Australian Peter Flavel, the chief executive of the British royal family’s private bank of choice, Coutts, is living proof of the power of mentors in the early stages of a career.
He believes he owes a large part of his success to the actions of two bankers who are legends in their hometown markets.
The first is Don Argus, who was chief executive of National Australia Bank when Flavel was rising rapidly through the ranks of Australia’s parochial banking oligopoly in the 1990s.
“Don Argus brought me into NAB and I was part of the team that developed what was called the new business model,” he says. “It led to the establishment of the mass affluent and the private bank client segments at NAB.
“But the way in which private banking has grown up in Australia over the past 20 years is disappointing. To be honest it isn’t much more than a heavy focus on mortgages and asset allocation of superannuation.”
He says NAB was on the right track when it bought MLC in 2000 but it couldn’t integrate the wealth management business into its banking business. The same applies to the other big Australian banks.
Different perspective
So how did a boy from Adelaide working for NAB in Melbourne end up sitting in an office in the Strand, overlooking Trafalgar Square, with what many would regard as the world’s most sought-after job in private banking?
As a precursor to his answer, Flavel says Coutts, which is owned by Royal Bank of Scotland, is the seventh-oldest bank in the world, established 325 years ago. It is the largest private bank in the UK with client balances of more than £50 billion ($80 billion) and revenue topping £600 million.
“I learnt a lot from Mervyn Davies, who is now Lord Davies, at Standard Chartered about the opportunities in international banking,” he says.
“He said to me, ‘If you want to be an Australian banker I am sure you will have a great career ahead of you, but if you want to be an international banker, come up to Singapore and I will show you the ropes.’”
Flavel worked as head of consumer banking for Standard Chartered before running its private bank, which became one of the top 10 private banks in Asia. He then jumped ship to JPMorgan, initially in Hong Kong, to run its Asian wealth management arm.
After more than 25 years in banking in Australia, Asia and Europe, Flavel has developed a unique, open and transparent management style. “One of the reasons I am in this role is that RBS wanted someone from outside, a different perspective,” he says.
Leveraging portfolios
Flavel says the best-in-class in private banking in 2017 is a combination of services and bespoke advice. These include day-to-day transactions, complex lending that helps customers extend their businesses and entrepreneurial interests, and advising on sensibly leveraging their investment portfolios.
“At Coutts we really focus on making sure that wealth has its intended consequences,” he says.
“For most of our clients in the private bank, their wealth is going to outlive them. So there are really big questions about their legacy and what does wealth mean for them and their descendants.”
Apart from being the preferred banker to Queen Elizabeth II and her family, Coutts is best known for representing the most influential families in the UK.
“A lot of people think our customers are landowners, people with inherited wealth and dynastic wealth and of course that is a part of what we do,” Flavel says.
“We also have a very strong presence in sports and entertainment stars including over 400 professional footballers.”
Flavel says private banking in Australia is really split into two silos, with a banker offering mortgages and a financial planner offering asset allocation of super.
“They are not getting to the more important questions of ‘Why does your business exist?’ or ‘What are you trying to achieve?’
Commitment to innovation
“I think the biggest lever in high-performance organisations is people having absolute clarity of what is expected of them.
“We spend a lot of time making sure people are clear, capable and motivated.”
Employees at Coutts are divided into small teams which work to 90-day plans, each of which has five main objectives. Flavel posts his own 90-day plans on the bank’s intranet, as does every other team in the two top tiers of management.
“We have an internal Twitter-like communications feed,” he says. “Open communication is key to high performance.”
One of Flavel’s most recent successes was a call to staff to pitch an idea via a two-minute video. He says 80 fantastic ideas were submitted and many are now being implemented.
That fits with his commitment to innovation, which last year included a world first: a single-card, multi-currency debit card avoiding foreign currency transaction fees.
It is taken for granted that Flavel has spent quality time with the Queen and Prince Charles, but he could not possibly comment.
“What I would say is that I think I have the best job in private banking.”
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