20259 - PRIVATE BANKING AND MONEY MANAGEMENT FOR INSTITUTIONAL INVESTORS

In the second part of the course, we will examine some models for measuring the performance of managed portfolios that require the knowledge of some elementary notions of statistics (standard deviation, covariance, correlation, OLS regression). The models will still be explained "step by step" with the help of an example made available to students through an Excel sheet.

The course aims to provide the tools to critically understand the management of large individual estates (private banking) and institutional mandates, a rapidly growing market that is characterized by a high rate of innovation. To this end, it will be presenting the main market coordinates, including different types of customers, products and services; the course will also discuss how asset management services can be reported and billed to customers, how to measure performances and how to allocate large fortunes across multiple management lines. Special care will be given to the competitive strategies implemented by financial institutions, also through the participation of qualified external speakers representing the main industry players. An optional group work - where participants simulate to be part of an asset management advisory firm - will contribute to the final score.

Watch me present the course in a 13-minute video: https://youtu.be/VsUghOR8Cng

• The demand and supply of private banking services: size, characteristics, strategies.
• The demand and supply of institutional money management: size, characteristics, strategies.
• Products and services to compete in private banking and institutional money management, including e.g. UCITS, alternative investment funds (including private equity and hedge funds), secured lending, art advisory, investing in commodities, creating trusts.
• The relationship with the customer relationship: measurement and reporting of performance. The case of hedge funds.
• How services are billed and the different types of fees and commissions.
• The allocation of assets across multiple managers.

• Know about the demand and supply of private banking services, the strengths and weaknesses of different producers and the evolution of demand.
• Know about the demand and supply of institutional money management.
• Know the main products and services and the distinctive factors of satisfaction and risk to the customer.
• Know the different types of fees charged.
• USE all the above mentioned concepts in practical situations

• Compare different products and services, choosing the most appropriate ones in relation to the customer profile.
• Measure the performance of a managed portfolio based on several alternative techniques and explain the results to a customer.
• Apply safeguard clauses to management fees, foreseeing their impact.
• Allocate assets among multiple mutual funds based on customer preferences.
• Critically examine asset management products.
• Read and explain the documentation accompanying the main investment products

• Face-to-face lectures
• Guest speaker's talks (in class or in distance)
• Individual assignments
• Group assignments

ONLINE LESSONS

The availability of online lectures will be decided centrally by the University. Should there be a resurgence of the pandemic, some of the experts mentioned in the next paragraph may be forced to give their speeches online.

INDIVIDUAL TESTIMONIES AND ASSIGNMENTS:

The course hosts talks of industry experts who first present their own vision of some emerging issues, and then are interviewed by the teacher and the students. The latter, in order to have a "bonus" of points for the exam, may prepare questions in advance and submit them to the teacher. The questions selected by the teacher and asked to the external speaker during his/her talk will bring an additional score.

GROUP ASSIGNMENT:

As part of an optional assignment, each group will have to review a client, assess his/her characteristics, analyse his/her current investment portfolio (e.g., in terms of past performance and fees) and finally produce a portfolio reshuffle proposal for the client.

The final score originates from three activities: the written exam, the questions asked to the experts giving talks to the class (as explained above) and an optional group work.

WRITTEN EXAM

The written exam is identical for attending and non-attending students. It consists of multiple choice questions (short and objective) and open-ended questions, which also tend to be short and focused.

For multiple-choice questions, in general there is no penalty in case of incorrect answer (although it could be introduced, exceptionally, in case of seriously incorrect answers).

OPTIONAL GROUP WORK

In the optional group work, students will pretend to be an independent consulting firm addressing a new (wealthy) client that is currently served by his/her bank through a sub-optimal portfolio (low performance and/or high fees). The group must perform a "check-up" to this customer, write a short PowerPoint report and present the results in the classroom (students who cannot participate in person because they are taking part in an internship will be allowed to join the presentation online).

FINAL SCORE

The final score will be assigned as follows

a) The written exam (regardless of whether it is carried out in a single test or divided into two partial tests) will assign up to 28 points (additional points will be earned through the actitivies under b) and c) below) will provide a maximum of 28 points (additional points will be earned through the activities described under items b) and c) below).

b) In the exam there may be a question relating to the talks performed by external experts: the maximum penalty for those who cannot answer that question correctly will be 3 points. Students who have earned extra points by asking questions to the experts during the course may use those points to offset the penalty. If their answer to that question is already correct, they might be entitled to an extra point for the final score.

c) Students participating in the group work will be entitled to a bonus of 1 to 2 points (3 points for results that are exceptionally accurate)

As a result of the above, the final score could reach 31 (28 + 1 + 2, or 28 + 0 + 3) or even 32 (28 + 1 + 3), in which case a "cum laude" will be assigned.

• PowerPoint slides distributed before each lesson.
• Mandatory readings (few) and recommended readings. The list will be delivered before the partial exam.
• Handouts written by the teacher and distributed after concluding each topic (e.g. the demand and supply of private banking services may take 3 lessons to complete, after which a handout will be distributed).