Frank Reisbøl is a Danish citizen leading Carnegie, a Swedish bank, in Luxembourg. The amicable cosmopolitan reflects his client base in a remarkable way, although the patchwork of jurisdictions involved in the latter’s affairs is often even greater.
“A client might, for example, be a Swedish resident living in Spain, who is banking through Luxembourg and has his assets in Cyprus,” Reisbøl says. In practice, this cocktail of different
loyalties leads to a number of complications when it comes to fund selection. “There are a lot of different boxes to check to find out what products are actually suitable for a particular client, because they all have different profiles. So lots of our resources go into complying with regulation.”
So Reisbøl must be delighted that Mifid II, which is supposed to harmonise regulation for European investment products, is comin gup. Right? Wrong.
“Mifid II is not implemented evenly across Europe,” Reisbøl says. “Each country has its own interpretation of the rules. Why can’t you have a level playing field, where the same renumeration model is in place for all countries?”
He is equally underwhelmed by Mifid II’s attempts to increase investor protection. “Mifid II requires us to draw up risk profiles for each of our clients, to know what their understanding of risk is. But many clients don’t fill in the risk-profiling surveys seriously, so that information cannot really be used.”
Next to his daily work monitoring the team that manages the client portfolios in Luxembourg, Reisbøl sits on Carnegie’s investment committee, which currently has seven members and decides on both the company’s white list and the overall asset allocation.
The private bank has a strong top-down approach and the basis of all portfolios is a result of the asset allocation decisions taken by this committee. It convenes approximately every other month, usually after big macro events that might have consequences for asset allocation, such as the big sell-off which hit markets in August.
The focus on asset allocation helps his team to get its priorities right. “Imagine you find a really good fund in emerging market debt local currency,” says Reisbøl. “Great, but if it is not interesting as an asset class, it’s not really relevant because you won’t buy this fund.”