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Featured Articles

WMRC regularly contributes on topics and issues relating to market trends, recruitment and developments within the financial industry. We also provide commentary on several online job portals, sharing our views of the market and our opinions of key developments.

The following are some of our featured articles:

The Private Banker At The Centre Of Client Experience

Abstract

More intimately engaged with the client than anyone or any touch-point in the entire client experience, the private banker is the human face of a bank defining the overall satisfaction level of a client.

How happy the client is with his/ her private banker affects how much assets would be brought over, the level of investment activity, the potential to refer others in their circle of influence, and even down to issues surrounding inter-generational wealth transfer and gifting.

In the face of mounting competition and regulatory changes, how has the role of the private banker changed and how does that affect client experience?

What are some key actions that private bankers can take to further enhance client experience and how do banks ensure they are hiring the right people for such a critical role?

This article sheds light on these and provides insights on the best practices used in hiring the best private bankers.

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The role of the private banker has in recent years, become increasingly challenged in the face of mounting competition and regulatory changes.

Many wealth managers are citing the rising costs of compliance as a major impediment to their business growth. Not only are regulations becoming stricter in terms of approving a new client account, existing clients are also subject to more pervasive surveillance on their trading activities and banking transactions.

Concurrently, the industry is undergoing massive changes post the global financial crisis. Consolidation is happening rapidly and there have been significant M&A activities among the key players over the last 2 years.

The number of international names in Asia's private banking arena has reduced lately with the disappearance of names such as Merrill Lynch, ING, Clariden Leu, Fortis and recently, Societe Generale. Others such as BSI Bank are in talks with potential buyers.

On the surface, it looks like the competitive landscape has grew milder with fewer players but on closer scrutiny, the level of competition has actually grown keener with the emergence of numerous non-traditional players, such as the independent asset managers and family offices.

Global financial institutions such as investment banks and fund managers (which traditionally aren't strong players in the wealth management space) are also jumping onto the bandwagon on the promise of the creation of new wealth and the huge potential opportunity in Asia.

It is no surprise that clients in Asia are baffled by these recent developments.

Dilemma faced by Asia's wealthy

Many of them are finding it hard to differentiate among the various service providers, let alone understand how relevant their service would be for them.

With the financial crisis still fresh in their minds, many are still cautious about getting into a new banking relationship as they have seen how even well established names have faltered during the crisis.

However, managing your own money is a difficult and time-consuming task and Asian clients know that if they want to enjoy their wealth and be able to sleep well at night, they need professional help.

That professional help comes in the form of the private banker or a trusted advisor – someone whom clients expect to be fully conversant with the latest financial products in town and can depend on for strategic advice on their financial matters.

Comparing Asian's wealthy to those in the West, they are less experienced in utilizing the full suite of wealth management services which often encompass financial planning, investments, trust services, tax planning across several jurisdictions, inter-generational wealth transfer and philanthropy.

Many Asian clients derive their wealth from their business ventures and in every conversation they have with their advisor, their business issues inevitably come into the picture. In fact, so intertwined are their business and personal wealth needs that a number of wealth managers are realigning their business banking and private wealth solutions to better cater to the needs of these business owners and entrepreneurs.

The level of sophistication and competence of the private banker therefore has a strong influence on client experience.

Role of the private banker

Private bankers are no longer just high-end salespeople good at wining and dining their clients. More than having just good interpersonal and communication skills, clients are expecting them to have strong knowledge of products (both external open product architecture and internal in house products), as well as good cross-selling skills.

They must be capable of giving comprehensive wealth management advice; able to make sound investment calls which deliver sustainable performance; be good at product innovation and able to develop new solutions to problems.

Perhaps the Achilles' heel for many private bankers lies in their propensity to jump ship and secure a higher salary. To most clients, switching a relationship manager or a firm every year or two totally irks them.

Depending on how strong their relationship with their banker is and how 'institutionalized' they are with the firm, some clients would rather uproot their assets to continue their relationship with their banker or choose to remain with the firm with a new RM.

Studies show that Asian clients are becoming more discerning when picking their wealth managers. Gone are the days when they would maintain 5 or more private banking accounts. It is now common to have just 3 accounts to fully service their private banking needs, and have another 1 or 2 accounts with the non-traditional asset managers, i.e. independent asset manager, family office or fund manager.

