Private banks with sound strategies survive pitfalls

PUBLISHED : Friday, 15 June, 2007, 12:00am
UPDATED : Friday, 15 June, 2007, 12:00am

Only private banks that take a sustainable approach to growth, have sound recruitment practices and emphasise training will succeed if there's another downturn, a senior private banker warns.

Private banking is certainly not immune to economic swings brought on by events such as the outbreak of Sars and can be affected by cycles and the sentiment that results, according to Esther Heer, senior executive vice-president, head of private banking, Coutts Bank von Ernst Hong Kong.

'In a downcycle, private banking clients tend to hold back from active investing even though most have not been economically hurt as much as the wider population,' Ms Heer said, noting that in an upcycle, clients became more aggressive. 'As private bankers, it is our job to be the clients' constant counsellor and partner throughout these cycles.'

Private banking clients and the wealth management industry have both become more sophisticated over the years due to greater access to information and the development of new investment tools.

All players in the industry were developing products, but how many were successfully developing people? Over time, the discerning client would appreciate the difference, Ms Heer said.

A recent trend is sector and theme investing, where banks make tactical recommendations about an industry rather than a geographic region.

'Amid these changing trends, the key values of integrity, impartial advice and maintaining a value added relationship with the client remain the long-term secrets to success in the industry,' Ms Heer said.

By all accounts, the outlook for the wealth management industry in Hong Kong is rosy. Fortunes are still being made, not only in Hong Kong but regionally, and much of this regional wealth will make its way to our shores. But there was no such thing as easy money, Ms Heer said, and to better compete, local wealth managers must continue to educate themselves and upgrade their skills.

'The Hong Kong industry cannot remain complacent as regional rivals are positioning themselves better all the time,' she said, with the main threat coming from Singapore.

Those interested in a private banking career should take note that Coutts has hired many private bankers through staff introductions and finds this method to be highly successful.

The benefits of hiring a private banker in this way are the knowledge of the candidate, cultural fit and being one step ahead in building internal trust and teamwork.

Successful private bankers tend to have a few traits in common (required licences aside) which are a stable employment history, a reputation for integrity and a proven ability to win the trust and respect of clients.

Ms Heer said the investment attitude of Hongkongers was difficult to stereotype or classify. However, she said: 'Data shows that Hong Kong people invest more per capita than [people] elsewhere in Asia.'