The "war for talent" continues to be a top concern for private banks; here, Daniel Odermatt of Clariden Leu argues that attracting and retaining the best relationship managers is about more than pay.

Editor's note: The "war for talent" continues to be a top concern for private banks; here, Daniel Odermatt of Clariden Leu argues that attracting and retaining the best relationship managers is about more than simply having the biggest compensation packages.

The secret has been out for quite some time now – Asia is one of the fastest growing markets for high and ultra high net worth individuals, with the number of millionaire individuals and households increasing more rapidly than the global average.

As the current generation of Asians becomes wealthier, the growing demand for high quality wealth management services is higher than ever before. This presents huge opportunities for private banks like Clariden Leu, not just as stewards of such vast wealth, but also to ensure our growth. This explains the fierce competition among private banks, including the perennial war for talent.

Attracting and retaining experienced relationship managers is undoubtedly one of the key success factors for growth among banks. But does the number of relationship managers in a bank guarantee success?

Although it helps, headcount alone does not always guarantee success. Clariden Leu continues to enjoy a steady pace of growth in Asia; however, we don’t have a quota on the number of people we hire to avoid the risk of compromising on quality in favour of quantity. Hence, aggressive poaching of top performers from competitors by offering exorbitant compensation packages for quick results is not a good option.

Presuming that top-performing relationship managers are already well paid in a market with enormous shortage of talent, competitive compensation packages are a must, but it is not the main driver for achieving sustainable growth.

Client-centric culture

Beyond compensation, top-performing relationship managers, who are looking to move, usually weigh their options by giving serious consideration to a bank’s culture and heritage. A pure-play private bank like Clariden Leu for instance, has a much higher chance of delivering on its promises to provide a more focused, client-centric service because they are more centered on servicing the account and growing it, rather than “selling”.

Top relationship managers usually draw inspiration and fulfillment from the rewards of being “client-centric”. Hence, constant effort to establish and live a client-centric culture in an organisation where leaders engage their employees, promote teamwork and give experienced bankers the space they need are the key factors for retaining a highly motivated group of relationship managers.

Stringent recruitment process

Selecting top-performing relationship managers should go beyond the traditional interview process. At the outset, candidates should be assessed on their potential as future business partners. In an in-depth business assessment, it is critical to analyse the needs of the bank’s clients and involve the respective specialists from various departments. A prospective hire should only be considered if, based on the overall assessment, the candidate is highly capable of providing the highest possible quality of service HNW and UHNW individual clients deserve. This goes hand in hand with the candidate’s personality and mindset, which should be compatible with the bank’s culture, standards, and values

At Clariden Leu, we have a stringent hiring requirement, which includes no less than 15 years of banking experience, ensuring us high quality, top-performing relationship managers who know the industry well. These considerations promise greater success in hiring the right people, furthering the bank’s long-term success and employee satisfaction. Equipped with specialist knowledge, an outstanding network of contacts, personal maturity, entrepreneurial mindset, and pronounced risk awareness, clients see our relationship managers as their “first call” advisor whom they can trust to have their best interests at heart, and to provide intelligent, insightful advice consistently. They are usually entrusted to manage 30 per cent or more of these clients’ investable assets.

Training and development

With all the talk about growth and hiring new relationship managers, there is a danger of overlooking existing talent from within the bank itself. A good balance between coaching and supporting experienced professionals, while developing hopeful talents internally provides a “best of both worlds” scenario.

For instance, at Clariden Leu, the starting point for people development is the analysis of the Human Capital Portfolio, which carefully evaluates each employee's potential for a client-facing role, specialist, or managerial career. Also taken into consideration is the employee’s performance, based on set objectives as well as behaviour. This enables leaders to discuss and establish customised development plans and select the right training module for their staff.

We have a multi-modular training offering which applies to not just relationship managers who have just joined us, but also experienced relationship managers, and leaders of frontline units. There are various on-the-job and off-the-job modules available, such as introduction programs, compliance briefings, professional standards, various products and risk-related training methodologies, as well as modules to enhance the structured advisory process, among others. All these activities aim to ensure a high level of professional competence, methodological and advisory competence, as well as social and personal competence, in order to provide the highest possible quality of advice and service to our HNW and UHNW individual clients.

Performance management and compensation

The recent financial crisis had drawn the attention of clients to the importance of dealing with banks that operate on a highly sustainable business acquisition and cost model, which provides them with the ability to balance their operating costs against their ability to generate new income. With this in place, Clariden Leu has always had a strict cost management policy and an enviable cost-income ratio – two key factors that have helped the bank weather the recent global financial crisis.

And this brings us to the issue of compensation. Poaching candidates from competitors by offering exorbitant compensation packages without seriously looking into their overall value proposition for the bank’s clients is risky from a business and cost perspective. It also causes enormous compensation gaps between new joiners and existing staff. At Clariden Leu, we have a transparent compensation system in place for new relationship managers where business plans and expected key performance indicators determine compensation – rather than the other way around. At the end of the day, it is absolutely crucial to us that a banker’s move should make sense for the clients.

To have a successful hiring and retention strategy for relationship managers, there should be strong and consistent emphasis on the selection, development and retention of highly qualified team players, all of whom should have one goal – to serve the best interests of the bank’s clients. Having a client-centric culture, leaders who coach and support their employees, and last but not least, having fun working in teams – go far beyond monetary or compensation packages.