Deutsche Bank’s plan to add about 2,500 advisors to its wealth management arm may at first sight look brave as markets tumble but the case for ramping up this business is sound over the long run, said the bank and a wealth management job recruiter.

Deutsche Bank, Germany’s biggest bank, announced last week that it intended to recruit the advisors between now and 2012 to serve the German and core European markets. In Europe, Deutsche currently has 22,000 advisors covering high net worth individuals and businesses. Its expansion target represents a rise of 11.4 per cent over four years.

“Some banks are, despite considerable exposure, making moves on to what they perceive to be the firm ground of the future.  The core high net worth/ultra HNW markets remain attractive and profitable turf to fight over,” said Tim Gibson-Tullberg, a London-based recruiter working in the wealth management sector.

“Investment banking, and to some extent corporate finance, will not be what it is or was, in the future.  Therefore, staking claim to large tranches of deposits i.e. HNW or UHNW markets is a shrewd strategic move whilst competitors are in stages of disarray," he said. 

The bulk of Deutche’s new advisors will be hired externally with the remainder coming from within Deutsche, a spokesman for the Frankfurt-listed bank told WealthBriefing.

Deutsche’s move is a rare piece of positive news at a time when investment banks, hammered by the credit crunch, have announced or are expected to announce large layoffs. Wealth management has proven a welcome hotspot for recruitment. In late September, Credit Suisse said it intended to hire a further 1,000 client relationship managers over the next three years. Wealth management, unlike investment banking, has been relatively unscathed by the global financial crisis – at least so far.

With more financiers looking for jobs after thousands of job layoffs in the US and Europe, the potential pool of talent for wealth management recruiters has deepened, but Deutsche has not taken its decision to boost headcount because the labour market has turned in its favour, the bank said.

“If the market situation plays into our hands, well that is fine, but even without that we would want to launch our growth programme. We see growth potential in Germany and European markets,” the spokesman said.

In contrast to the UK, where independent financial advisors play a relatively larger role as intermediaries between financial products and HNW clients, banks hold a dominant position in Germany’s wealth market, the spokesman added.

Deutsche’s announcement made it clear that the increase in headcount in one side of the business would come partly at the expense of job reductions elsewhere in the group. There are plans to restructure administrative activities and processes in banking services in order to reduce the number of European back-office jobs by 1,100.

Reaching ambitious recruitment targets will not be easy, however, said Mr Gibson-Tullberg. “This is a contested market and others have tried in the markets DB is targeting and struggled.  Equally, tax regimes and government attitudes to wealth within those states are complex and tough to work with, so economies of scale and capable platforms will be difficult to craft,” he said.