The practice was rife before the financial crisis and now it’s making a (more muted) return: private banks in Singapore are dealing with talent shortages by hiring relationship managers from the lower ranks of wealth management.
Priority bankers – who serve “mass affluent” retail consumers and are also known as privilege or premier bankers – are being recruited into large private banks in Singapore when they can’t fill vacancies by grooming their own private bankers or by poaching them from rivals.
The job market in private banking in Asia Pacific remains buoyant as firms seek more relationship managers to service the fastest-growing region for private wealth worldwide. Asia Pacific will likely overtake North America as the largest wealth market in four years, according to the Boston Consulting Group.
“Top-tier specialist private banks, including UBS and Credit Suisse, are now willing to look at mature priority bankers from other firms who want to leverage off their strong product platforms. Bank of Singapore has also been in the market to snap up good potentials,” says a private banking headhunter in Singapore who asked not to be named.
Banks in Singapore that have both private and mass-affluent arms – in particular ANZ, Citi, DBS, HSBC, Standard Chartered and UOB – are increasingly willing to consider “upgrading” their existing priority staff, he adds.
This is by no means an easy career change or one you can make as a junior, however. Priority bankers are expected to slot into private-banking roles at VP level and above.
“Quite a few relationship managers have crossed over from priority banking this year as hiring appetite has improved. But private banks are selective and are looking at senior RMs who’ve had a long stint with their mass-affluent platforms,” says Clarence Law, a Singapore-based business advisor in private banking.
Rising up the wealth-management hierarchy was more straight forward before the 2008 financial crisis, says Rahul Sen, a director at search firm Sheffield Haworth in Singapore. “Back then there was significantly more risk-taking by both private banks and their clients. Now priority bankers are being recruited again once more, but only top-performing ones.”
Many of the recent recruits had clients as priority bankers whose rising wealth levels nudged them into private-banking territory. As a rule, clients in Singapore need about US$250k invested to qualify as priority clients, while $2m to $3m (sometimes more) is typically the minimum range in private banking. These thresholds, however, vary hugely from firm to firm, while banks such as Citi and DBS also provide mid-ranking wealth services between their mass-affluent and private offerings.
“Priority bankers often feel obliged to better cater for the new and more sophisticated needs of their clients,” explains Law. “Ultimately, the quality of a banker determines their ability to cross over. The extent to which they have groomed their relationships into bona fide private-banking clients will determine their success in their first foray into private banking.”
As we reported last month, relationship managers in Asia face tough first-year revenue targets as private banks struggle to cover 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.
“Once in a private bank, your performance is monitored and discussed every quarter initially and then every year when you’re more mature in the role,” says Sen. “Private and priority banking are completely different ball games in terms of products, volume of business and reporting structures. Priority bankers moving over need to shrug off any retail-banking mentality because private banks are for entrepreneurs.”