Asia braces for growing army of rich

PUBLISHED : Friday, 17 October, 2008, 12:00am
UPDATED : Friday, 17 October, 2008, 12:00am

Since confidence in the global financial sector was thoroughly shaken this month, several financial institutions announced that they would shed staff to help weather the economic storm. However, a handful, such as Barclays, which in a high-profile move recently bought the North American operations of troubled investment bank Lehman Brothers, are bucking the trend by seeking to continue to grow their workforce.

Didier von Daeniken, Asia-Pacific chief executive at Barclays Wealth, said the bank was expected to continue to make key hires in upcoming months. He said as the private banking business continued to thrive in Asia there was a shortage of experienced private bankers to keep pace with the growth of the wealth management industry. Wealth management firms are also competing fiercely to gain an advantage by expanding their range of services and wealth management professionals.

'Despite the recent developments in the global financial markets, it is business as usual for Barclays Wealth in Asia. Asia continues to be a growth area for us, and we are invested in this region for the long term. Private banking is a people-led and relationship-led business.

Mr von Daeniken sees increasing staff numbers as important for preparing for the future expansion of the wealth management industry. 'The world's financial markets may look shaky at the moment, but wealth in Asia continues to grow and we must be prepared to provide this growing group of affluent individuals with a wide range of wealth management services,' he said, adding that the skills required to deliver first-class private services could not be learned or taught in a few months or years.

'I believe you are not really a private banker unless you have experienced both a bull and a bear market,' he said.

Barclays Wealth recently made several key appointments, including Pheabe Chau, who was former senior vice-president, investment advisory at RBS Coutts Bank, as Barclays Singapore head of investment specialists.

The firm also recruited Nitin Birla, also formerly with Coutts, as director, head of the Hong Kong desk to tap into the burgeoning potential of the Southeast Asian community in north Asia, and Manpreet Singh Gill as Asia strategist.

Across the Asia-Pacific region, Barclays Wealth has nearly doubled its headcount over the past 15 months and maintains a positive hiring outlook for this year and next year.

But not all market watchers are upbeat about the prospects of the wealth management sector. Stuart Rutherford, a senior financial analyst for data provider Datamonitor, said that the good historic performances of private banks were due to the excellent market conditions that had prevailed, but the market had now changed significantly.

'Wealth management is a competitive market which goes through cycles, and its relationship-based nature means that those active in the space can suffer serious client withdrawals,' he said.

Even Barclays Wealth appears to acknowledge that the dip in economic sentiment has shifted the dynamics of the wealth management sector. The bank recently released a study, conducted with the Economist Intelligence Unit, suggesting that the economic downturn had elicited different sets of investing behaviour between people in developing and developed countries. Regardless of the investing climate, Mr von Daeniken said he believed that there continued to be a broad spectrum of roles in the private banking industry, and the private banker played a crucial role in bringing it all together into one package with the purpose of addressing the clients' needs. 'We take a resourceful and multipronged approach in growing our banking talent. In addition to hiring experienced bankers, we also believe it is important to train and promote internally to build a strong pipeline of bankers,' Mr von Daeniken said.

He said the firm also hired bankers from the corporate banking sector. 'We believe corporate banking skills are highly transferable to the private banking sector. Corporate bankers' changing roles undergo a bridging programme that helps them to prepare and adapt to what is expected of them as private bankers.

'Clients have high expectations of private bankers and understandably so. When clients engage a private bank, they expect a personalised added-value service that goes beyond other mainstream types of investment advice.'

Barclays views private bankers as being wealth coaches who help their clients realise their financial ambitions while helping them to manage risk.

When recruiting or promoting staff, Barclays Wealth looks for several important qualities.

These include a passion for service, technical knowledge, trust and integrity, drive and discipline, and personal and interpersonal skills. Mr von Daeniken said private banking was a seven-day job that required the professional to be available to look after the clients' needs at any time.

Also, as a private banker, it is vital to interpret clients' goals and risk appetite, and propose appropriate financial solutions. To do this well requires broad knowledge of various financial instruments.

Mr von Daeniken said as a relationship-led business, it was important that private bankers had the emotional capability and intelligence to handle social occasions skilfully.

This involves being a good listener and a good conversationalist.

Because there are no fixed working hours, private bankers must be self-disciplined, arranging and arriving at meetings and social events on time, while meeting client and employer expectations.

Above all, they must follow regulations, maintain ethical standards, and always handle client information with the utmost discretion.

'Taking into account the rational and emotional factors and the distinct business and personal aspects of their clients' lives, private bankers need to be sensitive to the different concepts that can affect financial decision making,' Mr von Daeniken said.

While natural ability can support the development of these skills, Barclays Wealth believes it also takes training and dedication to reach the top level of professionalism.

Barclays Wealth is not alone in believing that close personal associations based on professionalism are key to successful long-term relationships. Stephen Richards Evans, head of Standard Chartered Private Banking, Greater China, said there were two main qualities which private banking relationship managers needed to provide: timely execution of investment opportunities, and timely advice.

'Client expectations in Asia are extremely high where private banks are competing for wallet with some of the best service providers in the world. Therefore, timely execution of advice and services is vital,' he said.