History of Private Banking

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The history of asset management starts long before our time. One of the first legal codes to contain rules of trusteeship and capital management under power of attorney are the Solon code of laws written in ancient Greece circa 600 B.C.

Historical documents indicate that the institute of entrusted administration of property under power of attorney in the interests of a private individual was rooted in antiquity. A 1925 U.S. brochure on the history of asset management cites documents as evidence of the existence of trustee relationships in ancient Egypt. The large amount of assets belonging to the pharaohs and their children was managed on the basis of trust and custodianship.

Historical examples show that the development of asset management was linked in the first place to the evolution of property ownership and the personification of ownership rights. The first forms of asset management appeared as inheritance custodianship or devise trusteeship. As different forms of ownership developed and grew in sophistication, procedures of trusteeship, bequeathal and settlement also grew in sophistication. As different forms of wealth evolved, trustees faced matters of preserving material, real-valued capital and also matters of financial asset management, and liquidating one form of wealth and replacing it with another form.

The emergence of commercial or enterprise ownership meant that trustees had to grow in professionalism, their constant specialization in the latest, their transformation from passive notaries to people who validate wills in assets, that is, asset managers. The development of commercial property entailed the emergence of financial assets.

Owners of financial assets weren't able to deal in their own wealth; when exchanges first emerged owners of financial assets were prohibited from trading in their wealth. The traders became middlemen, short-term trustees who executed orders from owners to buy or sell financial assets.

The development of financial markets and exchanges led to a new class of people emergence - the rentier - a person living on income from property or investments. With their emergence, trust management didn't include all of the assets being inherited, only the direct assets of the owner during his life and in his interests.

Therefore, asset management is one of the oldest economic categories having passed through many phases of development in human society, and which has proven its attractiveness and purposefulness. In the U.S.A., some 70% of all investor assets are managed by professional managers.