Singapore and Hong Kong are about to experience an influx of assets from abroad that will exacerbate existing skills shortages within their wealth management sectors.
Offshore assets in Singapore and Hong Kong are set to rise at a compound annual growth rate of 8% and 7% respectively between now and 2021, according to a new study by a study by Boston Consulting Group. Switzerland’s projected increase is 3%, although it remained the largest offshore wealth management centre globally last year, with $2.4tn in assets, compared with Singapore's $1.2tn and Hong Kong's $0.8tn.
“Singapore will continue to attract wealth from Indonesia, other Southeast Asian countries, non-resident Indians, and the Indian subcontinent. It’s also favoured by greater China investors due to its political and economic stability,” says former Merrill Lynch private banker Rahul Sen, now head of wealth management at search firm The Omerta Group.
“Private banks in Hong Kong will attract money from the greater China region and from investors internationally who want to trade, do business in, and invest in China,” adds Sen.
The expected growth of foreign assets helps to explain why several private banks are intent on expanding their already-heavy ranks of relationship managers in Hong Kong and Singapore.
UBS is hiring 100 RMs in Hong Kong over the next two years, Credit Suisse is recruiting 180 in Asia by 2018, and now Deustche Bank is taking on about 50 Asian private bankers. Bank of Singapore, Julius Baer and Standard Chartered are among the other firms with substantial recruitment plans in the region this year.
But because asset inflows are predicted to keep rising rapidly well beyond 2018, it’s likely that headcount targets will too. And banks will find it even harder to meet their hiring goals because the talent pool of relationship managers won’t increase fast enough to cope with demand, say headhunters.
“Demand for talent will outstrip supply in Asia,” says Sen. “That’s partly because banks no longer take unnecessary risks by hiring non-private bankers.”
The BCG report says that the expansion of offshore wealth is “expected to continue in the long term, but China's ongoing restrictions on investment outflows may slow it down to some degree in the short term”.
Don’t expect any decline in demand for sought-after China coverage RMs, however. “Relationship managers are in shortest supply for the China market,” says Sen. “As China continues to grow and its investors mature, there’s always the need to hire more quality bankers to cover this market from Hong Kong and Singapore.”
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