Asia’s personnel problems approach crisis point

It is s no secret that Asia presents a golden opportunity for wealth managers able to successfully capture emerging market wealth. But to harness growth in the region, financial providers urgently need to review their customer service delivery. This means getting to grips with the region’s complex personnel challenges.

In May, UBS announced that it had added 88 advisers to its Asia-Pacific client team since the start of 2014. The recruitment drive has taken the total number in the region to 1,120, an increase of 8 per cent this year. It follows a boom period in the region for UBS, which has seen Apac wealth assets grow 38 per cent to SFr218bn (Ä178bn) over the last two years.

These figures are good news for the Swiss banking giant. Yet they also point to an intense demand for private banking talent in the Asian market, a demand dangerously close to crisis point.

Crucially, the relationship model in Apac 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 human capital is severely limited.

Specifically, there is a shortage of modern private banking talent that can cater to the growing wealth and increasingly complex requirements of the region’s wealthy. By contrast, there is an oversupply of expensive and traditional private banking talent.

And yet, in spite of this dearth of talent, control remains in the hands of the adviser rather than the institution. Pathik Gupta, head of Wealth Management Asia-Pacific at McLagan, the performance and rewards consultancy, remarks: “On one hand, relationship managers here have growing expectations about what they should be offered and how they should be incentivised. This leads to increased cost pressures for the institutions they work for. On the other hand, private banks are feeding the ‘musical chairs’ of relationship managers who are moving from one firm to another. Organisations are suffering through the process.”

That is not to say relationship managers do not face severe internal and external pressures. The principle complaint from the region’s RMs is that heightened regulatory requirements have expanded their role, specifically the increased stipulations around documentation per trade, disclosure and investment suitability.

But relationship managers should view new legislation as an opportunity, argues Mr Gupta. “Client disclosure, education and investment suitability are the bread and butter of the private banking industry. A smart relationship manager is the one able to use regulation to their advantage and get closer to the client.”

Asia’s relationship managers should be mindful of this, given the emergence of a new threat to their power. In this market more than any other, there is 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 today.

This is not something which will happen overnight. But it is certainly a factor that will impact on recruitment trends in the future. In fact, we may be on the cusp of a power shift back to the institution, which will be increasingly mindful of how their personnel slot into their future organisation.   

Annie Catchpole is a research associate at wealth management think-tank Scorpio Partnership