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This job promotion in Asian banking comes with a 50%+ failure rate

priority banking

A risky jump into private banking

Any promotion in the finance sector has its challenges – but if you’re an Asian priority banker who’s just become a private banker your chances of succeeding in your new job are less than 50%.

In an effort to plug skill shortages, the larger private banks in Hong Kong and Singapore have recently increased their recruitment of priority bankers who manage less wealthy “mass affluent” clients.

Most of this “hiring” is done via internal promotions at large firms – Citi, DBS, HSBC and UOB, for example – that boast both priority and private banking units. Standard Chartered is understood to move about 10 people a year in Asia, according to an industry source.

Those picked for promotion typically have some customers whose investable assets have already breached the bank’s threshold for becoming a private client (typically US$1 to $5m depending on the bank). “And they’re also top performers in terms of meeting their targets,” says former Merrill Lynch private banker Rahul Sen, now head of wealth management at search firm The Omerta Group in Singapore.

But despite having a track record of high performance the newly promoted relationship managers often fail to make the grade. “Across all private banks in Asia, more than 50% don’t succeed,” says Liu San Li, an ex-Coutts banker, now head of private wealth management at I Search Worldwide in Singapore. “But not all are fired, most are given the option of returning to the priority side.”

Sen says the high failure rate is down to the differences between managing clients in the two segments. “Priority bankers are essentially working in the retail segment. They are micro-managed with daily calls from the boss, daily sales calls and weekly targets.”

“But when you go into private banking you’re suddenly in a much more mature way of functioning – your manager might check in on you once a month but you’re largely left to your own devices. You either build your business or you fail,” says Sen.

New private bankers also need to get up to speed quickly with the more complex products they are dealing with.

“You can’t be a pusher of simple insurance and mutual fund products any more. And you’ll be managing fewer clients, but increasing wallet share from them,” adds Sen. “Private bankers must operate end-to-end with their clients and deal with issues like long-term estate planning.”

Because priority bankers can only bring their wealthiest clients to the private bank, they also face tough revenue targets, says Pathik Gupta, an associate partner at consultancy McLagan in Singapore.

“Usually they are given 24 to 28 months to succeed. Because they bring sales experience rather than a big client base, they need to spend a lot of time building up clients, which is difficult,” says Gupta.

Despite the failure rate, hiring priority bankers can pay dividends for banks.

“When UBS took on about 100 of them from Citi, HSBC and the like in China two years ago only about 35 were successful,” says a headhunter who asked not to be named. “But the salaries of the 65 others were low anyway and the bank consolidated their clients when they left – so it worked out.”

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