Growth in mainland China is fuelling new opportunities for wealth management professionals in the private banking sector and skilled bankers are in high demand. Michael Blake, Asia Private Banking CEO at Union Bancaire Privée (UBP), gives his insight on the trends, opportunities and challenges shaping the sector.
What trends have you seen shaping the global private banking sector in the last few years and what are the factors driving them?
Looking at the big picture, the two macro drivers for the industry remain economic growth and regulation. Regarding the first, the Asia private banking industry has expanded rapidly over the last 15 years in response to the accumulation of wealth in Asia. Private banks have invested in their Asian operations to grasp this incremental opportunity, which has led to increased competition and increased demand for skilled bankers.
More recently, tightened regulations have led some global banks to reassess their strategies. Those for whom wealth management is not a core business are divesting operations or retreating to home markets, enabling regional and pure-play private banks to increase market share. This process of consolidation is not specific to Asia and will continue throughout 2017.
How about the situation in Hong Kong? What are the opportunities and challenges?
I see more opportunities than challenges. Opportunities for further growth within the industry come mainly from Hong Kong’s proximity to China and its status as an international financial centre. Greater China is the single biggest wealth management opportunity in Asia today. Mainland entrepreneurs are now more open to a conversation about portfolio diversification or family business succession and they have increasingly strong international ties. This is leading to a demand for private banking services that international wealth managers are well placed to provide.
As the mainland economy matures, I expect demand for international wealth management in Hong Kong and Singapore to increase. I also see a significant opportunity for Hong Kong to act as a professional-development centre for the mainland wealth management industry, particularly in the Pearl River Delta.
The challenges for the industry are to ensure that the supply of private bankers keeps up with demand; to provide wealth management professionals with the chance to develop their technical and soft skills; and to balance high standards of regulatory compliance, particularly in the area of financial crime and tax compliance, with offering an accessible service to customers.
What effect are these trends having on recruitment in Hong Kong?
We see three trends. First, there remains a shortage of talent within the wealth management industry. Banks are addressing this either by hiring from a limited pool of experienced client advisors or hiring new entrants and offering on-the-job training. Second, the current round of consolidation is leading to greater differentiation between private banking models, meaning private bankers can now match their own aspirations and skills to similar organisations. Third, clients are less willing to follow their banker if they move to a different firm. Relationship managers (RMs) need to take this into account and select a firm that will serve their clients’ needs over the longer term.
Has UBP made any major changes to its recruitment strategy recently?
The year 2016 was one of significant expansion for UBP in Asia. We grew tenfold following the acquisition of the Coutts business and we were fortunate to welcome experienced RMs with a strong and loyal client base.
In 2017, we will build on this strong foundation through selective hiring. UBP’s business model is well suited to experienced RMs with a small number of clients who are looking for customised investment solutions, including bespoke asset management, alternatives and direct investment opportunities. People who excel with UBP commonly have the conviction to make things happen for their clients, while private ownership helps us to preserve a spirit of entrepreneurship and agility.
What separates a great private banker from a good one?
Three things: market insight, conviction and a high EQ.
What path did your career take? Is this considered a typical career progression?
I have not met many people who have had a typical career progression! I myself followed a non-traditional career path. I first came to Asia in the late 1990s to learn Mandarin in China. My first taste of financial services was working at a universal bank focused on business expansion in Asia, particularly China and India. I joined a pure-play private bank because I thought the flexibility of the pure-play model would be attractive to clients. I was attracted by the opportunity to expand the business and because I was impressed by the people I met during the interview process.
What sort of career options do private bankers have as they become more senior?
The choices available to today’s senior private bankers are reasonably clear. They can choose to become a team or market leader, which will entail them moving away from the direct management of client relationships and into team coaching or management. They can opt to remain a senior producer, focusing on clients. Or at a smaller number of pure-play institutions, they can retain client relationships at the same time as managing teams of bankers. At UBP, we believe strongly in the “player-manager” concept, which enables the RM to stay close to customers but also pass on their expertise to junior bankers.
Are there any formal qualifications that are useful in this sector?
All private bankers in Hong Kong and Singapore must sit exams before they are licensed. There has been a strong move towards professionalisation of the sector in recent years, with both the HKMA and MAS (Monetary Authority of Singapore) introducing professional standards for continuous professional development. This is a move that has been warmly welcomed by the industry.
A number of institutions, such as the CFA Institute, Private Wealth Management Association and the Hong Kong Securities and Investment Institute, are playing a really positive role in the industry’s continued professionalisation. A similar trend is evident in most other developed financial markets.
What do you think is the hardest part of working in this sector?
Client relationships are the most rewarding and demanding aspect of the job.
Is private banking in Hong Kong a 9-6 job? If not, how do you manage work-life balance?
Are there any jobs in Hong Kong that are 9-6? Private banking requires flexibility, particularly when responding to clients. But for those who have an interest in global economic trends, financial markets and building long-lasting relationships with interesting people, it is a fabulous, privileged job. And it is absolutely possible to maintain a good work-life balance.
This article appeared in the Classified Post print edition as From strength to strength.
