Demand for private banking talent in Asia is dangerously close to crisis point, and getting to grips with the industry’s changing personnel needs will be key to progression.
Only recently UBS Wealth Management announced it had added a staggering 88 advisers to its Asia-Pacific client team since the start of 2014. That has taken its total number of advisers in the region to 1,120, an increase of 8% since the end of 2013.
It comes after UBS Wealth Management has seen assets among its wealthy clients in Asia Pacific grow 38% to SFr218 billion ($246 billion) over the past two years.
Such figures point to an intense demand for private banking talent in Asia. Clearly the relationship model in Asia Pacific requires a human interface. But with only 3,500 private banking relationship managers available in the two booking centres of Hong Kong and Singapore, this supply of human capital is severely limited.
More concerning still, the scarcity of advisers is worsening. Over the last five years, the growth of relationship managers in these two financial centres has been 5%. But with a 23% increase in client wealth over the same period, the shortage of relationship managers has quickly become significant.
Specifically, there is a shortage of modern private bankers who can cater to the increasingly complex requirements of the region’s wealthy, whose numbers are rising fast. Yet there is an oversupply of expensive and traditional private banking talent.
Nevertheless, in spite of this talent shortage, control remains in the hands of the adviser rather than the institution.
Pathik Gupta, head of wealth management for Asia-Pacific at recruitment consultancy McLagan, points to a contradiction. Relationship managers in Asia have rising expectations about what remuneration package they should be offered and how they should be incentivised. This leads to increased cost pressures for the institutions they work for.
At the same time, many private banks are also feeding the musical-chairs syndrome that has seen an army of relationship managers hop between institutions. “Organisations are suffering through the process,” observes Gupta.
That is not to say that relationship managers do not face severe internal and external pressures. The principle complaint from the region’s relationship managers is that heightened regulatory requirements have expanded their role; specifically, increased stipulations around documentation per trade, disclosure and investment suitability.
But Gupta argues that relationship managers should view new legislation as an opportunity. “Client disclosure, education and investment suitability are the bread and butter of the private banking industry,” he says. “A smart relationship manager is the one who is able to use regulation to their advantage and get closer to the client.”
Asia’s relationship managers should be mindful of this. In Asia more than any other wealth region, there is a strong client demand for a digital solution that works in tandem with their adviser. For institutions, this means recruiting a very different kind of professional to the one who exists in the business today.
This is not something that is going to happen overnight. But it is a factor that will impact on recruitment trends in the future. We may be on the cusp of a power shift back to institutions that are mindful of how personnel will slot into their organisation of the future.