythingis clientd r i v e n andt h a t t h e wealthmanagementprocessbeginsw i t h t h e formalestablishmentoftheclientrelationship.AccordingtoEvensky(1997,p2),thewealthmanagerm u s t besuccessfulindevelopingandcustomizingtheprocesstoreflecttheclient‟spersonalexperiences.Otherwise,Maude(2006,P3)“Wealthmanagementcanmeandifferentthingsindifferentgeographicr e g i

o n s , t h e U n i t e d StatesandEuropeh a v e t r a d i t i o n a l l y s t o o d att w o extremesi n thisregard.Forexample,i n t h e UnitedStates,Wealthmanagementi s m o r e c l o s e l y alliedt o transaction-drivenbrokeragean d i s typicallyinvestment-

productdriven.InEurope,thetermismoresynonymouswithtraditionalprivatebanking,withitsgreateremphasisonadviceandexclusivity”.Infact,wealthmanagementcanbeprovidedbyindependentfinancialconsultancy,independentwealthmanagers,multi-

licensedp o r t f o l i o managersorbylargebankinggroupwithspecializedentitiescalledPrivateBankingservices.T h i s s t u d y f o c u s s e s o n l y o n wealthmanagementprovidedbycommercialbanks(Privatebankingservices)generallycalledPrivatewealthmanagementservices.Driga,NitaandCucu(2009,p231)definedprivatebankingas“…providingaone-to-

oneservicebyarelationshipmanageroraprivatebankertoclientswithacertainlevelofwealth”.Privatewealthmanagementisoneoftheservicesoffersundertheprivatebankingumbrella.Driga,NitaandCucu(2009,p231)arguethat“Privatebankingisaboutmuchmorethantraditionalbankingservicesofdepositsandloans”.Inamatteroffact,Privatebankingserviceshavebeensetupbycommercialbanksinordertoanswerascloseaspossibletotheirwealthycostumers

II BackgroundoftheIssue

McCannandLavayssiererelated(2008,p16)that“theworldiswitnessingthegreatestperiodo f wealthaccumulationinhistory.Neverbeforehavesomanypeoplefromsomanydifferentregionsoftheearthbecomesowealthyinsoshortperiodoftime.Andneverbeforehavesom a n y opportunitiesexistedt o createnewwealth,b o t h ast h e natural o u t c o m e of newideasandt h e producto f existingcapitalappropriatelyandp r u d e n t l y l e v e r a g e d ” Thisgreatestperiodofwealthaccumulationinhistorystartedfromthemid-

eighteenthcenturyuntilnowadays.AccordingtoBeinhocker(2006,p9),“globalwealthrocketedont

o a nearlyverticalcurvethat wearestillclimbingtoday”

Figure1–The explosive growthinHumanWealth between 1700to2000.

(Adapted from Bradford,J.(2006),UniversityofCalifornia, Berkeley).

Asa result,t h i s c r e a t i o n andaccumulationo f wealthh a v e e n h a n c e d t h e developmento

f privatebanking servicesf o r highnet worthindividuals Driga,NitaandCucu(2009,p231) reported,“privateb an ki ng businessfocusonthe substantialgrowthinprivate banking overt h

e lasttwodecadesascommercialbankshavetargetedupmarkethighnetworthindividuals”

primemortgagecrisisintheU.S.inAugust2007,hasaffectedallregionsoftheworld,pushingmanynationsi n t o a de ep e c o n o m i c recession.T h e globalo u t l o o k deterioratedd r a m a t i c a l l y in S

e p t e m b e r 2 0 0 8 , f o l l o w i n g t h e d e f a u l t o f a largei n v e s t m e n t bankandt h e g o v e r n m e

n t

bail-outo f t h e largestinsurancec o m p a n y in t h e U S ” (“HowIst h e EconomicC r i s i s Changingt h eManagementofR e s o u r c e W e a l t h ? ” 2009).Adler(2009,p 7 0 ) f o u n d t h a t “thes t o c k marketcrashandresultinggreatrecessionhavetestedwealthmanagers„businessmodel,alongwitheverythingelsefinancial”.Asaconsequencetheglobaleconomicdownturnof2008markedt h e end

o f t h e s u b s t a n t i a l growthw i t h i n t h e wealthmanagementi n d u s t r y a n d l e d t o manyo t h e

r issues.Harrison( 2 0 0 9 ) statedt h a t “Ast h e financialcrisist o o k h o l d , highnetworthi n d i v i

d u a l s watchedtheirwealthdeclineandquicklylost faithintheirwealthmanagers,anditi s clearthatthetrustandconfidencehighnetworthindividualsplacedinmarkets,regulators,financiali n s t i t u t i o n s a n dportfoliomanagementhavebeenshaken”.Itwasn o t e d byYeh(2009,p5)that“thepast18monthshavechallengedtraditionalthinkingaboutinvestingandassetallocation,diversification,andcorrelation.Forindividualinvestors,risktoleranceshavebeentested,investmentassumptionshavebeenoverturned,andfundamentalt r u i s m s havebeenquestioned.A s a result,i n v e s t o r s h a v e changedt h e i r r i s k tolerances,marketexpectations,andinvestmentprocesses”.Consequently,t h i s fastd e c l i n e m a d e “ m a n y customerswithdrewassetsorlefttheirwealthmanagementfirmsaltogether”(Harrison,2009).Therefore,boththewealthmanagementindustryandcustomersweredeeplyaffectedw i t h t h e c o m i n g oft h

