Kicking off a Q&A session around strategic issues, Patrick Field, chief executive of Hanover Search Group, remarked that the financial crisis has had the unforeseen consequence of making wealth management a very attractive career path for financial services professionals. “Private banking has become the new ‘sexy’ area to be in, rather than investment banking,” he said, adding that while increased interest in the field is certainly to be welcomed, firms must be more certain than ever that staff are appropriately qualified.

Phil Cutts, chief executive of Credit Suisse Private Bank UK, highlighted the role played by the UK Financial Services Authority’s Retail Distribution Review reforms in upping standards. “We should thank the regulator for pushing firms towards higher qualification standards,” he said.

The RDR dictates that as of the end of December advisors in the UK will have to be QCF Level 4 qualified, as opposed to the previous minimum of Level 3. The onerous task of going back to the classroom has prompted some advisors to leave the industry, but Cutts maintains that this attrition doesn’t detract from the value of the RDR changes. “It’s inevitable that we’ll continue to see turnover…frankly I think that’s a healthy thing for the industry,” he said.

Ian Ewart, global head of products, services and marketing at Coutts, agreed, saying that the RDR constitutes “a real push of the roundabout which has brought financial services to the level of a profession…it’s no longer about gifted amateurs.” He also believes that the RDR reforms will help to make things much more objective when recruiting new staff and assessing existing ones.

International developments

Ewart in fact views the UK as leading the world in its push towards higher qualification standards and sees the increasing professionalisation of the industry as a key global theme which is long overdue. “We take the view that if the RDR hadn’t happened we would have had to invent it,” he said, adding that what has started here is soon likely to translate to key global markets like Switzerland and Singapore.

While the panellists welcome the RDR’s qualification regime, they did concede that implementing higher standards is no easy task – particularly when it comes to recruiting bankers from abroad. Cutts explained that with international recruits Credit Suisse insists that advisors are Level 4 qualified before they can speak to clients and they then have to commit to gaining Level 6 qualification in the next 12 months (many firms are asking staff to supercede the minimum FSA requirement and attain the CISI’s Certificate in Private Client Investment Advice and Management, which is a Level 6 qualification). “Level 6 is a step too far for some international advisors to do straight away especially where English is not their first language,” Cutts said.

Retention issues

Turning to the issue of retaining both bankers and clients, the panellists all agreed that clients will follow their relationship manager to a new institution to a far lesser extent today than was once the case. There are several reasons behind this, one being the “hassle factor” entailed. “Clients are more and more reluctant to change institution now due to the fact that they have to go through so many onerous compliance checks." said Ray Soudah, chairman of Millenium Associates. “At best 20 to 30 per cent of assets will follow a banker now.”

Firms now take a much more realistic view of how many assets a new banker will bring in, the experts said, pointing to somewhat of a change in culture towards “buying” books of business. Field noted that when assessing candidates firms are much more concerned about a banker’s ability to build a book than the conversion rate on their existing roster of clients. Wealth managers seem to be much more focused on the fact that “form is temporary but talent is permanent”, he said. Cutts agreed that this is indeed the case at Credit Suisse, saying that “we look at bankers’ abilities, not necessarily their ability to transition a book…it’s more about the person.”

In recent years there has been a marked move industry-wide towards making clients loyal to an institution, rather than to an individual banker – some firms putting “team banking” strategies in place, for example. Here, Ewart and Cath Tillotson, managing partner at Scorpio Partnership, concurred that client loyalty is a complex issue and that it is the fit between the advisor and their employer which is often most important. “The brand and advisor have to be a fit… the firm’s and the individual’s brand have to sit well together on the business card,” said Ewart. Tillotson agreed that is the combination which is paramount, saying that some of the qualities clients want are delivered by an individual, some by an institution. She did however note that clients are most likely to move when it is the institution which doesn’t offer what they want.

Looking at the prospects for the wealth management industry in Asia-Pacific, Tillotson maintains that the region has a lot to offer international houses. “Asia wealth is still growing incredibly fast so for players looking for scale on an international level it presents lots of opportunities, not least because it’s not an over-banked market.” Firms are going to have to innovate to find a way to staff their expansion in Asia-Pacific however, Field said. “The talent pool in Asia-Pacific is very shallow indeed…the market is either going to have to develop its own or look at other sectors like private equity,” he explained.

Tillotson also pointed out that a lot of the trends which first emerged in the West are now taking hold in Asia-Pacific. These include a preference for fees over commissions and the growth of independent advisors and family offices – all trends first seen in the US. In her view, one crucial difference however is that while in the US and Europe the relationship manager has tended to be dominant in Asia-Pacific they are not so central. To Asia clients it could be that technological capabilities are most important, she said. “Twice as many Asian clients have a financial services app as their American counterparts. The data coming through is quite clear – Asian clients want a tech-based solution,” she said.