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August 9, 2019

Wealth management recruitment heats up as wealth creation slows

By Oliver Williams

The relationship manager brings more millions through the door than any other marketing means. But as wealth creation slows, wealth management recruitment is heating up, finds Oliver Williams.

Things are about to get more difficult for private banks and wealth managers. A recent report from Capgemini, estimated the number of HNWIs in the world slid 3% last year, the first fall in wealth creation for seven years. UHNWIs were hardest hit – their number dropped 6%.

This means that private banks – buoyed by years of growing wealth – will now be slicing up a smaller pie. In order to arm themselves for the forthcoming fight, many are equipping themselves with the best relationship managers to keep wealth coming in through the door.

Wealth management recruitment: The battle begins

Nearly 50 members of First Republic’s wealth management division walked out of the firm in June, following the five top advisors on their team who had already left. Between them, these employees were responsible for managing most of the $17 billion of client assets at the bank.

In losing such teams, as hiring them, hangs the balance of retaining extremely wealthy clients.

While First Republic’s team scattered, taking up positions with a number of Registered Investment Advisors (RIAs), most major moves – and therefore clients – are between large private banks.

In the past month alone, HSBC hired its new asset management head from Deutsche Bank, Credit Suisse raided UBS for its UK wealth management team and Deutsche bank took 13 wealth managers from Credit Suisse in Italy.

But perhaps the biggest wealth management rivalry is between the two Swiss private banks, Julius Baer and Pictet, which started in 2017 when the former’s CEO unexpectedly jumped ship to the latter, sending shock waves throughout the industry.

To make matters worse, in his new role as a managing partner of Pictet, Boris Collardi has been hiring many of his former colleagues from Julius Baer. In June, for example, senior relationship manager Sanjeev Premchand walked out of Julius Baer after 15 years at the bank and straight into the Pictet office.

Wealth management pay set to increase

With supply and demand in their favour, many wealth managers are counting on their pay rises this year.

In a survey by Kathy Freeman, a financial services recruiter, 54% of respondents said they would expect an uptick in their pay packages this year.

UBS, the world’s largest wealth manager, increased its salaries by nearly half a billion in 2018. “Adjusted expenses for salaries increased by USD 472 million to USD 6,273 million,” the Swiss bank stated in its last annual report.

After Switzerland, the UK is home to Europe’s largest private banks. It also has its best-paid bankers and fund managers, with almost 10 times more financiers on €1 million ($1.1 million) as Germany according to the European Banking Authority.

But with pay levels already rising, many smaller wealth managers might struggle to match, let alone beat, such packages. Talent will therefore leave and potentially clients with them. For these firms, Kathy Freeman recommends adopting a different approach:

“For firms without deep pockets, success is still possible, but they will need to be creative. One way to achieve success is to draft a job description that allows a less experienced individual to evolve into the role. Candidates may be willing to consider some compensation offset in order to transition into a position that increases their career trajectory or broadens their scope of responsibilities.”

 

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