A polarised community

Wealth management employers fall into two very different groups. Tim Gibson advises that careers must therefore be carefully planned. Career progression is not a matter of luck; it is a result of shrewd analysis, timely advice and hard work. The last factor is a pre-requisite, whilst the first two are very relevant in today’s changing markets. To trust a website, a recruitment agency or a friend has often landed professionals in roles that destroy or damage career profiles and advancement. What was a well-known environment to those working in the industry has now become an altered landscape. The slow arrival and acceptance of bear market conditions have served to highlight the different cultures within banks and institutions at the higher levels. Investment banks that run private banking operations have in many cases applied uniform cutbacks. These have shattered the special cohesion that enables their private wealth management operations to function successfully. Big names that would formerly have been a wealth management employer of choice, offering first class career progression, are now languishing with diminished revenues, reduced remuneration scales and staff who have called into question previously unswerving loyalties. US houses have been saddled with the additional burden of the backlash of geo-political changes within Middle Eastern and Asian communities following US policy post September 11. Visits by Merrill Lynch chief executive Stan O’Neal and Peter Scaturro, chief executive of Citigroup’s private banking arm, to their respective London operations this summer highlighted the close interest taken by US companies in their pan-European operations. Both visits paved the way for restructuring amid redundancies and high levels of staff turnover. Synergy between asset management and private banking arms can be a recipe for success when private and institutional investors are increasingly close in the high net worth (HNW) European markets. However, when the holistic corporate wealth management engine is being re-tuned it is easy to make a mistake and upset the equilibrium. GWST has identified two groups within its continual examination of the providers of private wealth management services. It is not necessarily a matter of scale or total assets under management. At one end of this polarised community of providers are those with clear strategic plans, defined resources, reinforced by visionary management displaying a committed front. This group does not contain the names and brands that it did last year, nor will it looking forward. The opposite pole of the model is populated by banks and institutions in disarray. They are unable to formulate a cohesive response to the market conditions, and wealth management is often a peripheral, rather than a core function for these players. Several US houses are making the mistake of trying to stretch and fit American principles to European markets. Their principles are proving inappropriate and they fail to account for pan-European national differences. Similarly, investment banks are the first to slip the gearstick into reverse and floor the accelerator pedal in a bear market. The drive to protect profits ignores operational harmonies and fragile staff cultures. Some significant banks within private wealth management have by pure management ineptitude secured themselves a seat at the wrong end of the spectrum. Others, like rabbits in a speeding car’s headlights, have been transfixed by market conditions and have failed to react, still less to jump in the right direction. They populate the middle of the spectrum with their direction clearly identifiable. Employee conscience Certain senior managers have in some cases single-handedly guided their private wealth operations into troubled waters that were wholly avoidable. Employees are not necessarily wrestling with their consciences as bonuses are pared back and in extreme cases disgruntled clients are imploring their relationship managers to move on as service standards slip and their assets are eroded due to derisory media reports, product limitations or excessive charges. The situation is unique, has been quick to occur and leaves industry professionals facing a very tough call regarding their careers. It normally takes time for an individual to abandon an employer of standing. However, with the market conditions generating significant opportunities, a new balance of power is manifesting itself with corresponding opportunities for the bold. Career planning should map out a staged progression with a reserve position being kept in mind. We are shocked at the number of individuals across the private wealth industry who have no plan, or when faced with the need to change jobs, have no idea of the next step or an appropriate house to look to. We are particularly critical of the CV “spraying” that typically accompanies an attempt to a move. Most recruitment agencies are new to the private banking business, given their need to boost revenues from failing markets elsewhere and their approach is often ill informed and very short-term. We are aghast at the number of professionals who will post CVs to an Internet recruitment site or agency that will hopefully find them a job. This is tantamount to professional suicide given the lack of due diligence that is applied to such an approach and in its mildest form creates an air of desperation if an employer receives approaches from more than one source. No banker would treat an investor’s money in this fashion so why treat one’s career in such a cavalier manner? It remains vital to know what your career path is going to be in outline looking out five to eight years. This plan is then dynamic, taking advantage of opportunity set against prevailing changes and trends. We have seen promising careers flattened by corporate change or management decisions. Most professionals would benefit from access to permanent advisers who maintain links with the industry-wide employer pool, and who are thus able to make timely recommendations for considered action. This often pre-empts corporate changes or offers alternative career paths in times of change. The polarised nature of the current wealth management employer market is creating opportunities for careers to move rapidly up or down. The GWST prediction is that up to 35-40 per cent of senior management within private wealth management will change within the next 18 months given the current conditions and the need to respond decisively, positively and deliver profitable robust businesses. Hitherto smaller players are now challenging lead houses in terms of offering individuals career progression, remuneration, job satisfaction, autonomy and the often overlooked quality of family life. With mergers, acquisitions and platform closures likely to reflect the market for the next 24 months in all jurisdictions within private wealth management, the need to take one’s future seriously, whether you are the global managing director or a junior portfolio manager, has never been more pressing. Tim Gibson is Managing Director of Gibson Whitaker Stevens & Thynne (GWST), tim.gibson@gwst.co.uk