I'm a former private banker now working as a headhunter in Singapore, so I know how tough it is to decide whether or not to join a new bank.
Moreover, these days it's not just the likes of UBS and Credit Suisse who may want to hire you in Hong Kong or Singapore. Several boutique banks are also recruiting, following a flurry of recent takeovers that have given them more clout in the job market, despite remaining outside the top-10 private banks by assets in Asia.
LGT, for example, is still recruiting more RMs after acquiring ABN AMRO’s Asian wealth unit earlier this year. Last month, VP Bank said that it wanted to double its Singapore headcount and EFG said it would keep on hiring in the Republic, having taken on BSI's Singapore RMs last year.
Meanwhile, Safra Sarasin is expanding in Asia and UBP is also growing its regional headcount – fresh from its takeover of my own firm, Coutts International, in 2016.
But should you join one of these five European boutiques that are all adding RMs in Asia? Here some issues you should weigh up before deciding.
EFG and LGT employ a brokerage model – which uses a set formula to calculate bonuses – meaning RMs more or less know in advance how much they will be paid, based on their revenue/AUM for the year. By contrast, most private banks in Asia use a discretionary model, which can be very subjective. Although the main KPIs are still AUM and revenue, less quantifiable parameters are also counted (albeit given less weight). For example, your work attitude, work quality and adherence to the bank’s protocol, to name but a few.
Will you be told that your clients must come from one market, or will you be allowed to cover several countries? UBP’s market segmentation is more well defined than the rest, a legacy of Coutts Bank, which had enough RMs from different countries to divide up teams into fixed market desks.
All of the other four banks, especially VP and Sarasin, have very flexible market coverage. Despite this, you still need to consider whether in the future the bank you join will grow so big in Asia that market segmentation rules will start to kick in for its RMs.
It's a bit of a dead heat here. The five boutiques offer very good opportunities to climb the corporate ladder, because the link between promotion and performance is much clearer (and less political) than at the big banks.
All five firms lack corporate banking and investment banking platforms, which is obviously a major issue if you're currently at a large universal bank. As for product financing, they have a lot more restrictions in place compared to the big banks. Before joining, be very sure what products qualify for financing and the financing percentage. And at job interviews, ask very specific questions on what products can be financed and under what conditions and rates.
Will your current clients actually want to move to the new bank with you? Do they even know much about the boutique you want to join? In the case of EFG, they probably do. But the other four still don't have a high profile within wealthy circles in Asia, so make sure your clients are comfortable well before you accept a job offer. Having said that, the profiles of these firms are starting to rise in the wake of publicity surrounding the recent takeovers. LGT is better known in Asia now than it was before it acquired ABN AMRO, for example. The brand recognition of all these firms looks set to improve.
Minimum AUM per account
Do your clients have enough assets to bank with these boutiques? Currently, all five banks are fine taking on clients with about US$2m in assets. However, this might not always be the case. You might soon have to target clients with assets of at least $3m to $5m because the banks might well raise their minimum thresholds, as some of the larger firms have already done. The worst-case scenario is when the clients’ accounts have to be closed because of their failure to top up their AUM.
Many RMs overlook this area. You might not be aware that some boutique banks actually don't accept clients from certain industries that they deem risky, not just in terms of political risks but also business risks. Some banks reject oil and gas and energy clients no matter how 'clean' or how financially strong they are. It's imperative to ascertain this in the interview. It will otherwise come as a rude shock when you come on board.
All are comparatively less stringent than the tier-one private banks, so long as all checks and documentation pass MAS regulations. That said, EFG could potentially be extra cautious because they acquired BSI (whose license was revoked by MAS due to the 1MDB case) last year. And compliance standards for all banks look set to keep on rising.
It's a huge challenge to move AUM and clients these days, even for senior RMs. So it's very important that you have a checklist of the above factors before you decide to join a boutique.
Liu San Li is an ex-Coutts private banker, now head of banking at search firm IGS Asia in Singapore.
Image credit: JohnnyGreig, Getty