In an exclusive interview with some of the top recruiters to private banks Mike Cobb finds that the industry is not as focused on the Middle East as we have been led to believe. But what remains important to all the banks is a banker’s rolodex.
Some Cassandras in the recruitment industry predicted a severe cut back in the use of external recruitment firms when the financial crisis struck private banking back in 2008 but as Steve Jobs once said: "hiring is a collaborative process."
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Because of the collaborative process using a search consultant brings, the relationship between hirer and the recruiter has persisted against the odds.
Private banks rely on the skills and contacts of the recruitment industry to find the people that will help their business grow and avoid the pitfalls of regulation and compliance.
That relationship has continued through the turbulent times. Retrenchment and regulation has significantly affected where and who the recruiter is asked to hire from.
As Stephen Heal, partner at HB International a London based executive recruitment business, reveals to Private Banker International: "I think for bankers that have been in the market for 25-30 years, it’s a very different world now to what it was, well even prior to back in 2007 or 2008. I think it’s a challenging environment for everyone."
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By GlobalDataThe recruiters say that the banks have had to adapt their searches since the beginning of the crisis. Whereas before searches were a global hunt for a good book of business, banks now look more critically at their markets and needs.
For some the focus has been on developing their business in growth markets and with others it has been about developing a more cohesive platform across their business lines.
Emerging Markets or the US?
In geographic terms the recruiters disagree where banks are focusing their energies.
"The US is by far the hottest market, the pressure on significant people from a management product, operations or banker/broker is definitely the hottest. Asia has cooled down," says Harry Pilkington, a senior partner at leading executive search firm Korn Ferry.
It is a view also held by the head of recruitment at one of the leading global private banks, who wanted to remain anonymous: "I have seen a move away from some of the emerging countries, like the Middle East, Eastern Europe and Africa."
"The US continues to be a focus for most firms, but it’s still not an easy place to do business. Most firms are covering it from offshore," he says.
Stephen Heal however feels that Asia remains a hot market, certainly in comparison to the UK with the Middle East being a major area of business for him currently.
Nick Lambe, managing director at Morgan McKinley in Hong Kong, explains that the impression may be because "the infrastructure piece has definitely slowed down with the market place.
"But ‘in terms of your relationship managers’, it’s still pretty robust for hiring."
The demand that Heal and Lambe have witnessed is being driven by the growth in assets under management in the Asia Pacific region. Across the top 20 banks operating in the region there was a 16% gain in AUM according to exclusively gathered figures gathered by Private Banker International. This is the strongest rise since before the downturn in 2008.
What has also happened has been a maturing in the recruitment effort.
"There’s a lot more due diligence that seems to be going on in terms of the client base that those bankers have, and also the appetite of those clients for products and how much of a fit there is with the organisation," explains Lambe.
He believes that previously the banks were too slow to realise that books were not as easily movable as they would have liked
.
It’s all about relationships
The demand in Asia for relationship managers is mirrored in other markets too: "The banks are looking for people with a clear demonstrated track record of bringing in clients and an ability to transact on their platform," says Heal.
"For example people with a solid length of tenure of ten years plus in the market place, where they haven’t changed employer multiple times," he adds.
One thing recruiters will agree on is that relationships are key to any hire in the private banking sector and the reason is simple. "The income from actually bringing assets over and managing them," says the head of recruitment. "It’s a kind of stickier, higher quality revenue source," he adds.
Being ‘stickier’ means that for recruiters the problem lies not in finding people, but convincing them to make the move. And that is a slow process, one that can take up to 10 or 11 months according to Pilkington.
What can help is the platform that the banks provide; for candidates one of the biggest pull factors that they ask recruiters for is the breadth of service that the client bank can provide.
"The capability of the platform has become even more significant, so people do become clients of JP Morgan rather than ‘Bob’ who worked at JP Morgan," says the global bank’s recruitment head. This in turns leads to clients being the driving force behind the end destination for candidates.
