Austria’s Kathrein Privatbank: Continuing to Apply the Personal Approach in its 99th Year

Since joining Kathrein Privatbank as CEO in May 2019, Wilhelm, together with his team, has been responsible for the successful implementation of its ambitious growth strategy. When he spoke with Wanda Rich, editor of Global Banking & Finance Review, he filled her in on how Kathrein Privatbank is prepared to help clients navigate the most difficult challenges being faced in the current financial climate.

“Staggering inflation, a looming recession and the war in Ukraine are the significant factors shaping our economic environment,” he reported. “Investors have been confronted with the rare scenario of high economic uncertainty and political turbulence. For our relationship managers, times are intense. We are available for our clients nearly 24/7, which is particularly important in difficult times. But that is the added value of a private bank – trust that builds on the close relationship with our customers.”

Wilhelm revealed that while the environment for investors has been challenging, the bank has been continuously adapting investment strategies through its active asset management. “Even in this environment, we were able to outperform the market with our portfolio,” he said. “In the equity sector, the focus is on defensive stocks – that is, companies whose business models are stable even in turbulent times. In the bond segment, for example, Kathrein invests in localcurrency bonds of emerging markets to generate higher returns, but only in issuers with excellent credit ratings, such as development banks.”

The bank’s slogan, “Very personal,” is a reflection of what Wilhelm describes as the core of its business: listening to and understanding clients’ needs. “We are convinced that the personal relationship between our clients and their private bankers is the crucial success factor for private banking. Financial planning is one of our core capabilities. That is why we can provide a holistic approach and offer much more than just investment advice. Our services include support in succession questions, structuring wealth and assets, special loans and much more. That is what sets private banking apart from a retail bank – we don’t just take care of the money; we serve the clients.”

As the popularity of sustainable investing continues to rise, Wilhelm weighed in on where Kathrein stands in terms of ESG investment options and how its clients are responding. “Sustainability is more present than ever. At Kathrein, we are convinced that responsible business practices contribute to a better quality of life and future for generations to come,” he said. “That is why we started our first sustainable investments back in 2012. Today, we have already invested more than 50 percent of the total fund volume according to the sustainability approach. We see a growing interest from our clients in sustainable investments. Apart from last year, the MSCI World SRI has outperformed the MSCI World.

Thus, from an investor´s perspective, ESG investing bears fruit. Is it the right thing for everyone? That is for our clients to decide.

“As of last year, we can offer our clients 10 funds that are managed according to independently monitored ESG criteria. These funds encompass stocks and bonds. Moreover, we offer special funds for our institutional clients that often demand an even more rigid approach and specific exclusion criteria.”

Following almost a century of operation, Kathrein now manages several generations. Wilhelm explained how a deep understanding of a family's needs and goals, a long-term perspective and – crucially – the trust of its clients allow the bank to navigate the challenges of multi-generational wealth management.

“As a private bank, our goal is to provide tailored solutions that meet the unique needs of each client and help them build and preserve their wealth for generations to come,” he explained. “We do so with our service Family Konsult, which consolidates the full spectrum of our expertise and services in the areas of succession, family and business assets, and foundations. These matters are all complex and frequently intertwined. That’s where our holistic consulting approach comes into play.

“We have identified, among others, three critical factors,” he continued. “First is succession planning – developing an effective succession plan that ensures the smooth transfer of wealth from one generation to the next. This includes addressing issues related to taxes, estate planning, and governance. Then there is managing complexity. Multigenerational wealth management involves managing complex family dynamics, as well as financial and legal issues. It requires expertise in tax planning, estate planning, and financial planning to create effective strategies that meet the needs of each generation.

Information on past performance is not a reliable indicator for future results or returns.

“The third is investment strategy. Creating an investment strategy that meets the long-term financial goals of multiple generations can be challenging. Investment decisions must balance the needs of current and future generations while also considering their different goals and ambitions.”

