Hong Kong’s wealth management industry is working actively to address a significant talent pool shortage in order to serve growing clientele from the Greater China region, Private Banker International (PBI) has found.
Hong Kong is a key private banking hub having $800bn of AuM in bookings according to the Hong Kong-based Private Wealth Management Association (PWMA).
However, a significant talent gap exists, threatening the market’s ability to serve a growing pool of clients.
Francis Liu, regional market manager for UHNW Greater China at UBS Global Wealth Management, told PBI in Hong Kong: “Talent is a key challenge. The industry is growing at a rapid pace but there is a very limited pool of talents.
Liu added: “This especially applies to expertise in this part of the world. The Chinese economy has only started growing since the late 80s.”
He continued: “But [the economy] is still relatively young and it is hard to find seasoned, experienced, young bankers.”
David Shick, head of private banking Greater China at Julius Baer bank, said: “We have a very limited talent pool in Hong Kong. The clients are growing faster than the number of practitioners in the market.”
Shick attributed the industry’s talent shortage to graduates having a choice of many other industries that are “equally attractive for employment to them.”
In order to bridge this shortage in talent PWMA launched an apprenticeship programme with Hong Kong’s monetary authority in 2017.
The programme is an eight-week programme which lasts two summers targeting students. If the apprentices perform well, they will be offered a job at the end of it.
But what are private banks in Hong Kong doing aside from the PWMA’s initiative to address this challenge?
UBS Wealth Management, the world’s largest private bank is one of the participating banks. Aside from PWMA’s programme, UBS runs a wealth management associate programme.
This means UBS recruits people with 3-5 years of work experience both from within and outside the industry, and trains them for a year and half as client advisers before they can climb the ladder in private banking.
Shick says Julius Baer has a talent identification programme that operates twice a year.
“We try to identify talents within the existing talent pool, people with aspiration to become relationship managers. That is normally our younger employees and those who are at the assistant level.”
Drilling down into the Greater China wealth market, the rising number of billionaires is a key driver for growth in the sector.
According to research by the UBS and PWC’s Billionaires Report published in 2017, China created two new billionaires every week in 2016.
Data published by Citi Private Bank in March 2018 also shows that the number of millionaires rose 15% compared to the previous year, making one in 7 people millionaires in Hong Kong.
Liu adds: “You may be rich on paper, but you need to be rich with some sort of valuation. “I expect the growth in billionaires to be stable.”
He comments: “Looking at where we are today in Hong Kong, we would require a lot more uniqueness in terms of exponential growth in the economy to create rapid billionaire growth.”
Julius Baer is conducting research called “Womenomics” as the core focus of its next annual wealth report to better serve female billionaires. The Wealth report is expected to be launched this coming October.
Shick comments: “This is an area where I think we will take a lead in catering towards the female billionaires and the female clients in general.”
Liu says there are “good indications” that the wealth creation cycle is growing quite strongly.
“And the opportunity for us is whether we can capture the amount of exponential growth that we saw in the last three years, says Liu.
Overall, the outlook for Hong Kong’s private banking industry appears positive. For example, UBS expects GDP growth to be approximately 2-3% in Hong Kong in the coming months.
Shick comments: “As China is the second largest economy, demand for wealth services is growing rapidly. We can see a very strong demand for asset diversification in China.”
Liu echoes this view. “For the outlook for greater China specifically, we are very optimistic that we will continue to see that growth in the market. This is specifically in the tech sector.”
While bridging the talent is a key theme dominating Hong Kong’s wealth market, the overall picture is promising due to a rising prominence of billionaires and strong market fundamentals.