In enriching client experience, private bankers need to carefully consider their career options and decide which platform suits them best. With clients consolidating their private banking accounts, bankers need to make sure they remain relevant and continue to be among the top 3 bankers their clients would like to do business with.

Impact of technology

How well are wealthy clients taking to new technology, such as social media and smart IT gadgets? And how would that affect their private banking experience?

Wealth people are heavy users of technology and smart gadgets. They are often among the first adopters of what's new and available and that is likely due to their ability to spend and their curiosity to experiment and try new things.

Technology has the ability to make information available quickly and thereby improving efficiency – which very much appeal to the rich. In fact, smart phones, tablets, social networking and video are increasingly becoming the norm in the communication tools that the wealthy use and wealth managers must be able to adapt to the digital media to fully engage with their clients.

Private bankers know their clients are very busy people and rather than meeting them face-to-face and sending reports or letters, digital technology is now making client interaction more efficient via emails, text messages and clever applications that enable clients to do more wirelessly.

With the private banker being such a key figure in the entire client experience, are banks getting their hiring strategy right? What are some crucial points they need to address whenever they look at a potential candidate?

Below is a quick checklist:

  • How strong is the candidate's knowledge of the various aspects of wealth management, i.e. financial planning, investments, trust services, tax planning, wealth transfer and philanthropy?
  • If the candidate is weak in certain aspects, is he/ she resourceful enough to rope in the relevant specialists to work with?
  • How confident is the candidate in engaging with business owners and entrepreneurs? Would he/ she have good understanding and knowledge of business banking needs and cross-sell intelligently?
  • Besides the mainstream private banking products, how knowledgeable is the candidate on alternative products and service platforms rendered by independent asset managers or family office?
  • Does the candidate have a strong track record of making sound investment calls? Is he/ she quick at grasping new product ideas and concepts, and applying them to unique client needs?
  • What is the main motivation for wanting to move? Is the candidate motivated mainly by financial gains or is he/ she moving to better meet the interests and needs of clients?
  • How technology savvy is the candidate? Is he/ she totally comfortable with the use of IT tools and gadgets, such as smart phones, tablets and social media? Is he/ she good at leveraging on technology to foster closer relationships with clients?

Putting Relationships Back Into Relationship Managers

Hiring good Relationship Managers in the private banking industry is fast becoming an art rather than science. Private banks relying on conventional wisdom are finding their recruitment strategies yielding less than desired outcomes. The conventional method starts with a two-pronged approach.

The first approach is to engage with industry contacts to find out which private banker is currently well received and garnering positive feedback from their clients and colleagues. This is usually followed by trying to establish contact with that individual either through an internal HR representative or using the services of a headhunter.

The second approach recognizes that outright poaching of a private banker through an internal source may not go down well with a competitor and could pave the way for future legal disputes. Hence, the preference is to find an expert recruiter who is highly specialized in this field of hiring.

Both approaches invariably converge to the next stage of assessing the suitability of the candidate, which typically starts with an initial discussion on client coverage, AUM and revenues, as well as business plans for the next 1 – 3 years.

The Business Plan is highly relied upon to document exactly the types of client profiles, estimated net worth, targeted AUM and revenues that could achieved over the next 1 – 3 years.

Some banks go a step further to make sure their hiring decision is a good one by asking the candidate to participate in role plays with their senior management, and utilizing psychometric tools to suss out the 'character' make-up of the banker.

"An overly aggressive banker may not work too well in our culture and current business focus. Someone who is found to be a better farmer than hunter is not suitable either, as that would mean net new money is not going to grow very much."

Supposing the candidate passed the rounds of interviews and tests, both parties will then sit down and discuss on the terms of their engagement. The bank will reiterate the targets and seniority level of the hire, and the candidate will reassure his/ her ability to meet those targets.

Once both parties reach an agreement, a job offer is made and the candidate will make sure he/ she finishes all duties and obligations with the current employer before starting work with the new bank.

Sounds too easy?

The reality is much further from this as private banks are seeing several pitfalls and risks involved in the above approaches.

Firstly, the above conventional method of hiring totally misses on the aspect of client relationships. There are some aspects of client relationships being discussed in the interview rounds and during review of the Business Plan, but very little effort is spent ascertaining the strength of those client relationships.

Numbers in the Business Plan are estimations and projections, and much of it is difficult to verify. An experienced interviewee knows the right buttons to push during job interviews and role-plays, and can easily breeze through psychometric tests to finally land himself a job offer.

