PBi HK Forum: Key takeaways
Attendees at the 2013 PBI HK Forum on 4 June were told in no uncertain terms that, while the Greater China market offers great potential to private banks and wealth managers, a lot of effort is required. In particular, the training and retention of staff and need to demonstrate the value of private banking services to a new generation of HNW clients, especially in Mainland China, were top of the list.
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Kenny Lam, a partner at McKinsey specialising in Greater China, pointed out that 41% of wealth in China is in the $30m plus segment, however private banks and wealth managers only manage about 10-15% of the onshore wealth. Lam added that 70% of
wealth in China is in Tier 2a/b cities, meaning a big proportion of wealth is outside the traditional centres.
He also emphasised that Hong Kong was remodelling itself as the deepest capital base in Asia with the broadest product range to
differentiate itself from Singapore. For the industry, Lam had some stark warnings around staff retention. He referred to one unnamedmainland Chinese bank which had a shockingly high rate of junior staff turnover. In the first year, 26 out of 40 junior starters had left after 12 months.
He suggested private banks need to create special career tracks to show junior staff the career they can have within a bank and retain new staff by introducing a different set of KPIs for new recruits that aren’t tied to AUM/revenue.
"Asian clients are paying European rates, but they are not getting a European level of service," he said. Lam also highlighted how private banks should see their competitors as the retail and affluent banks, rather than other private banks. Temenos’ Nick Kalikajaros told PBI on the sidelines of the conference that although retail and affluent banks had the march on wealth managers in terms of customer base, there was dysfunction amongst these institutions as they don’t know how to design IT systems within retail banks to suit HNW clients.
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By GlobalDataChristie Wong, a manager at Bain & Co, said the model for onshore clients was clear: local banks should use domestic footprint to
increase mass affluent wealth management.
Foreign banks should only operate offshore and use their international experience/ investment expertise to leverage clients. Wong referred to the prospect of joint ventures and partnerships between local banks and foreign banks but noted that they were traditionally very difficult to pull off.
She noted that investment immigration is still an area of interest, with 60% considering or have completed immigration, which rose to almost 80% amongst UHNW. She also suggested following Chinese HNWIs’ increasingly sophisticated demands in investment management and rising needs in midand long-term wealth planning, especially in wealth preservation and inheritance.
