Job recruitment by private bankers in Singapore has slowed since the rapidly expanding hiring market in 2007 although high-quality relationship managers are still tough to find.
Job recruitment by private bankers in Singapore has slowed since the rapidly expanding hiring market in 2007 although high-quality relationship managers are still tough to find, the head of Julius Baer's Singapore and South East Asian operations has told WealthBriefing.
The market for wealth management in Singapore and its surrounding area is still strong, buoyed by the rising affluence of the Asian kingdom. However, the city-state is not immune to the adverse impact of rising price inflation and some slowing of the global economy, Wilfried Kofmehl said.
"It [the job market] was definitely much hotter in 2007; in 2008, [executive] search firms would confirm that this year is more reasonable in terms of moves. Given that the overall economy is a bit tougher, you might want to re-assess how aggressively you want to hire people. However, that doesn't mean hiring is easier. Attracting the top relationship managers continues to be a challenge," he said.
Julius Baer has already come a long way in the Asian market. It opened for business in Hong Kong, for example, as recently as 2006. As Julius Baer's chief executive for North Asia, Andrea Benenati, told WealthBriefing last October, the bank can benefit from starting out from scratch. More than 100 years old, the bank has recently invested $100 million to develop its presence in emerging markets, including Asia.
Competition for a slice of the Asian wealth pie is certainly hotting up. Since 2000, the number of private banks operating in Singapore alone has more than doubled. Inevitably, after a strong period of growth, intensifying competition makes life tougher, he said. "Ultimately, the challenges in the past three to five years were more limited because the economy and markets were growing at the same time. Increasing competition makes it more interesting and challenging," said Mr Kofmehl.
"There are some concerns: inflation is rising and the costs of running a business in Singapore have become more expensive," he said.
"Marketwise, opportunities still outpace challenges though. There are still a lot of opportunities for all sizes of [private banking] players," Mr Kofmehl said.
"I see more and more interest from hedge funds and other players, saying that they want to be in Asia and Singapore. There is the benefit of the English language that is widely spoken here, the regulatory environment and also an education system that provides a lot of talent. The challenges mainly come from the economic side," he added.
Mr Kofmehl's ebullience is understandable. Julius Baer, one of the largest Swiss banks and an established private banking operator, has expanded its global reach to ride the Asian economic boom. It is targeting high net worth individuals with at least $5 million of investable wealth.
And Mr Kofmehl is no starry-eyed novice as he has been working in Singapore for about eight years and boasts more than 20 years experience in the financial industry.
Julius Baer prides itself on doing one thing well: private banking. As its chief executive, Alex Widmer, said earlier this year, Julius Baer is a "pure-play" private bank, focusing entirely on this part of the financial services arena without any potential distractions from being a part of a larger banking group with different divisions, such as UBS or Credit Suisse. At a time when clients of wealth management firms want to be assured their banks are reliable custodians of their assets, a pure focus on this area makes sense.
"The market in private banking has been dominated over the past two decades by the big banks such as the big Swiss banks, big US investment banks and their private banking arms, and some local banks. There is a need for pure play wealth managers such as Julius Baer. We have been extremely successful in our growth strategy. We feel that this is a sweet spot for us," said Mr Kofmehl.
The bank's Singaporean client base is well diversified, with a strong influx of younger wealthy clients who do not expect to run their finances in minute detail but who expect frequent reports on how well their assets are run, he said.
The younger generation of clients is more comfortable than the entrepreneurs themselves in entrusting a private bank to manage investments on a discretionary basis rather than getting involved in all the investment moves, he said.
Inevitably, as some banking groups have suffered big credit-crunch blows, there is media speculation that relationship managers at some of the affected banks might want to quit. Mr Kofmehl said Julius Baer continues to look for opportunities, including the purchase of other firms if they fit the bankï¿½s business model, but he declined to elaborate on names.
"The bank is always looking for good opportunities. Our strategy is to continue to focus on being the leading pure-play wealth manager and on organic growth and finding top relationship managers who share the same core values to join us," he said.
The Swiss bank has certainly been a partial beneficiary of the credit crunch. Earlier this year, Mr Widmer said Julius Baer is the refuge to which many clients are fleeing as the financial market turmoil continues to hurt other banks. Mr Widmer has estimated Julius Baer could attract net new client money of 5 per cent of assets under management in private banking this year.
Predictions are difficult in a year that has shown so much market volatility. If Julius Baer is going to reach its target for more clients, a strong performance by its Asian operations is likely to prove an important reason why.