Instead of making the good strategic hires, private banks are questioning the quality of those hires when their cost income ratios quickly crept upwards, while the promised AUM and revenue numbers seem ever so elusive.

Ascertaining the strength of client relationships involves a different technique altogether.

The most successful private banker is typically someone who possesses very good network and connections with the wealthy families. Possibly by virtue of his/ her own family background, growing-up experiences, professional exposure or personal interests, he/ she is able to strike an intimate chord with high net worth individuals.

It is this intimate chord that draws wealthy individuals to 'follow' a particular Relationship Manager. They have establish such a high level of trust and confidence in the Relationship Manager, that they would feel unsecured or even afraid to handle their own wealth or finances without the expertise of such a Trusted Advisor.

Rather than relying on conventional wisdom, private banks would do better to put Relationships back into Relationship Managers and ask themselves several critical questions in their selection process to arrive at the strength of those client relationships purported by the candidate:

  • Is the banker connected to the client or client's circle of influence in any way?
  • How long has the banker known the client, and under what type of circumstances?
  • In what capacity has the banker worked with the client, and what are some positive and negative outcomes arising from the experience? Is the banker able to freely articulate the positive experiences and proactively manage the negative ones?
  • Besides numbers and projections, what is the other single factor that the banker could rely upon to bring his network of clients to the new bank?
  • Besides hard finance knowledge, what does the banker know about his or her clients' family backgrounds, friends, interests, habits, lifestyle, etc.?
  • How effective is the banker able to articulate wealth management solutions to his top 3 clients, with emphasis on the unique situation and peculiar needs of each client? Such a case study is any time much more effective than a random/ generic role-play.
  • Is the banker naturally confident and positive about his client relationships? Or do you sense certain level of unease or lack of confidence when he/ she talks about clients?

An important observation from asking the above questions is whether the banker expresses conviction that there is finally a bank that doesn't just focus on AUM and revenues, but on the strength of their client relationships. Truly successful private bankers know they are the real Rain Maker – not someone who is merely good at acing job interviews.

The above questions can be tough to ask and harder to arrive at the right answers, but rather than risking another wrong hire and wondering how they could manage out a non performer, private banks could really do themselves a big favor by taking active steps to manage their selection process.

The Rise Of The Investment Counselor

The private banker has always been the centre of attraction in the wealth management industry.

Commonly-touted as their client's "trusted adviser", private bankers – and especially the highly-skilled and experienced ones – are in extremely short supply and courted by every major private bank and serious headhunter.

However, the recent trend in the industry seems to point to another group of professionals who are increasingly scrutinized under the radar screens of private banks and headhunters – the Investment Counselor (or Investment Advisor).

Banks are realizing that their next-best bet in getting close to and engaging wealthy clients is through investment counselors who wield considerable influence over the investment decisions of their clients. These professionals are likely to be highly- experienced investment analysts who are knowledgeable in the wide gamut of products and solutions.

Besides having the hard-core knowledge of investments and the markets, they also possess superior communications skills and the ability to give tip-top advice to their clients – resulting in extremely well entrenched relationships with them.

So while the private banker might own the client relationships, it is really the investment counselor who gets to drive the economic value of those relationships.

Not only do private bankers have sales targets, investment counselors are increasingly given revenue targets on the products they advise.

Part of this new emphasis on the investment counselor stems from the clients themselves. High net worth clients are known to be highly sophisticated investors and many of them are naturally drawn to professionals whom they can look up to for investment advice.

This is even more so with the emergence of the ultra high net worth client segment, which is driving many major private banks to put together a separate core team of professionals to give focused attention to the needs of such key clients.

Experienced investment counselors with strong client advisory skills within the core team play a major role in listening to these clients, and then structuring innovative investment solutions to meet their needs.

Given such closely linked relationships between the private banker and the investment counselor with their clients, it is not surprising that the two roles sometimes overlap.

Private bankers with strong investment skills and tired of chasing numbers are known to migrate to an investment counseling role, while the reverse could also happen with the sales-savvy investment counselor progressing to become a private banker with high accountability on attracting new assets and revenue generation.

One thing's for sure – the role of the investment counselor has definitely come a long way and is now blending beautifully within the wealth management industry.

In a way, this phenomenon is a positive boost to an industry, which has long been preoccupied with private bankers. The rise of the investment counselor has definitely provided an additional pool of credible talent to meet the sophisticated needs of wealthy clients!

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