At the core of Kathrein’s operations lies client relations, which contributes heavily to the level of trust it has earned among its clientele. The bank shows no sign of taking this trust for granted, and continues to take steps to consolidate these relationships. “We understand that the trust of our clients is our most important success factor,” Wilhelm acknowledged. “We aim to strengthen relations between clients and private bankers in various ways. We assign a dedicated relationship manager to each client, who acts as a single point of contact for all their banking needs.

If needed, we provide direct access to our Family Konsult team or our portfolio managers to address further topics. Thus, we provide our clients with personal access to a team of experienced professionals. Moreover, we have heavily invested in our digital capabilities. We are rolling out a portfolio analysis tool that offers comprehensive insights to our clients and allows for structuring of wealth and assets.

“Overall, our goal is to build long-lasting relationships with our clients based on trust, expertise, and personalised service. We believe that by listening to our clients, providing tailored solutions, and taking a proactive approach to client relations, we can continue to strengthen these relationships and help our clients achieve their financial goals.”

From an investor’s perspective, Wilhelm sees several opportunities for the year ahead. “One of the prominent issues highlighted by the multiple crises is the green energy transition. The decoupling of cheap Russian fossil fuels could be an accelerator for Europe´s economic development, although it will be painful in the near future. We spot opportunities to invest in clean energy, resource scarcity, and information technology.

“Inflation might be here for longer than anticipated. There is not one single asset to beat inflation; rather, we have taken a multi-pronged approach, dependent on the goals of our clients. A mix of bonds with actively managed duration and qualitative stocks could be promising for this year.”

The above mentioned sustainable funds are within Article 8 of Regulation (EU) No. 2019/2088. Social, ethical and environmental characteristics are promoted in the fund. Exclusion and quality criteria (negative and positive criteria) are considered in the selection process. However, no sustainable investments within the scope of the EU taxonomy are targeted or sustainable investment objectives are pursued.

Details on the carbon footprint, the ESG concept, the sustainability-related disclosures including the pre-contractual information on environmental and social characteristics as well as the fund's prospectus can be found at www.kathrein.at at "nachhaltigkeitsbezogene Offenlegungen".

Without a doubt, the challenging economic circumstances that we have witnessed in the last couple of years have severely impacted the financial stability of many employees in the UK, both in the immediate and distant future.

Growing inflation, eye-watering energy costs, and rising interest rates have all contributed to an enduring struggle for many Britons. In order to meet the basic cost-ofliving, some working people have had to live from one paycheque to another and focus on their short-term financial obligations. Unfortunately, this often damages employees’ aspirations for greater long-term financial security.

It is imperative, therefore, that employers, HR managers, and decision-makers within a business work to proactively facilitate and empower employees to continue to work towards their long-term financial goals – even in the face of short-term financial difficulties.

As such, employers must effectively enable their workforce to seize control of their financial wellbeing in the long run, and – especially during the cost-of-living crisis – it must be made a priority.

The importance of long-term planning

Across an employee’s life and career, it is inevitable that they will encounter significant financial goals that demand thoughtful and attentive planning.This can include homeownership, starting a family, building wealth, and ensuring a comfortable retirement. Many of these goals are difficult to fulfil, especially if employees are not given the tools needed to organise their finances beyond the day-to-day management of immediate financial obligations.

If we take the goal of a comfortable retirement as an example, employee pension schemes are a particularly important factor of an individual’s long-term financial wellbeing that are being overlooked in the current climate. Indeed, recent research shows that a fifth of employees in the UK have stopped or reduced their pension contributions in the last year. Yet, to maximise the value of their pensions, employees need ample time for growth. As such, by reducing their pension contributions, employees could be missing out on the chance to boost their pension’s worth and secure future financial wellbeing.

Moreover, the ability to plan for the future becomes particularly crucial when unexpected circumstances – like the cost-ofliving crisis – arise. Employers must ensure that their employees are able to tackle monetary emergencies without resorting to debt or facing other financial difficulties. Ultimately, this relies on their being in control of their future financial wellbeing. Businesses that are failing to foster a workplace that places value on a solid long-term financial strategy are putting their workforce’s entire future financial wellbeing at stake.

