Following the integration of private banking into its banking activities in 2019, Triodos is now focusing on the next step: the introduction of an accessible service model for the different groups of investors.
“Market conditions are tightening, you have to keep modernising. Yet the social trend is more important than a possible saturation of the private banking market. We see a lot of room for growth,” said Jeroen Pels, in conversation with Fondsnieuws, Investment Officer Luxembourg’s Dutch-language sister publication. “We do not have to measure ourselves against how the market as a whole is moving”, the director of private banking & mortgages explained.
“Real impact investing”, the strategy as pursued by Triodos, is a separate branch of the sport. “Five years ago, when I started at Triodos as head of mortgages, the outside world still saw sustainability as a niche, something for people with ideals. Now, everything around climate and social inclusion has little to do with ideals. It is simply a necessity, a matter of survival.”
“If you consider how the economy will develop, SRI is also the safer and more sustainable choice. Apart from the fact that many people no longer want to be part of the old. You are not an investor and then a private person. You are a human being of flesh and blood and do not want to put your money into activities that harm yourself, your children or the quality of life. That story resonates very much, and is given a platform. We notice that.”
With managed assets of EUR 1.5 billion and nine private bankers, Triodos’ private bank is smaller than those of ABN Amro, Rabobank and ING. Triodos also serves a growing number of retail investors and, according to Pels, the bank is experiencing exponential growth in its mortgage business and a lot of traction in the investment segment. “The phone is ringing off the hook here, because customers are becoming more aware of social issues and feel more connected to our mission, and realise that they need to take control of their own financial household.”
Integration of services
Since the private bank and the commercial bank have been integrated, it has become easier for the bank to help customers with this, he said, because the service models are now better geared. “If you separate your private banking activities from those of the commercial bank, you separate the wealthy and focus a service on investing.”
Whereas investing is much broader, Pels went on. “It starts with planning issues. If you have eight tonnes of assets, you feel wealthy. Then you reach retirement age and have to fund your living expenses from your assets, and the question is how to deal with that. You can’t judge a particular asset on its own, you have to take mortgage issues and your own wishes and ambitions into account. By integrating private banking with mortgages, you can anticipate this better.”
Being accessible
According to Pels, this integration makes private banking more accessible. “The bar can be lowered, because we believe that more people are entitled to services aimed at building up wealth. Experts point out that the risk of not investing may be greater than that of investing.”
That is why the bank now has a branch for assets of up to approximately 1 million euro. Pels: “We look at mortgage issues, pensions and wealth accumulation. This allows you to look at the product solution from an integrated perspective. That can be an investment, but also a mortgage repayment. Ultimately, investing is part of the total plan, but not the starting point. We are now able to do that properly.”
“At the same time we can concentrate much better on the higher asset classes, because the part below 1 million euro is now arranged in a separate Mortgage and Wealth operating model. In addition to high net worth individuals, we also serve many associations and foundations, for example.”
Entry threshold for private banking
The entry threshold for private banking at Triodos is EUR 200,000. The service is then provided through the Mortgage & Equity model. Customisation is possible with freely investable assets of EUR 1 million and above, and the anticipated capital growth is also taken into account.
The next steps for Triodos lie in improving the match between the product range and the various customer categories and, where necessary, new products. This could be a totally new solution for a particular customer group, or the further development of current solutions, said Pels.
Young generation
“Not everyone finds their way to investment and private banking; young people in particular sometimes do not even know it exists, noted the director. You have to make contact with them in a different way; transparency is key. We share the stories of young clients who have experience with investing, we visualise wealth creation, give webinars, use social media. And we’re not just talking about very wealthy customers. We also want to show that you can get far with small assets.”
The fact that people are becoming increasingly aware of the need for sustainability is a development that helps, Pels explained. “Young people in particular have a lot of fire in them for this theme and are keen to have a lively discussion about it. Our alternatives are also appreciated in this segment. Think of projects in micro-finance countries or renewable energy. Investors often have more affinity with these themes, and they see the direct impact of their investment.”
This ties in with the subject that, when asked, is the biggest challenge for investors, according to Pels. “I wonder what will happen to brown assets in the future. The energy market is upside down, the world is changing rapidly. What is going to happen in the portfolios as soon as the transition starts to take place? How will private banks approach that reality, modernise portfolios accordingly? The longer you postpone the real choices, the bigger the steps you will have to take later.”