Modern slavery, philanthropy and Swiss banking: PWM Tea Break

Rebecca Cretney of Nedbank Private Wealth talks to PWM's Ali Al-Enazi and Yuri Bender, over a cup of Fair Trade tea, about how wealth managers must embrace philanthropy to engage the next generation and analyse portfolios more deeply to avoid exposure to forced labour.

Ali Al Enazi: Hello and welcome back to our Tea Break series here at the FT Studios in London, alongside my co-host Yuri Bender, and Happy New Year to all our readers. To kick start the first of our 2025, Tea Break episodes, I'm delighted to say we have Rebecca Cretney, senior investment specialist at Nedbank Private Wealth. Rebecca, great to have you on the show. 

Rebecca Cretney: Thank you very much for having me, Ali. 

Ali Al Enazi: And what tea have you gone for today? 

Rebecca Cretney: I have gone for lemon and ginger.

Yuri Bender: You spend a lot of time on the Isle of Man, where your bank is based, Rebecca. What's the preferred beverage there? 

Rebecca Cretney: A pint of beer, normally would be the preferred beverage there, but a lot of English breakfast tea is consumed on the Isle of Man as well. But I'm originally from Spain, so therefore I have to give a nod to coffee.

Yuri Bender: I remember on the Isle of Man, the kippers were very popular there as well for breakfast. 

Rebecca Cretney: They still are. They still sell them in all fine establishments. 

Yuri Bender: I didn't have any kippers for breakfast today, Ali, I did have the porage earlier on, and I've actually gone for this Fair Trade green tea. I'm going down this virtuous trail this year because I was editing and reading an article from Martin Buttle of CCLA Investment Management, that appeared on our website about addressing the evils of modern slavery. The amounts that these illegal activities generate is mind blowing. $236 billion each year in illegal private sector profits. Rebecca, are private banks and wealth managers such as yours aware that they could be exposed to modern slavery when they draw up their ESG principles? 

Rebecca Cretney: This is certainly something that has come more and more into the fore over the past years, so it is something that we have very much been aware of. Simply having conversations which, I think, is very much what is lacking in today's society, having conversations with fund managers, expressing that this is not something which is permissible within portfolios and encouraging to dig deeper into the root causes of this is very much something that is in all of our gifts, be we direct investors or whether we access investments via a funded approach, such as is our case. 

Yuri Bender: I think you're absolutely right. These one-to-one conversations are absolutely vital in the future of the industry. 

Ali Al Enazi: These are some serious issues, Yuri. I mean, what have you included in your review of 2024 and predictions going into 2025?

Yuri Bender: Well, I was trying to kind of contextualise where we are in history and I was looking back 40 years to the days of my long lost youth in 1984 and it's a year I remember, well, tumultuous times, the height of the Cold War. There was the UK Miners’ strike, which destroyed the fabric of the Northern industrial society. We had intense rivalry between the liberal and the conservative. A lot of parallels today. And I remember the big, anthemic Song of the Year by Frankie Goes to Hollywood: ‘When two tribes go to war.’ And that was really summing everything up. But we remember 1985 coming in and that sense of optimism. There was the Band Aid single, the Live Aid, Bob Geldof, ‘Do they know it's Christmas.’ And it was this grassroots campaign to alleviate famine. This was the real start of widespread philanthropic giving to relieve poverty. And we also saw the launch of the Apple Macintosh computer, which was a very big deal. Rebecca, this time of innovation and philanthropy, which we saw kick started 40 years ago. Where are we today in this journey, in the wealth management world? Is philanthropy very much at the centre of those one-to-one conversations you have? 

Rebecca Cretney: It is a very valuable tool for addressing this. So it isn't the only tool and it isn't the only solution. But if you want to foment communication, if you want to protect your heirs against ‘affluenza’, if you want to create in them a sense of social responsibility, if you want to bring up nice, decent individuals, if you want to give them boardroom experience, if you want to give them experience of being able to read financial reports, if you want to teach them about the poverty that there is elsewhere, and want to train their thoughts away from themselves and their own egos, and towards finding innovative solutions, that will also help boost your personal wealth. So actually it's a win-win situation, because in doing so, you're bringing up individuals who are responsible, financially literate, who have boardroom experience, who are innovative, and however much it's cost you in philanthropic expenditure is going to be repaid in multiples. But philanthropy isn't the only tool. There are other tools.

