At a time when Asia is experiencing a rapidly expanding tribe of wealthy clients, the tough new capital and liquidity rules the banking industry faces are coinciding with the rising cost of operating a wealth management business, including hiring relationship managers.
According to a Capgemini/Merrill Lynch report published last year, the number of US dollar millionaires in Asia stands at more than 3.3 million - and annual wealth creation is expected to increase by nearly 9 per cent.
Lok Yim, head of Private Wealth Management (PWM) North Asia at Deutsche Bank, believes sacrificing cost-to-income ratios to win business in Asia is not a sustainable business model.
As a universal bank, Yim says Deutsche Bank (PWM) plays to its strengths of focusing on the needs of high-net-worth individuals. "We don't try to be all things to all people," he says, adding that by tapping into its expertise, Deutsche Bank (PWM) offers clients a wide range of services.
Through utilising the bank's synergies, Yim says recruiting talent is a focused process. "We know what we want and expect from candidates, and candidates know how the bank looks after our clients," he says.
Yim expects Asian private banking operations expenses to keep rising. "Banks need certain minimums to meet regulation requirements. The cost of compliance officers, risk managers, technology professionals, due diligence and regulatory environment managers puts pressure on operation costs."
As Asia moves towards becoming the world's largest wealth region, Eduardo Leemann, CEO at Falcon Private Bank, says a lack of experienced talent remains a major challenge. "The talent shortage drives up costs, but for the long-term good of the industry, we need to be realistic," he says.
"We have clear plans to hire a certain number of private bankers every year, but we don't go crazy. We would rather hire four or five good bankers, than 10 average ones."
By adhering to clear Greater China strategies, Leemann says the Swiss private bank is prudent about the way it approaches its recruitment policies. "We would rather use our financial strengths to hire the right people and maintain our services to clients, than increase headcount simply for the sake of growth," he says.
As private banks look to bolster their strengths, recruitment specialist Eunice Ng, director at Avanza Consulting, says she is aware of instances where banks have hired individuals with an executive MBA or experience in other industries, or both.
"We know of some hires that have never worked for the private banking sector before. They are recruited for their dynamic and interesting career profile, entrepreneurial presence, excellent presentation or communication skills," says Ng.
John Mullally, manager, financial services, at Robert Walters, says private banking is a tough area to recruit in. "Some private banks may look at bankers without financial services experience but, with the possible exception of the hiring of very senior advisers, they are not likely to be top-tier banks," comments Mullally.
Despite recent movements by senior private bankers between competing organisations, Mullally says top bankers usually move with their teams, and can only move a relatively small percentage of assets under management.
Swapna Reddy, manager of banking and financial services in the accounting and finance division at Links Recruitment Hong Kong, says private banking hiring is reasonably strong in regional and global banks.
"Candidates with local market understanding, language fluency and a strong network of high-net-worth clients are hot potentials for private banks," says Reddy.
