Upgrade or risk it all, private bankers told

Private banking in Asia-Pacific continues to develop in leaps and bounds, with the region now considered to be the new heart of private banking worldwide, where investment products continually evolve.

However, according to Esther Heer, senior executive vice-president, head of private banking, at Coutts Bank von Ernst, while some changes have been for the better, some qualities - such as focusing on client relationships, building trust and offering long-term solutions to suit the needs of clients, which form the true value of a good banker - have at times been diluted.

'Strong growth in the markets has made it easy for some [private bankers] to ride the wave rather than develop their skills,' she said.

'Private bankers need to avoid complacency and not rely solely on the positive performance of the markets to see them through good service. If markets have a correction, private bankers who adhere to good professional standards will be better able to guide their clients through the bad times successfully. Those who have not made the effort to upgrade will lose the trust of clients and do them a disservice.'

Going the extra mile to exceed the expectations of clients means that firstly, according to Ms Heer, private bankers have to raise their service levels beyond order taking and build a relationship of mutual trust and respect and ultimately be a partner with the client.

Those skills include being versed in a range of investment products and wealth planning solutions rather than just 'flavour of the month' products, she said, adding that more advanced skills should include tapping industry knowledge and working with a team of internal or external specialists to meet the more complex needs of clients.

She said: 'We need to encourage successful private bankers to share their experience and successes so the market will be better served.'

Ms Heer said that apart from the latest investment solutions, high-net-worth clients all over the world demanded trust and credible and quality relationship management. 'Asian clients expect all these, plus a little higher return,' she said. 'The challenge for the industry in Hong Kong is to develop enough credibility to strike a balance between what clients expect in the short term and what may be best for them in the long term.'

According to Julius Baer chief executive for North Asia Andrea Benenati, local customers, who were becoming increasingly sophisticated, could not be fooled for long. He said private wealth managers who were solely riding the wave of the buoyant equities markets would not last.

'Great wealth advising to me means knowing what the client wants,' he said. From this viewpoint, Mr Benenati said, private banking in Asia was the same as in the traditional markets of Switzerland and other parts of Western Europe, where the industry's long-term success had been based on building client relationships.

He said what was unique to Asia in the world of servicing ultra high-net-worth clients was the product offering and the sheer fact that private banking here was still in its infancy and set to continue its remarkable growth story, which would foster more product development in the years ahead.

'Private wealth management only began in Asia about 10 years ago. It is a completely new world now,' Mr Benenati said, adding that every day there seemed to be new millionaires that required wealth management services.

For Kenneth Sit, chief executive in Asia for Bank Sarasin-Rabo (Asia), a subsidiary of Bank Sarasin of Switzerland, by far the greatest issue facing the development of the private banking industry in Asia was people. Mr Sit said all private banks were talking about expanding, but for this to take place it required skilled people, such as relationship managers, product specialists, and IT people.

'Where are all these people going to come from? There is only so much talent in the region,' he said. 'There is an acute imbalance between demand and supply, I would therefore expect that we will see a period of change and consolidation, where the big players will stay big, while specialist boutique banks will be strengthened because of their dedicated client-focused approach.'

Mr Sit said the wealth management industry was exploring new frontiers, where a new business model was needed to deal with new wealth, particularly in Asia. He said since the European Savings Directive of 2005, which required a withholding tax on all income received by Swiss accounts held by EU residents, more money has been heading to Asia to be managed.

'This creates more opportunity because the region is experiencing an influx of liquidity from around the world.

'This means we are going to see a lot of new players enter these markets in the next few years,' he said.

'To me, China is the last frontier. It's challenging to have to start a business in an area where trust and credibility are critical. You need a certain stamina.'

Speaking at the 17th annual Private Banker International Wealth Management Summit in Singapore last week, Mr Sit said to retain next-generation wealth, families required a 'deeply trusted adviser' to deal with the complex and emotional issues of succession planning.

'It takes a special private banker to handle succession issues successfully,' he said.