Unfortunately, such a lack of support is extremely prevalent amongst UK businesses, despite the media and public attention that the difficulties of the last year have attracted. Indeed, according to Mintago’s recent research, just 38% of workers have access to employer-provided support for managing their long-term finances.

The impact of failing to empower employees to manage their longterm finances

While some employers may perceive employee finances as being outside of their remit, it is crucial to acknowledge that this impact of a lack of long-term financial planning extends beyond the lives of individuals. Underestimating the ramifications for businesses would be a mistake, as the adverse effects of employees’ financial struggles can profoundly harm a business’ productivity levels and job satisfaction.

In a recent study conducted by Mintago, for example, half of the employees surveyed (49%) reported that stress and anxiety stemming from financial worries had a detrimental impact on their overall job performance. The survey also revealed that the rising cost-of-living and money worries were the two leading causes of stress amongst employees. It is clear that businesses could see their team’s job performance falter if they do not step up and provide the right kind of support.

Related to this, the implications of poor long-term financial wellbeing extend to staff retention, as a lack of support could be interpreted as a lack of concern for employee welfare. Alarmingly, less than a third (32%) of workers currently feel that their employer genuinely cares about their financial wellbeing, which is perhaps why 44% expressed their willingness to leave their current role in search of better employerprovided financial wellbeing support. Obviously, employees value employers who show willingness to help them reach their long-term financial goals.

It is worth noting that The Society for Human Resource Management (SHRM) estimates that the cost of replacing an employee ranges from six to nine months of their salary. So, considering the average salary in the UK is around £30,000, the average staff turnover cost is estimated between £15,000 and £22,500 per employee, which could be incredibly detrimental to a business in the current climate. As such, there is not only a moral case for supporting employees, but also a business case for investing in financial wellbeing as a strategic approach to enhance staff satisfaction and retention.

How employers can better support their employees’ long-term financial planning

One of the most effective approaches to assist employees in planning for their financial future is by offering comprehensive financial education and training. Many employees lack the necessary financial literacy to make informed decisions regarding their finances, particularly when it comes to the complexities of long-term financial planning.

As such, even something as simple as providing access to educational resources can help employees acquire essential skills such as budgeting, saving, investing, retirement planning, and debt management. These resources enable employees to make better-informed monetary decisions, providing them with the support they need to effectively manage their longterm finances.

Additionally, facilitating access to independent financial advisors (IFAs) can be instrumental in helping employees develop a personalised strategy to grow their savings, despite the challenges posed by the current economic landscape. IFAs offer tailored, unbiased advice that aligns with employees’ specific long-term financial goals, whether they are saving for a property or want to ensure they have a dream retirement.

Moreover, the implementation of a comprehensive pension dashboard proves invaluable in enabling workers to effectively plan for their long-term retirement goals. Such platforms streamline and optimise pension management, while also providing the added benefit of helping employees trace any lost pension pots from previous employers. Indeed, this can deliver a healthy boost to an individual’s financial outlook.

Final thoughts

While the economic situation is beginning to look more positive, businesses cannot become complacent when it comes to supporting their employees. They must continue to ensure that they are providing the support that their staff need to navigate the rest of their financial lives with confidence. By taking some of the measures described above, employers will empower their workforce to take charge of their financial futures, fostering a more confident and financially secure workforce for years to come.

Chieu Cao is the founder and CEO of Mintago, an FCA-regulated company that provides its users with the UK’s most complete and inclusive financial wellbeing solution. By equipping its users with financial planning tools, over 1,000 pieces of educational material, access to financial advisers, a Money Helper AI and a dashboard that allows for full pension management, Mintago helps businesses support their staff during the cost-of-living crisis and supply them with everything they need to navigate their financial lives with confidence. Mintago can also assist businesses in saving thousands in NIC, as well as providing their staff with direct savings.