Private banker training is back in the spotlight in Singapore amid market volatility and the high-profile alleged mis-selling of complex financial products linked to the now-defunct investment bank Lehman Brothers.
In response, Ng Nam Sin, executive director of the Monetary Authority of Singapore (MAS), has outlined a number of measures designed to strengthen the quality of advice given to investors. The new push, which includes increased grants for wealth management training, will also address the shortage of private bankers in Singapore, which are needed to meet increasing demand for wealth services in Asia.
The improved subsidies for a range of programmes have been welcomed by the industry, including Anthonia Hui, chief executive officer and co-founder of independent advisory firm, AL Wealth Partners.
She told PBI: “Given such government backing, many financial institutions are keen to build or up or strengthen their wealth management capabilities by structuring their training to meet the FICS standards.”
Still focused on sales
A vocal proponent for training in the soft skills departments, Hui highlights that “most banks in Asia, not just in Singapore, are still very much focused on product training or sales training”.
“The training desperately needed by the industry is in relationship management or the soft skills,” she added.
“Because of the high sales targets set and staff turnover in the last few years, many banks are not able to find the time or resources to set up such training despite management acknowledging this need.”
“Furthermore, many successful relationship managers do not feel the need to be trained if they are bringing in business for the bank. The financial crisis has highlighted the weaknesses of those who lack the appropriate skills and training in relationship management.”
The Financial Industry Competency Standards (FICS), based on a similar framework in to the UK’s, serves as a road map for skills and is a benchmark for wealth managers looking to replicate international best practice. Training programmes from local providers such as Singapore College of Insurance, Singapore Management University (SMU) and the Wealth Management Institute have been accredited by the MAS-linked Institute of Banking and Finance and tasked with developing over 270 FICS-accredited programmes by 2010.
The new measures Ng introduced in the speech, to a graduating class of private bankers from Standard Chartered, included increasing grant support for trainees under FICS to 80 percent. There was also the introduction of financial support to wealth management firms to implement in-house programmes and an extension of grants to individuals not sponsored by financial institutions.
Under the Financial Training Scheme (FTS), which provides financial support to executive programmes, grant support has been increased from 50 percent to 70 percent. And for the Finance Scholarship Programme (FSP), a postgraduate scholarship, MAS will broaden the range of Masters programmes which qualify for support.
There are more than 50 private banks and wealth management firms based in Singapore representing a four-fold increase in the past five years. Such growth, along with the expansion of the HNW market in the region, has contributed to frantic headhunting and recruiting from within and outside the industry, thus contributing to a sizeable number of private bankers with relatively shallow experience in advising HNWIs.
This lack of depth in adviser experience was highlighted with the recent debacle of alleged mis-selling of Lehman-linked structured products to the average investor. The industry has been criticised for its focus on product-selling and that it has moved away from original premise of private banking – earning the trust of the client by providing bespoke wealth management.
“I believe that the profile of banking has changed after this crisis, the whole business has to be reviewed and understood,” said Dr Annie Koh, associate professor of finance and dean, office of executive and professional education in SMU, the university’s executive training arm.
StanChart increases training
“It has gone beyond product and financial knowledge. Relationship managers must now learn about the business of private banking – how to build trust, how to communicate and articulate clearly amid the market noise and information overload. In addition, different segments of clientele require different solutions in terms of guidance, financial planning and engagement. It will be challenging to do private banking these days,” she added.
“The focus in Singapore is now on making sure that clients are kept aware and updated on events unfolding in the market. Many of the relationship managers are focusing on helping their clients to preserve their wealth.”
The focus from a product-driven approach to a relationship- and advisory-driven approach will need heavy investment in staff training. Standard Chartered, for example, has said that it will increase its emphasis on frontline training.
Ben de Beyer, head of human resources for private banking, priority/excel banking and small- and medium-enterprise banking at Standard Chartered, said: “We are increasing emphasis on the frontline training programmes we have been building and rolling out through our Private Bank Academy. We take a long-term view of our business and will continue to make fundamental investments in people – training recruitment and development.”
There might even be a move among the private banks to compensate private bankers according to their soft skills.
“In fact, many senior executives of leading private banks now acknowledge that they need to use the crisis to review their business model from product-selling to relationship-building. Some have even voiced their wishes to change remuneration of relationship managers from product sales to quality of relationship and advice,” Hui added.