At a time when Asia is experiencing a rapidly expanding tribe of wealthy clients, the tough new capital and liquidity rules the banking industry faces are coinciding with the rising cost of operating a wealth management business, including hiring relationship managers.
According to a Capgemini/Merrill Lynch report published last year, the number of US dollar millionaires in Asia stands at more than 3.3 million - and annual wealth creation is expected to increase by nearly 9 per cent.
Lok Yim, head of Private Wealth Management (PWM) North Asia at Deutsche Bank, believes sacrificing cost-to-income ratios to win business in Asia is not a sustainable business model.
As a universal bank, Yim says Deutsche Bank (PWM) plays to its strengths of focusing on the needs of high-net-worth individuals. 'We don't try to be all things to all people,' he says, adding that by tapping into its expertise, Deutsche Bank (PWM) offers clients a wide range of services.
Through utilising the bank's synergies, Yim says recruiting talent is a focused process. 'We know what we want and expect from candidates, and candidates know how the bank looks after our clients,' he says.
Yim expects Asian private banking operations expenses to keep rising. 'Banks need certain minimums to meet regulation requirements. The cost of compliance officers, risk managers, technology professionals, due diligence and regulatory environment managers puts pressure on operation costs.'
As Asia moves towards becoming the world's largest wealth region, Eduardo Leemann, CEO at Falcon Private Bank, says a lack of experienced talent remains a major challenge. 'The talent shortage drives up costs, but for the long-term good of the industry, we need to be realistic,' he says.