Asian private bankers are facing increased pressure to perform during their first year in a new job thanks to tightening profit margins across the wealth sector.
Wealth management headhunters in Singapore and Hong Kong say a rising number of private bankers are failing to meet tough 12-month targets and are looking to leave banks that they only joined last year.
Private banking recruitment in Asia remains buoyant as firms seek relationship managers to service a region where the combined wealth of high-net-worth individuals is expected to overtake that of Europe in 2017 and the US in 2024, according to a Wealth-X and UBS World Ultra Wealth Report.
But despite the forecast growth, banks are struggling to generate enough revenue to support expensive salaries and rising regulatory costs. The profit margin for wealth managers in Asia is 17 basis points, compared to 23 in Europe and 32 in North America, according to McKinsey Global Private Banking Survey 2013.
If you're moving to a new private bank in Asia, surviving your first year is getting more difficult. Here’s what it takes to succeed.
Your primary performance benchmark is set even before you even start work – at your final job interview. During the interview process private bankers outline (often via a business plan) how much of their current assets under management they think will be transferred to the new bank within 12 months. As a rough guide, banks in Asia typically expect your AUM to total about US$50m to $80m after year one, says Shearer Liu, a wealth management headhunter and managing director at search firm Pro-Matrix Consulting in Beijing.
Headhunters say that candidates tend to underestimate the difficulties of convincing clients to shift their assets and thus overestimate their AUM. “This is a core measurement for management when sitting down with the new team members after 12 or even six month to review performance,” says Liu. “Private bankers must put a figures sheet on the table that exceeds, matches or closely matches the numbers they had promised at the interview.”
With banks setting onerous 12-month targets, it’s crucial to do as much preparation as possible even before the clock starts ticking on day-one of your new role. Don’t stop researching your new employer when you’ve clinched a job offer, try to take a few weeks off between roles for an intensive study session. “Ultimately, the success of a private banker joining a new bank depends on how much work they have done before making the move,” says John Koh, a former private banker who is now the managing director of Singapore search firm WMRC. “Preparation is key – you should start your job already well versed with the bank's platform, acquired through careful research.”
Start talking to your clients about your move as early as possible – potentially when you’ve reached the final stages of the interview process. “Discreetly, you should get the approvals of your top, loyal clients who will move with you immediately on joining. This way, you can hit the ground running and help ensure that AUM targets are met,” says, Rahul Sen, an ex-private banker and a director at headhunters Sheffield Haworth in Singapore.
While AUM is all important, private bankers usually face additional year-one targets for generating revenue from those assets. The thirst for revenue can caused them to put too much pressure on clients. “This can damage the client relationship and trust and even business ethics and corporate branding,” says Liu from Pro-Matrix.
Bankers whose clients have a genuine incentive to join a new platform – for example its products aren’t offered by other firms that the clients already bank with – typically find it easier to meet revenue targets. “Successful bankers typically have very 'sticky' clients who are extremely receptive to the new bank, with minimal asset overlaps,” says Koh from WMRC. “These clients are relatively easy to onboard to set realistic AUM and revenue targets for.”
“I’ve seen many private bankers who are top performers but fail by making one single mistake on a risk issue,” says Liu. “Many innovative products contain complex trading structures, which means a great deal of risk to clients and banks. These days the industry is placing lots of emphasis on bankers’ compliance records and business integrity – banks have zero tolerance to compliance issues. A successful private banker at their first year will 120% understand and comply all corporate policies, and absolutely avoid any operation risks, compliance issue, legal risks and reputation risks.”
Convincing a good chunk of your clients to join your new bank is only half the battle. “You will need to work hard to understand the bank’s new products and services as quickly as possible,” says Liu. “You also need to conduct a detailed KYC of your clients’ financial needs and match them what the bank offers. Obviously the more matching points you get, the more success you will have. Many experienced private bankers have failed their first year because they couldn’t do this.”