e financialcrisisi n 2 0 0 8 M a n y customerschangedt h e i r m i n d s andaddressedmoreconcer

ns abouttheir assetsundermanagement.Thefinancialcrisisin2008 hasshakenthefinancialworldtoitsvery foundations.W i t h theeventsof2008, thewealthmanagementindustryunderwentdeepchanges

III Researchaim

Int h i s c o n t e x t , studyingt h e s e changesw o u l d b e beneficialf o r privatewealthmanagementservicesinordertobemoreresponsiveandtomakefasterdecisionstoencounterandmanagep o t e n t i a

l futurecrisis.T h i s researchw o u l d helpFrenchprivatewealthmanagementcompaniest o b e t t e

r e v a l u a t e t h e changedlandscapebya d j u s t i n g t h e i r businessm o d e l s i n ordert o providea

b e t t e r wealthmanagementf o r t h e i r customers,w h o havechangedt h e i r behaviourshortlyafterthearrivalofthefinancialcrisisof2008.Acriticalinquirycouldbe

complete in order to answer the overall research problem (Churchill, 2005) As believed by Polonsky and Waller (2009), “it is important that the research objectives are clear and achievable, and that they will directly assist in answering the research question” Saunders, Lewis and Thombill (2009, p34), stated that research objectives are likely to lead to greater specificity than research or investigative questions In this study, the research objective mainly focuses on the relationship between private wealth management services and their

undertakenwhenconsideringwhichwealthstrategyhasbeenchosenbyprivatewealthmanagers,an

dwhathasbeendoneuntil now

IV Researchobjectives

Accordingt o Calmorinetal,

( 2 0 0 7 , p 3 0 ),a researchobjectivei s d e f i n e d as“statementofp u rposefo rwhicht h e investigat

ioni s t o b e conducted”.Infact,t h e researcho b j e c t i v e is a statementofpurposebecauseresearcho

bjectiveisinawaythepathtofollowinorderfortheresearchert o conducth i s researchproject.Resea

rchobjectivescanalsob e definedast h e specificcomponentsoftheresearchproblemthattheresear

Jean-AntoineBAUX 10

V Approachtothedissertation

Initially,a l o t

o f generalinformationaboutwealthmanagement,p r i v a t e b a n k i n g wealthmanagementandcustomerbehaviourwas collectedinordertogetabetterunderstandingoft h e globalindustryaftertheeconomicdownturnof2008.Oncethisinformationcollectedandt h e subjectdetermined,theresearcherstartedtocollectsecondarydatausingrelevantsourcess u c h asbusinesslibrary,journalarticles,eBooks,catalogues,andtextbookstoappreciatetheresearchissueindepth.Infact,thesecondaryresearchallowscollectinginformationthathavea l r e a d y beenestablishedanddescribedbyleadingprofessionalsinthefield.Internetwasalsou s e d t o collectsecondarydata.O n c e t h

e gapw a s r e a l l y f o u n d andsituated,p r i m a r y datacollectionwasu n d e r t a k e n u s i n g i

n

-d e p t h i n t e r v i e w w i t h s o m e wealthmanagersi n s o m e Frenchbankswithintheirprivatebankingservices.Thequalitativedataobtainedfromthein-

depthinterviewswasgatheredandanalysed.Basedonthefindings,appropriateconclusionsandrecommendationsemerged

VI SuitabilityoftheresearcherandInterestinthesubject

Privatewealthmanagementhasbeen describedpreviously asag row in g, evolvingandv er y interestingsector.Theresearcherhasposedageneralinteresttothissectorfollowingseveralworkplacementswithinthebankingsectorandmorespecificallywithinsomeprivatewealthmanagementservices.Then,theresearcher‟sworkexperiencehasconfirmedmystronginterestinprivatewealthmanagement.Byobservingtherequirementsnecessarytoworkaswealthmanager,aspecialinterestisgivenbytheresearchertothisprofession.Furthermore,afterp r e v i o u s l y completinga Bachelori n f i n a n c e , a mastero n e i n financewi th a m aj or i n wealthmanagementandanMBAinfinancewhichprovidedtotheresearchernewknowledgeandcapabilities,t h e researchers ee ms t o h a v eanadequatebackgroundin ordert o p r o p e r l y undertaket h i s study.A s a consequence,t h i s researchseemst o correspondw i t h t h e researcher‟sambition

VII Scopeandlimitationsoftheresearch

Accordingto Rivera (2007,p45),“thescopeidentifiestheboundariesorcoverageof thestudyi n termsofobjectives,subjects,facilities,area,durationandthe issues to which