As recently as five years ago most private bankers in Singapore and Hong Kong led a fairly comfortable existence – schmoozing clients while advising them on personal investments and family affairs. Now Asia’s millionaires and billionaires are starting to demand more sophisticated advice and the job of a relationship manager in the region is being transformed as a result.
“Private bankers have long done extra advisory work for clients – from researching the right school for their children to solving retail transaction problems,” says Liu San Li, an ex-private banker, now practice lead, private banking, at CA Search in Singapore. “But now in Asia wealthy clients are increasingly served by multiple RMs from different private banks. Because of this more intense competition RMs are having to offer more high-level client advisory services in order to stand out.”
“With wealth now being spread across a larger range of institutions, the advisory side of the wealth management business is becoming more professional, extending beyond traditional relationship-based services to concentrate on better quality investment services,” adds Ciara Heneghan, a principal consultant in private banking at recruitment firm Carlton Senior Appointments in Singapore.
Most obviously, larger banks are giving their RMs better access to investment banking services because increasing numbers of wealthy Asian private clients are business owners whose companies need help with acquisitions or listings. Credit Suisse’s new Asian strategy, announced last month, is built around offering investment banking products to entrepreneurs in the region. And Nomura, a comparatively small player in ex-Japan wealth management, is now trying to boost its market share by encouraging more collaboration between departments.
“This change in client needs has forced private bankers to spend more time talking to their investment banking and asset management colleagues,” says Pathik Gupta, head of Asia Pacific wealth management at consultancy McLagan in Singapore. “RMs are now doing more and more financial planning, going beyond personal planning into corporate financial planning for entrepreneurs.”
Connecting clients to big corporate finance deals isn’t the only task that’s becoming more important for private bankers in Hong Kong and Singapore, however. There is a “growing trend” towards alternative investments such art and wine, says Gupta. “The change in client preferences for different investments is driven both by diversification needs and the hunt for higher yields, especially after a decade-long haul of low interest rates.”
Gupta adds: “Other examples of services that private bankers are now offering include single-stock lending and converting illiquid assets into investment assets. And increasingly prime brokerage or global custody solutions are offered by some universal banks servicing ultra-high-net-worth clients.”
Heneghan says the duties of Asian private bankers now include more “cross-border asset allocations, with significant assets being held in overseas real estate investments”. “However as wealth moves into the second and third generations it’s likely such high-revenue targeted investments will become more long term – such as funds, discretionary mandates and wealth protection.”
How are bankers coping with the recent and rapid expansion of their job descriptions? Gupta says the most successful RMs these days are “smart generalists” who have a handle on a more diverse range of services than they did five years ago, but also have access to investment specialist who can help close the tail end of a deal. “Product advisors and investment specialists are also growing in importance as the advisory role played by private banks expands,” says Gupta.
Larger private banks in Asia are reacting to the increased advisory demands placed on their RMs by stepping up staff development programmes. Last year both Credit Suisse and BNP Paribas opened new training hubs in Singapore.
“While some universal private banks have recognised the need to ensure that RMs are well trained and are given internal support to provide more holistic client solutions, not all firms have been able to successfully do so,” says Gupta. “And not all private bankers are able to do holistic planning successfully either. The private banks therefore have to identify RMs who can champion the way changing client needs are serviced and establish mentoring and training programmes to scale their coverage.”