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Opportunities for Asia's private bankers
Asia’s wealth management scene is competitive, fluid and expensive. Cost-to-income ratios in Hong Kong are more than 70%, almost double the proportion in Western Europe, as blue chip private banks fish for talent in a small pool of relationship managers with networks among China’s new rich.
The bait is a big salary and juicy benefits; the reward for the banks are connections to the world’s fastest growing market of high net worth individuals, according to the latest Capgemini and RBC Wealth Report 2015.
However, single- and multi-family offices are gaining traction within Asia, undermining the strategies of the leading banks who argue that scalability is essential to survive. Experienced staff see an opportunity to use their contacts to set up on their own or join a niche, more focussed firm with a realistic expectation of even higher compensation as well as greater independence.
Kenneth Ho, the former head of Julius Baer’s investment solutions group in Asia Pacific is the latest high profile banker to make the move. At the beginning of this month, he joined US-based Carret Asset Management where he is tasked to set up an Asian multi-family office, reports AsianInvestor.
He is looking to buy independent asset managers in Hong Kong and Singapore, and might also form a private equity fund.
In September, another private banking veteran, Stephen Repkow quit Union Bancaire Privée to launch an independent platform in Singapore that will serve both as an external asset manager and a multi-family office.
If more bankers strike out for independence then, of course, the talent pool for the big wealth managers will become even shallower. They will have to offer larger salaries and bonuses which will push the cost-to-income ratio higher so that eventually head office must wonder: why bother?