Private banks will likely win out over commercial banks, investment banks and asset managers in the race to tap Asia’s wealth pool, believes Kaven Leung of Julius Baer.
He says that the financial crisis of 2008/09 created a vacuum in the financial industry, with clients still re-evaluating what they want from their bankers and advisers.
Asked where he thought the growing pool of wealth in Asia would end up, Leung replies: “Ultimately clients need to find someone they can trust.
“In my mind [the winner of Asia’s wealth] will be a set-up in which the front-office focuses on helping clients to gain understanding of financial market product sets and tailor solutions to meet their needs. That set-up today is mainly in private banks.”
Still, he stresses the need for private banks, asset managers and investment banks to work together to service the varied needs of today’s high-net-worth individuals.
He notes, too, that asset managers are moving closer to the private wealth segment, a trend he expects to continue, although he says they need to come closer in their understanding of end-clients.
“It is about how asset managers can be efficient in delivering their capabilities to individual private wealth,” he says. “They need to think about the kind of solutions they have to tailor that will find a place in HNWIs’ total asset allocation.”
The sort of managers he likes to work with, he says, are those focused on after-sales support throughout the life of a product.
It has barely been three months since Leung started at Julius Baer as deputy Asia CEO and North Asia CEO based in Hong Kong. But what becomes clear is that he has a definite strategic direction in which he wants to take the bank, although how he implements this is still a work in progress.
His goal is to develop a deep and broad bench of talent to engage not just in wealth planning, wealth structuring and distribution, but in wealth creation, too.
The aim is to expand Julius Baer’s reach beyond traditional wealth management, in part leveraging its alliance with Macquarie – a private wealth team led until recently by Joseph Poon (see today’s job-hoppers column).
“A lot of our clients have active businesses and they appreciate someone who not just looks at investments and funds and so on, but also has a general understanding and appreciation of business,” says Leung
“We need to have people with diverse backgrounds and experience who can have a meaningful dialogue about wealth creation. That will be important for us and it is one platform I need to think about developing.”
Having spent over two decades at Citi, a universal bank, followed by three at Goldman, an investment bank, the question arises whether Leung will be changing the culture of what was a traditional Swiss private bank.
However, he notes the Macquarie alliance was signed before his time, so Julius Baer set off on this journey before he arrived. “It is the buying behaviour and needs profile of our clients that has continued to evolve,” he says.
By way of a template, he points to his two decades at Citi, where he became Asia-Pacific wealth management CEO and built a team of relationship managers and products specialists who stayed together for 10 years.
“This is not impossible [to do again] provided everyone has a strong sense of commitment and belonging and identifies with our direction and the way we serve clients. That is a critical element of success in our business,” stresses Leung.
Already Leung has moved to bring in a new China team from Credit Suisse (see today’s job-hoppers), all of whom are former colleagues.
At Citi a decade ago it was Leung who started its private investment banking approach. It was the same model he sought to implement at Goldman Sachs, although after three years in its private wealth management practice that project evidently broke down.
It appears to have left a sense of frustration. “Goldman is very strong in almost everything it does and it recognised [private wealth management] as one area it did not have in-house expertise to build in the scale and expertise it wanted," he says.
“But the DNA of the firm and the way it thinks, behaves and is organised, this cannot be changed in a short time. It can only change when there is a more permanent strategy behind it.”
He suggests there has been so much job-hopping in private banking recently because so few firms have had a clear vision and identity as to how they want to serve clients.
“The question is, how they take this step by step on a building-block basis to build the franchise they want, eventually,” he says. “I like to think, in the next three years at least, things will change here [at Julius Baer].”
Leung says he considers himself a people-person who is in touch with clients almost daily – giving him the sort of understanding he sees as key for formulating strategy. “The second most import part [of private banking] that I enjoy and think I am good at is the strategy part,” he adds.
He wants to bring in people with different skill-sets and experience, including corporate bankers [Leung himself spent four years as a corporate banker at Bank of America] and asset managers. “Then my job is to bring a synergy out of that diverse pool of talent. That is one part of the strategy I am going to take with Julius Baer.”
He says the bank needs to align its structure with the client market it wants to serve, either geographically as it is now – the bank has country teams for China, Hong Kong, Taiwan, Philippines, Korea and Japan – or by client segmentation.
“The organisation now is still evolving,” adds Leung. “When I look at the future, as we scale up a bit more we will need more structure around the place. At this stage I am still thinking about the best way to align our talent with our client base and make it more efficient.”
AsianInvestor has previously suggested Leung is a regional leader in waiting to succeed Tom Meier at Julius Baer. If you have read the above article, you will likely have gained the same impression: more a case of when, not if.