Yuri Bender: But one of the major ones. This idea of nurturing individuals, bringing them through the private bank and the family office, Ali, this is what Swiss banks have always prided themselves on and you were over there strolling along the shoreline of Lake Geneva a couple of weeks ago, seeing all the major players there. Obviously, Swiss banking is living through troubled times at the moment, the collapse of Credit Suisse, serious problems at Julius Bear,  Lombard Odier, and other players. What kind of feedback did you get? Is this a dying industry now in Switzerland? Are the other centres stealing a march? 

Ali Al Enazi: Yes. As you mentioned, I was in Geneva a few weeks ago in freezing temperatures along the lake. But the common theme after speaking to a lot of banks there is that it's too early to write off the Swiss. Of course, you have centres like Dubai and Singapore growing, but they're just growing faster. Switzerland still retains its place as a robust, credible place to put your money in. But with those new emerging hubs, it's not about replacing one hub over another. It's that those hubs, Dubai and Singapore, are playing catch-up towards Switzerland. And also, another way to understand it, a lot of the banks were saying, is to understand that families are becoming global. Wealthy individuals are becoming global, and so these hubs are growing as well, to accommodate these global families. It's not replacing one hub by the other. 

Yuri Bender: So basically, the wealth is growing for the families. The families are becoming more global. And then they say, ‘well, look, some of our wealth is in Asia. Some is in the Middle East. Let's use those centres’? 

Ali Al Enazi: Exactly. And a lot of the talk is: let's not see it as some sort of competition, but it's that the banks are going to be global. We're going to have to work, we're gonna have to have communication lines all over the world. But some of the analysts I spoke to have fear that in this new era of a Cold War between America and China, we could see Dubai and Singapore actually being neutral hubs, and Switzerland might lose influence as a financial hub. That's an argument that's been put forward. Nonetheless, it's still a reputable place. It's still a stable place to put your money in, according to these banks. What are the major concerns? What does Trump do? And how is that going to affect not just Switzerland, but Europe as a continent and the UK as well. How's that going to pan out? They struck some deals last month. Is it going to come closer to EU regulations, or is it not? Will the Swiss people vote that in or not? So there's a lot of dynamics for Switzerland. 

Rebecca, the market is being shaken by confidence, particularly in the UK. We had Brexit and political instability followed. It was a favorite underweight, according to an article we featured by Mark Costa and James Lowen, fund managers at J O Hambro Capital Management. But now they claim the UK will return to the centre of allocations. Is this the way you see the UK market?

Rebecca Cretney: In terms of a short-term answer - and by short-term, I mean five years, I think that there's great opportunity in the UK. On a longer term scale. We've seen that the UK used to be around seven, seven and a half [per cent] of world equity markets 15 years ago.There is a slide that's occurred. 

Yuri Bender: We're seeing the lack of listings here taking place, the lack of faith. And we've actually got a question that's been sent in for you from Spain, from your former homeland, from Gumersindo Ruiz, a financial adviser from Spain. He asks: “We know a lot about the relationship between interest rates and stockmarkets. Our private bankers are always talking about these things, but not so much about the effects of the reduction of Central Bank balance sheets, or so called quantitative tightening.” And he says, “Is this something that we should be concerned about when we look at equity and bond markets?”

Rebecca Cretney: It is something that we should be concerned about, and it is something that we should be talking about, but it isn't, as he points out, part of a more traditional conversation with clients, and actually, momentum and sentiment is taking far more importance recently, as we've seen with stocks such as The Magnificent Seven in the US, or actually, there are five stocks In the UK, which this year alone have posted returns of over 80 per cent. 

Yuri Bender: For our viewers, which stocks should we be watching in the UK? 

Rebecca Cretney: I would say financials are very interesting. So two of the stocks that have posted returns in excess of 80 per cent are Barclays and NatWest in 2024. But they are still trading on very fair price earnings ratios relative to the market and relative to their own historical norm. So, having seen those substantial gains, and knowing what the yield curve is projected to do, I do think that actually financials do pose quite an attractive picture within the UK, and they're less subject to trade wars. 

Yuri Bender: And the trade wars, Ali, are something that you and I are constantly concerned about. 

Ali Al Enazi: Definitely, we are consistently talking about trade wars on the PWM website. Rebecca, thank you for coming on the show, from me, Yuri and the PWM team. See you next week. 

Further reading:

Budget can spark wealth management reforms in UK

Wealth managers must be smooth operators in 2025