According to London-based recruiter EMA Partners International, salaries of senior private bankers working in Singapore range between $160,000 and $410,000 compared with their Swiss equivalents who earn between $152,000 and $210,000. Of course, the East's star is rising and it is tempting for banks to assume that Asia-Pacific's 3.3 million millionaire population will soon warrant the expensive staffing costs 

Indeed, wealth management revenue is tipped to grow by around 18 per cent this year in Asia, triple the US average and more than double that in the Europe Middle East and Africa region, according to a recent report from accountant PricewaterhouseCoopers. 

“Wealth management’s centre of gravity is shifting towards the emerging markets. Revenue growth here is far outstripping that of developed markets and Singapore is expected to be the leading global wealth management centre in two years,” said Justin Ong, Asia Pacific leader of PwC in the annual Global Private Banking And Wealth Management survey published in June.

Growth Warning

But industry heads warn that Asian richesse should not necessarily equate to higher pay for Singapore-based private bankers. Soaring comp levels could lead to profits being pinched, while mercenary bankers serially moving jobs are damaging client trust. 

Tan Su Shan, head of wealth management at Singapore’s largest bank DBS, believes that using lucrative packages to lure bankers with “ready-made” books of business is a short-term strategy, detrimental to clients and businesses in the long run as it encourages job-hopping.

She told WealthBriefingAsia in an interview this month that although DBS has been hiring aggressively, it will not pay over the odds to access a book of business. An individual’s skills and experience are ultimately more valuable for the client and so for the bank. Tan gets around the talent shortage by looking outside of private banking. "We hire the right people as they come along, and not just from the private wealth space. I like to think laterally. We have hired people from investment banks and asset managers before," she said.

She expressed concern that extortionate salaries will set increasingly high price expectations for relatively inexperienced bankers, just for the sake of boosting headcount.

Tan’s concerns are echoed by others. Shayne Nelson, chief executive of Standard Chartered Private Bank, told this publication in an interview earlier this year that he was finding it difficult to recruit talented staff. Like Tan, Nelson is looking laterally across a variety of businesses lines for "quality individuals" with experience and different skill sets. StanChart does hire private bankers, where appropriate, from other parts of the group such as the wholesale banking side.

He admitted that a dearth of talented relationship managers will be a constraint on growth. "The cost of business (in Asia) is quite high; the depth of talent, such as for RMs and compliance staff is not here for the expansion of wealth,” Nelson said.

The stakes for paying over the odds on staff are high. As PricewaterhouseCoopers pointed out, the average cost-income ratio of private banks is 71 per cent and only a relatively small number of firms are below 60 per cent. Historically low interest rates in many countries squeeze margins, as do the high costs of getting the best talent. 

Hiring Frenzy

Global private banks including JP Morgan, UBS, Credit Suisse, Barclays Wealth, Merrill Lynch, BSI, HSBC and Standard Chartered have all outlined aggressive recruitment sprees in coming months. Switzerland's UBS plans to grow its Asia wealth ranks by 300 to 1,200 within two to three years, said regional head of wealth management Kathryn Shih in July.

Meanwhile US rival JP Morgan wants to grow its Singapore wealth ranks by 100 to 240. HSBC recently announced it had grown headcount to 450 from 370 in the city-state, three years ago. 

And there is data to suggest that this wealth explosion will not be a flash in the pan. Asia’s millionaire tally is expected to double within five years according to CLSA-Asia Pacific, the broker and investment group. Asia, excluding Japan is already home to 1.2 million high net worth individuals. CLSA predicted in a report this month that this will rise to 2.8 million by 2015.

Asia's fortunes may be on the up, but if the quality of private bankers sink then reputations will be on the line. According to PwC the average level of experience is falling. Approximately 45 per cent of assets in Asia are managed by advisors with less than 10 years of experience, according to PwC, further increasing demand for the shrinking pool of qualified CRMs.

Regulatory demands for CRM fitness requirements are likely to exacerbate CRM shortages. In April 2011, the Monetary Authority of Singapore released a new Code of Conduct requiring CRMs to take competency examinations or possess at least 15 years of relevant financial experience.

Some headhunters say the top Asian private bankers could in the future brush the compensation packages once associated with only the highest flying investment bankers.

A New Tack

Perhaps, but things are changing. The cost of running a quality wealth management organisation is becoming greater as the regulatory burden increases. Wealth managers are beginning to change their compensation structures to link variable compensation to long-term goals and to extend fewer employees large long-term incentive awards, said Ong at PwC. 

He said: "Wealth managers need to accept the short supply of CRMs and realign their growth strategies accordingly. Contrary to established practice, poaching from competing firms is no longer such a viable option. Clients have become frustrated by following their CRMs from one firm to another and going through multiple on-boarding processes, including know-your-client and anti-money-laundering experiences, that client loyalties are shifting to the firm rather than the individual.

Nowadays, when CRMs leave only 20 per cent of respective client assets leave with them, according to the PwC survey. Further, only 2 per cent of CRMs polled managed to take more than 60 per cent of assets with them when changing jobs.

And the tables are turning. Firms that once flung their HR doors wide open are becoming fickle as costs rise. Wealth management redundancies are higher in Asia than anywhere else in the world. Over the last two years Asian respondents to the PwC survey had the highest redundancy rate, with 52 per cent of departing CRMs having been encouraged to leave - over 50 per cent more than their US peers. In EMEA, 33 per cent were asked to go and in the Americas, 17 per cent.

Last week, HSBC announced it would make 3,000 redundancies from its Hong Kong office. There has been speculation that at least 1,000 jobs could go at Macquarie Bank as the Australian bank seeks to trim its cost base. Neither bank has confirmed how wealth management jobs will be affected. But it goes to show that Asia is not immune from the moribund economic environment afflicting the West. 

What will be interesting to see is how the global banks will meet their hiring targets with thinner margins, less available talent and higher pay expectations.