Asia is booming as a wealth management region in some ways but there are "hundreds" of senior private bankers out of work, an experienced figure in the consultancy field says. He wants to help.
Wealth management professionals have got used to reading stories about how the Asia-Pacific region is the hottest for business growth and that there are skill bottlenecks. Credit Suisse, for example, said in 2015 there are an estimated 7 million millionaires in the Asia region, and that figure has risen since. On the assumption that a banker can on average handle 35 clients, that would translate into a need to have 200,000 private bankers. But at the moment there are only around 10,000 such people.
This news service regularly reports on efforts to grow new wealth management talent to handle the workload. Institutions in Hong Kong, mainland China and Singapore are building programmes to develop talent.
But for all this busy activity, there is a flipside to the coin: a number of senior, often expatriate private bankers have been let go by their employers, sometimes taking early retirement, or they have moved into external asset managers, family offices, consultancies, or teaching, or switched industries entirely. And they need help to make the shift and embrace new fields, argues an experienced observer of the scene.
“These are very senior people becoming unemployed and this is a waste of talent,” Steven Seow, who had been the head of Mercer’s head of wealth in Asia, said. He recently left that international player to work on his own business, Singapore Consultancy. As the name suggests, he is based in the Asian city-state. (At Mercer, he was head of wealth management for Asia from October 2013 to December 2017.) Seow is well known to this publication and has been a judge at this news service’s wealth management awards programme in Asia.
His business will help people move into areas such as consultancy, work with entrepreneurs, sit on boards of non-profit bodies, and work in other areas. Seow said his firm has an open revenue-sharing model. “For every project, we share the revenue with the consultants,” he said.
Asked about the apparent contradiction between a much talked-about shortage of wealth management talent in Asia and a number of out-of-work senior private bankers, Seow said this reflected a structural as well as cyclical issue in the regional market. Banks’ profitability is falling and there is rising competition for private banking and wealth management jobs in Asia, Seow said. Asked how many senior private bankers are out of their roles, he replied: “Hundreds”.
UBS, the world’s largest wealth manager, in 2016 reportedly let a number of senior private bankers go even while building teams of managers overall in the region. Also, private banks’ enthusiasm for mobile platforms, “hybrid” delivery channels and technology to pursue greater productivity means bankers earning big pay-checks find it harder to justify their roles unless they bring in large sums consistently. And that’s not always easy to do.
Behind the headlines of how Asia is overtaking North America for UHNW individuals, for example, is that fact that for some senior bankers, they are paid a lot for not enough revenue growth. When banks' cost-income ratios are in the 70-80 per cent region, as they have been in the past few years, these salary and bonus packages can be tough to justify. Some foreign-born bankers have lost out as non-domestic private banks, unable to reach sufficient profitability in an expensive region, have sold up to domestic players more likely to favour home-grown talent with a closer cultural fit and language skillset. Firms such as ABN AMRO, Barclays, Societe Generale and ANZ have pulled the plugs on Asian private banking to varying degrees, with locals such as OCBC and DBS buying to increase scale.
Asia may be full of wealthy people, but it isn’t an easy market for everyone to prosper in. There can also be specific problems that have cut senior jobs, such as when Falcon Private Bank and BSI were kicked out of Singapore in 2016 for anti-money laundering control failings, or when the Indonesian tax amnesty programme, concluded in March last year, made life difficult for Singapore-based bankers used to managing offshore money and looking at the prospect of moving to a new country.
For a while, then, some private bankers in their middle ages are going to be anxious, Seow said. Even so, these men and women, aged in their 50s and 60s for example, are still physically and mentally sharp, carry considerable knowledge and are real assets to organisations willing to use their services.
There has been some movement by senior figures into the growing Asian family offices field, but Seow said there was “not much” of such movement.
Fears and hopes
This news service asked Seow what sort of issues do bankers typically bring up. “Changing of mindset and letting go of ego are two of the biggest hurdles,” he said. As advice, he urged industry professionals: “Keep an open mind, explore all options, the world is changing, never give up.”
Seow said there is a growing acceptance of “portfolio careers” and a move away from older approaches, he said. In areas such as non-profit organisations, as well as other commercial enterprises, a CFO or COO are “fantastic for boardroom roles”, Seow said.
Asked about other reasons for setting up his business, Seow said: “There has been a gradual acceptance that Singapore is a brand in the banking and wealth management space; there’s increased appreciation and demand for Singapore-focused consultants.”
Singapore has international exposure, and the city-state also has a cultural affinity with the surrounding region. This situation is very different from when, 16 years ago, Seow said he was working in the consultancy field. "Now Asia has matured and today when you get any work they [clients] won’t ask you for your specific nationality,” he continued.
As this publication has noted in research reports, the recent ascent of external asset managers is one potential outlet for senior bankers aiming to stay in the game. Players in this space include Crossbridge Capital, Thirdrock, Abacus Capital, Swiss-Asia Financial Services and Taurus Family Office. (See here for a recent study.) Whether such organisations are going to soak up all such talent remains to be seen, as EAMs are likely to face tighter regulation as the sector expands. Family offices are another possible route. There was media coverage late last year that Morgan Stanley in Asia, for example, is trying to cope with defections of private bankers who have been poached by family offices. Vincent Chui, who oversees the business in Asia, was quoted in local media as saying that at least 10 RMs left the firm in 2017 for family offices, which meant that total headcount in Singapore and Hong Kong is static versus the end of 2016 at around 100.
Seow concluded by saying that, in such an environment, private bankers out of a job or wondering about when the axe might fall need to think if not just having one specific job but juggling a number of functions. And this might even be a blessing in disguise for those who have toiled in the groves of banking for decades. There is a growing acceptance of “portfolio careers” and a move away from older approaches, he said.
In areas such as non-profit organisations, as well as other commercial enterprises, a CFO or COO are “fantastic for boardroom roles”, Seow added.
Seow's clients will hope they have plenty of fulfilling time in the workplace ahead yet.