Editor’s note: This publication recently interviewed Jonathan Fraser, who heads up European operations for the international executive search firm Octavian Partners. Against a backdrop of continued economic uncertainties, the market for wealth management jobs has had to contend with headwinds in some sectors, and easier conditions elsewhere. So we asked Fraser for his views about his business and the outlook for the jobs market in general.

How big is Octavian Partners and when was the firm launched?

Octavian Partners has three main geographical presences, in the Middle East, Europe and Asia Pacific. These are overseen by the head of Middle East, the head of Europe and the head of Asia managing current offices with a full research function and with further hiring plans for the Middle East and Europe. We envisage the business to be at a headcount of circa 15 by the end of 2014 whilst maintaining our key focus on the private banking/wealth management markets.

There are a number of executive search firms operating in the wealth management space. What would you say is your differentiating quality/qualities, and why?

Our greatest differentiator is that we are boutique yet international. We have a presence across three continents yet by specialising in only a few sectors within financial services, and furthermore working with only a select client base, we offer the economies of scale of larger firms but with the speed, flexibility and close consultancy that they cannot. There is the in-depth experience and industry knowledge of all employees, a track record of assignments across three continents and superior research function.

Do you have any specific approaches to how you look for managers, place them, do the necessary due diligence, and so on?

Significant industry contacts and network, coupled with a live industry mapping model that is constantly updated. On top of our pro-active research model, we offer a bespoke research service to match our individual client's needs that not only includes a full market map but competitor intelligence and executive assessment.

Across the different markets you operate in, could you give me an idea of where the strengths are, which markets are busy and others less so? Could you give a brief outline of what you see as being the qualities of the Middle East, Europe and Asia markets?

Middle East – Private banking has been vital for the sustenance of the financial services market in the last couple of years. Investment banking and private equity have been significantly affected by the global downturn what with the reduction in funding and simultaneous decrease in investment opportunities. The sovereign wealth funds and government-related entities across the GCC are those that have prospered (relatively) due to funding and therefore ability to invest beyond the Middle East. Among the busiest in the ME are Saudi, Qatar, UAE and to a lesser extent Kuwait.

Qualities of the ME: it is heavily sales focused. At the beginning of the boom banks, asset management and private equity firms, and other firms set up small to mid-size offices to capitalise on the growth of the region. They then built out teams and businesses around these. Due to the downturn, there has been a reversion to this model in many cases. Regarding private banking, there has always been a dichotomy of opinion as to whether the region is best serviced by bankers on the ground, or by bankers flying in from Switzerland or London. There certainly has always been a bias for product teams to be based outside in more traditional hubs, yet many banks have a skeleton team/individuals.

Regional talent mixes on balance with international human capital. Most sales/business development senior positions for HNW or institutional clients naturally fall to individuals from the region, whereas the more technical fund managers, execution specialists are populated by international/foreign talent. So, the likes of Abu Dhabi Investment Authority are heavily biased towards foreign professionals as they invest mainly outside the region and are on the buy side. Private bankers are typically regional of course.

Europe – London and Geneva are still viewed as the main hubs for the private banking market and therefore some of the larger banking institutions are looking to relocate their desks from the Middle East back to the these main hubs. Institutions are looking to fill gaps on desks that they have previously been happy to leave empty as confidence returns. There has been a visible growth in boutique private banks that have offered more bespoke and personal service to their clients thus taking a portion of market share from the traditional global institutions. Private equity has remained quiet over the past few years but is slowly recovering its confidence as there is increasing appetite for investment, especially within the UK.

Asia – There is a bullish approach to the market, many people moving around – essentially a game of musical chairs as opposed to any real “hires”, i.e. real expansion. Private banking remains very buoyant however, as increasingly the markets are focusing on China and Taiwan and the Philippines; the available pool of experienced candidates remains small. Investment banking was hugely aggressive in the early part of 2011, however it has seen a slow down within mergers and acquisitions and equity markets.  Fixed income however remains the largest piece and continues to rapidly grow, with the largest fight for talent coming out of this business area. Private equity and asset management have remained quiet on the whole over the last few years, funds are opening and starting but few exits have been made of late.

In terms of institutions, where do you get the most business: private banks, wealth managers, family offices, others?

Middle East: Private banks, asset managers, sovereign wealth funds, family offices; Europe: International and boutique private banks, asset managers, family offices and private equity; Asia: Private banks, investment banks, asset managers, private equity.

In the time you have been in the wealth management industry, what has changed?