"They don’t just go ‘what does the chair pay Steve,’ " Heal says of his candidates needs, "It’s about ‘I need this platform, I need these products’. And they are the characters that you really want to work with."
"What you find is that when people want to move, all their questions are now around the capabilities of the platform," adds the head of recruitment.
"There are more tools, there’s more toys for you to play with therefore the size of the cake is bigger in the future than where you are today," he continues explaining what is in it for candidates.
A choice of lifestyles
But a broad platform is not about candidates looking for products to sell to boost income, especially in a post RDR world.
"People are talking less about selling products to clients and more providing a service and that’s very much in line with what RDR is trying to eradicate in the UK: The sale of products to clients," says Pilkington. He believes there is a change for better in candidate’s attitudes.
"There is a mindset change about working with the client, from gaining their trust and working with them, rather than selling to them."
When it comes to those opportunities a few banks dominate this market. UBS and Credit Suisse are leaders but banks like Barclays and Citi are just as capable of offering this to candidates.
The smaller ones offer something different instead. "Boutiques have been able to pick up one or two people," says the head of recruitment. "Because they offer something completely different. Its high end, it’s a small boutique, they’re not full service. "
For some, the likes of Rothschild offer a lifestyle choice away from the administrative process and corporate culture demanded by larger banks.
In the UK at least RDR has made some other changes to the way in which these banks can recruit, with more traditional relationship managers weighing up their options.
"People tell me that the older and more independent people have either sold their books or moved on," says the recruitment head.
"You do find a number of people who are becoming independent, or consultants for that reason." Explains Heal. "I think if you worked in a different way and you’re in this market now, it’s a much harder market to do business in, rightly or wrongly, but it is."
In Asia RDR is not the issue for recruiters, it is more a matter of finding the best home for a diverse regional portfolio of clients.
This has led to more demand outside of Europe for candidates to move to smaller banks. "You’re an off shore Taiwan banker in Hong Kong, but if you’ve also got some Japanese clients or Korean clients then you can bring those over and you will get to keep those,"
Says Lambe of the appeal. Bigger banks, he adds, are more rigid in their regional focus and often cannot accommodate broader coverage managers.
A change in the way they do things
Whatever the changes the industry have been through, one problem employers see with recruitment searches seems to persist, seeing the same old faces.
This is a particular problem in private banking sector due to the nature of the business, believes Heal. He says that relationships are key and experience establishes those relationships, limiting the talent pool.
However the head of recruitment feels some elements of what makes a good relationship manager doesn’t come from experience alone : "The bankers that tend to be better at being full service tend to have done something else before, rather than grown up in private banking."
But he says. "They’re in a slightly tough spot because we all want the same thing. We want the guy with the big book and they’re really obvious, everyone knows who they are."
In addition he thinks the economics of a search means that the hidden gems can be missed and explains that in investment banking recruiting a recruiter can often map a whole business area for the client.
However for private banking this is a near impossible task he concedes as there are ‘near limitless numbers’ of private bankers but: "It would be great if someone did invest that time and energy in doing it so."
None the less it does happen that the gem is found from outside private banking: "We’ve recently placed an individual out of a capital introduction role into a private banking role. And they’ve never been a private banker before," says Lambe.
Know your recruiter
For the time being, most of recruiters believe the search for talent will remain one of convincing the existing stars in the industry to move.
And the numbers of search consultants who can do that for a bank is limited, believes Heal: "You’re only talking about a handful of people who are genuinely successful in this market, despite what anyone tells you, genuinely successful in it. There’s probably only three or four of us."
Nick Lambe has some advice for anyone thinking of using a recruitment firm: "If you’re going to work with a recruitment consultant make sure they know their onions so to speak and have a strong appreciation of the client base.
"Fundamentally a private banker that is looking to make the move needs to be confident that the recruiter that they’re working for is going to market them to the banks effectively."
After all just like private banking, recruitment for the sector is all about relationships, and when it is, it is truly collaborative.
