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A look at Hong Kong wealth manager turnover

Private bankers are able to bargain for higher pay when transferring to a boutique wealth manager, according to Sunny Kwak, senior consultant for private banking at executive recruitment firm Morgan McKinley.
Sunny Kwak, Morgan McKinley

“When private bankers from huge organisations move to a boutique-sized bank, they have more bargaining power and can ask for up to 30% increase in [base salary],” Hong Kong-based Kwak told FSA.

By comparison, bankers transferring to another huge organisation should expect an increase of around 12%-15%. Bankers staying in their current firms should expect annual increases of 3%-6%, she added.

However, private bankers coming to boutique firms from large organisations should expect more responsibilities, Kwak noted.

“They are able to bargain more not just because of the size of the [client account] books they are able to bring. It is also their knowledge of compliance.”

Large banks typically have more back office support than smaller rivals. Therefore, private bankers moving to a smaller outfit are likely to have the additional plus of being well-versed in compliance issues.

Turnover reasons

Kwak said that a bank’s product offering is an important factor for a banker when deciding to transfer to another firm.

“When they want to make a move, it’s usually because they are not satisfied with the product offerings of the current bank. So they are moving to a basically better or more-suitable platform for their current clients.”

Another factor in deciding to jump to another job is technology strategy. Wealth managers look at whether an organization is investing adequately in technology to better service clients, she said.

“The banks now are investing huge amounts of money in fintech, such as online platforms that enable clients instant access to their investment performance.

“When considering a move, some private bankers also check whether the bank would be able to provide that to their clients,” she said.

Team departures

A war for wealth management talent has existed for the last seven years due to a shortage of professionals in that area, she said.

Adding to the challenge is the trend of whole teams moving from one bank to another.

“It is not just one banker making a move, sometimes they move in teams, which is more preferred by some banks.”

Kwak explained that whole teams are recruited because their clients will feel more confident if they will still be handled by the same set of people after everyone moves to another bank.

“Sometimes it’s the clients, not only the bankers, who prefer team movements.”

An example is UBS Wealth Management, which hired a team of five people from Hang Seng Private Bank in May to cater the Hong Kong high net worth segment.

She added that a number of private banking professionals in Hong Kong have left the industry.

“I see a lot of private bankers in both junior and senior positions entering and exiting the industry because it is a tough industry. One of the biggest challenge is to balance [their time] between internal controls and compliance and the clients’ needs.”

In response to the small pool of available talent, banks now are getting more creative, according to Kwak.

A number of the bigger banks now have management associate or graduate programmes in which people with no private banking experience are trained in different departments and functions to better understand the private banking industry.

Banking groups have also started hiring internal staff from different divisions, such as investment or commercial units, reasoning that the candidates will have transferable skills or knowledge that can be used in private banking.

“There’s a lot of in-house training offered by the banks now,” she added.

Private banking basic salaries (HK$ per month)

Source: Morgan McKinley’s 2018 salary survey

Part of the Mark Allen Group.