Clients not always happy to play follow the wealth adviser
Only a minority of wealth advisers are able to convince clients to follow them when they move to a new firm, which should change how banks go about hiring staff
Who wins when an adviser decides to move on? The industry assumption in the break-up scenario is the adviser wins. The story goes that their magnetic grip on the client is such that they can expect the client to follow with each career move they take. In essence, the previous employer loses. Believers in that scenario feel compelled, therefore, to do whatever they can to keep advisers and their biggest tool is salary inflation.
But that story seems to forget who is in fact the lead character – it is the client, not the adviser. And the client has a choice.
The strength of the evidence of the break-up question may surprise you. Particularly in Asia.
Recent articles released by recruitment firms in Singapore and Hong Kong advising bankers how to make a successful job move have caught our eye. Their content illustrates that the merry-go-round that is the Asian wealth management job market is not easy to hitch a ride on, particularly for more junior bankers.
The lure of higher compensation for private bankers is firmly coupled with high expectations by firms for the assets that these bankers are able to bring with them.
This is at odds with the latest research released by Scorpio Partnership. In research for our Futurewealth Report 2015, we asked clients if their adviser were to leave their private bank/wealth firm, which course of action would they most likely take?
Overall, just 19 per cent of clients responded that they would transition their account from the firm and follow their adviser to new employers. For the Asian market, this response dropped to just 14 per cent. This does not stack up against the assets that bankers are required to transfer over.
As one search firm, Eban in Singapore, commented on private bankers: “Some of them ideally want a new job, but they’re afraid they won’t be able to move $150m (€142m) in client assets – which is usually the minimum the new bank will require.”
This is a tall order for all but the most experienced private bankers and illustrates the intense pressure bankers are under in Asia, regardless of whether they remain in their existing role or seek a move.
This loyalty and ‘stickiness’ of Asian private clients may well require a re-think by banks and wealth managers in how they hire. Credit Suisse is addressing this through the launch of a training programme for relationship managers, aimed at graduates.
The programme invests in training the right people early on in their career. While the impact on the bottom line is slower than recruiting experienced bankers, it does ensure young employees can be imbued with the culture and values of the organisation and a measure of loyalty will be ingrained.
A well trained banker will ultimately be more productive than one hired based on the amount of assets that can potentially be brought on board.
Several banks are continuing to embark on aggressive hiring strategies in the coming year in an effort to boost revenues and relieve the intense pressure on profit margins. This will no doubt be coupled with highly attractive salary offers.
However, if younger bankers are to build a successful career with a trusting client base, they will need to think twice before being lured by ever higher salaries in the short term. Their motives for moving on need to be very clear and need to take into account their clients’ needs as well as their own.
Caroline Burkart is senior manager at wealth management think-tank Scorpio Partnership