Middle East: A move towards a more holistic approach in the Middle East. Where wealth transcends purely the individual and blurs the lines between the HNW individual and the family office or institution, banks have promoted different product lines with a merger of business lines, so that a client can be offered a broader range, such as M&A, corporate finance, etc. Many banks have established family office teams, many have created teams similar to Credit Suisse and their Solution Partners team whereby ex-investment bankers sit behind and support the front-office private bankers to pitch and structure complex transactions on behalf of clients' businesses.

Europe: Companies within the UK private banking market have become more judicious in their approach to hiring. Senior decision makers expect far more due diligence to be carried out on potential hires and if there is a level of uncertainty would rather wait than make the hire. Individuals must be able to show a demonstrable track record of success.

Within private equity, an inability to raise funds over the last few years has meant a huge downturn in the number of principal investments. In contrast, the secondaries market has seen a large number of new opportunities across the global market which has meant the secondaries market is now fully established on the financial scene.

Asia: the market is severely overbanked. As a result even the most senior bankers find it hard to transport a large proportion of their book, with some markets being restricted. This is also causing protraction in ability for private banks to build assets.  In Asia, the wealth continues to flow within Hong Kong, China and Singapore, with Taiwan and the Philippines also a close focus for private banks.  Banks are now offering more tailored solutions, less generic products to "sell to the masses" and more products which have region-specific wrappers.

What do you see as the main trends in your sector going over the next one or two years and why?

Middle East: A consolidation of regional banks in the ME. A relocation of some international private banks out of the ME back to Switzerland. The same [will happen] within asset management. A slow return to investment banking activity with a natural but modest increase in IPOs. A continued growth in innovative venture capital due to the dearth of established companies to invest in that are not overvalued.

Europe: There will be a cautious but more positive view on the market and the macro economic conditions. Banks will look for opportunities for growth in the emerging markets within Eastern Europe and Russia. CEOs will look to gain market share of the more established markets in Europe by hiring strong individuals with proven track records that can build desks in a strategic and consolidatory fashion. The approach to growth will become increasingly long term rather than the immediate results-driven business that the industry had become. The boutique private banks will become increasingly prevalent as their product offering expands and becomes more mature.

Asia: Investment banking will continue to hire, although cautiously and will focus on the newly emerging Asian economies such as Vietnam and Indonesia.  Private equity and asset management remain cautious with key markets still being China on the whole with most large firms focusing their efforts on raising funds and completing deals here. Private banking remains the most bullish area of recruitment as banks increasingly restrategise their entire global model to focus more on wealth management with Asia being a key focus.

With the spate of senior relocations from the US and London into HK and Singapore, this is indicative that as a market Asia will be taken very seriously over the coming years. Many reports already indicate that Asia now has the highest population of HNW individuals for the first time, taking over the previous largest market (US). With trends such as this on the rise, Asia will be intrinsic to any institution hoping to develop a strong and lasting footprint.

Who do you see as your main competitors?

The international search firms and wealth-focused headhunters.

Do you do much business in India and Russia?

No.

Is regulation and the crackdown on offshore financial centres proving to be a problem for you, is it creating opportunities, and if so, where?

Octavian Partners has seen the largest impact being a shift in booking centres, and the offering of more platforms, Asia being a natural focus as the HKMA [Hong Kong Monetary Authority] and MAS [Monetary Authority of Singapore] are most straightforward with regard to regulation. There is a perception Asia is seen as a safer bet and as pressure is mounting for Swiss banking secrecy to open up clients are looking at other hubs as an alternative to park their assets.

So, therefore, it is not that there is an increase in roles in Singapore and other places but simply that booking centres are changing. There is no dramatic increase other than they would rather relocate their bankers there now. This is not to be confused with bankers based in Singapore covering the Asia markets exclusively. Singapore and HK are rapidly becoming hubs where Asian and non-resident Indian clients are managed by bankers sitting in these two locations.

Some of our clients within MENA have also started to recentralise operations, slowly moving net new assets into Singapore as opposed to Geneva. Bankers are also leaving London and moving to be based in Switzerland. There was always the assumption that the Middle East would become a large hub in terms of booking centre capabilities, but this so far has not happened from our analysis – instead it’s an excellent base for offshore banking.

In turn the opportunities for banks are to hire and build teams around the core booking centres and to ensure they have a solid presence in the various regions in order to service their clients correctly. 

The market is hugely competitive, particularly in the family office and UHNW space, therefore banks are realigning and refocusing in order to stay above the rest in their offerings.  This is turn will bring up the standard of advice and product offered to the clients.