Private banking has enjoyed one of the most buoyant job markets in Asian financial services for several years. But takeovers, compliance costs and skill shortages are now changing the face of careers in the sector.
Here are the key job trends you need to know about in 2017.
Recruitment is still rampant
Will overall demand for private bankers in Asia fall this year in the wake of ANZ, Barclays and Coutts exiting the industry? No, says Sean Kang, director of wealth management at consultancy McLagan. “Over the last three years, the number of relationship managers in Singapore and Hong Kong has grown by 20%. But the number of high-net-worth people in Asia has grown three times faster, so the pressure to recruit continues.” As we noted last year, Credit Suisse, Julius Baer and Standard Chartered are among the firms with the most ambitious hiring targets.
Juniors are more in demand
“Unlike a few years ago, when they focused on senior hiring, private banks have realised that it’s less risky to hire junior to intermediate RMs,” says Kang. “Senior bankers tend to have ultra-high-net-worth clients, but these clients face longer on-boarding times and are already well banked, which makes it harder to move their assets and reduces the business case for recruiting senior RMs.”
Outsiders are not
“Private banks in Asia who’ve recruited non-traditional people – like corporate bankers and premier bankers – and turned them into private bankers have found that the success rate isn’t high,” says Kang. “This is no longer a good long-term solution to getting new RMs.”
Longer hiring times
To help ensure that new RMs do succeed on the job, private banks are becoming even more vigorous during their hiring processes. “They’re taking longer than they used to and are in some instances thinking out of the box before hiring a banker,” says Amod Jain, a former HSBC banker, now a private banking consultant at recruiters Morgan McKinley. “For example, a bank might tell an RM to first onboard US$50m in an ‘introducer’ capacity before actually making a formal job offer to them.”
Compliance pressures were among the chief concerns of Asian RMs last year, and this looks like being the case in 2017 too. “Compliance and regulations now rule private banks more than the business and sales objectives do,” says former Merrill Lynch private banker Rahul Sen, now head of wealth management at search firm The Omerta Group. “This puts more pressure on you to run a clean client book and be profitable at the same time.”
Your bonus could slump
It’s (very) early to be making predictions about 2017 bonuses, but the outlook isn’t particularly good, says Liu San Li, a former Coutts private banker, now client director in private wealth management at search firm EMA Partners in Singapore. “The high-net-worth population is expanding in Asia, but when you factor in growing compliance costs and clients investing more cautiously because of uncertainties about Trump, China’s slowdown and Brexit, it makes sense that private banks’ profits will suffer. This will affect the RMs’ bonuses, which are in ratio to the total revenue they produce.”
Where to now?
Thanks to mergers (e.g. DBS buying ANZ in Asia) and organic expansion (e.g. Credit Suisse’s ongoing hiring spree) Asian private banking is increasingly in the hands of a few large players. “But RMs in bigger banks aren’t necessarily happier, because the bigger you are, the more obstructions there are,” says Sen. “For example, clients increasingly want bankers to manage their wealth across several countries, but this is difficult or near impossible in larger banks, which prefer RMs to cover one single market. Many RMs want to join smaller houses, but are worried they will be taken over as the industry continues to consolidate.”
You could always try external asset managers (EAMs)
“Many RMs in Asia are still cautious about joining EAMs because, unlike in Europe, Asian clients are unfamiliar with the EAM model,” says Liu. “That said, there’s now an increasing number of senior RMs thinking about setting up or joining EAMs. That’s mainly due to frustration with their banks: more stringent on-boarding, restrictions on conduct of business, and increasing pressure on AUM and revenues.”
Image credit: Boogich, Getty