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The Benefits of an International Private Banking Qualification

Emma Rees

14 June 2007

When WealthBriefing’s recent poll of the week asked whether there should there be an internationally recognised private banking qualification, a resounding three-quarters of respondents said that the industry would benefit. Just nine per cent believe qualifications are not necessary and a further 15 per cent said that current qualifications are sufficient. The Financial Services Skills Council, which applies the exam standards for the UK financial services industry, acknowledges that even in the UK, private banking qualifications are not straightforward as they have to cover such a wide spectrum of activity. According to Sam Rees-Adams, acting director of Education for the FSSC, there are a couple of qualifications available in the UK that have international applicability: “One is the Masters level International Fixed Income and Derivatives offered by the International Capital Markets Association centre linked to Reading University, which is used by lots of wholesale firms. The Chartered Financial Analyst qualification which is taken by fund managers, as well as investment analysts, is internationally appropriate and has everything bar the regulatory angle, which you could top up for the jurisdiction you were working in.” Andrew Hall is professional programmes manager for the UK’s Securities and Investment Institute, which plans to launch a wealth management diploma in October 2007: “We have gathered input from practitioners and organisations across the industry and distilled this to create a structured pathway for people in wealth management. It will cover fundamentals, as well as being alive to what is fashionable currently.” “Private banking and wealth management is very broad and a private banker does to some degree have to be a ‘jack-of-all-trades”, continues Mr Hall. “However, an individual cannot be qualified as an expert in everything and a good private banker will be mindful of where their confidence or qualifications end and when to hand over to an expert in a particular area.” Whilst an internationally recognised private banking qualification may be desirable, industry experts acknowledge that the practicalities of coming up with something valid for different jurisdictions is challenging. Certain skills and technical requirements might be the same the world over, but local fiscal, tax and regulatory vary hugely: “From an international perspective, one important aspect is the tax situation, so we are looking at designing and offering a transferable tax model which can be tailored for different jurisdictions,” says Mr Hall. Michel Dérobert from the Swiss Private Bankers Association is in favour of good training and specific programmes set up for client relationship managers or other bank employees. However, he believes that introducing compulsory qualifications would have huge drawbacks: “The banking profession – including private banking – is already overwhelmed by an incredible regulatory burden. A new layer of regulation restricting the profession would almost certainly be a bad thing. Banks should be free to hire or not to hire people with such qualifications, but a formal recognition by supervisory authorities would in my view be illusory and counterproductive.” Mr Dérobert also questions what “internationally recognised” means: “If the idea is a sort of private examination such as the CFA, I have no problems. However, regulations are essentially national, which means that there are strong limits to an international approach. I don’t care if my people don’t know the anti money-laundering rules in Britain or in America, but I am definitely interested that they are fully aware of what is going on in Switzerland.” UBS opened its Wealth Management Campus for the Asia Pacific region in Singapore in April this year, the first outside Switzerland, and aims to train 5,000 existing and future wealth managers over the next three years. Markus Tanner is head of education & development, UBS Singapore: “In Singapore and Asia Pacific we use the Financial Industry Competency Standards as a base, which was established in 2005 after extensive research into financial industry standards in London, Hong Kong, the US and Australia. UBS received accreditation as a financial training and assessment service provider in wealth management for the roles of assistant relationship managers, relationship managers, team heads and senior line managers. In addition to the external certification, we have a structured internal certification process for wealth managers that goes beyond the market standards.” International law firm Baker & McKenzie set up LawInContext, an interactive knowledge and training venture which provides a number of services for financial institutions and multinationals, including online and live wealth management training. Philip Marcovici, a partner at Baker & McKenzie in Zurich is astonished that there is no recognised global educational institution that offers a full-time wealth management or private banking qualification: “Whilst this is a problem everywhere, it is particularly shocking that here in Switzerland, the world centre of private banking, that there is very little in the way of higher education in wealth management.” “My vision is that there should be a business school in Switzerland, attracting people from across the globe. Whilst a global qualification is clearly desirable, the bottom line is that an internationally recognised standard would need to be clearly defined and properly co-ordinated.” PricewaterhouseCoopers’ upcoming biennial Private Banking/Wealth Management survey 2007 reveals some interesting findings on the subject of qualifications. In the poll of over 265 organisations, qualifications were considered important by over 80 per cent of respondents globally and as high as 90 per cent in the US and around 76 per cent in Asia: “There is still a war for CRMs and by far the most common way for firms to acquire new recruits is still poaching from their competitors, which perpetuates rather than resolves the issue,” says Natasha McMillan, senior manager, PricewaterhouseCoopers Private Banking Practice. “Firms are increasingly recruiting from other banking disciplines and recruitment of new graduates is also becoming increasingly common.” Ms McMillan notes, however, that there is still credibility in age and experience: “A 50 year old private banking client does not necessarily want to be advised by a 23 year old, however intelligent and well-qualified they may be,” she observes. “In Europe and America, CRMs tend to be above 30 and there are still many in the 40-50 category. In Asia they are younger, perhaps not surprisingly as it is an emerging market.” With many firms still valuing experience over qualifications, is experience and “on-the-job” training sufficient? Mr Marcovici believes not: “Wealth management is changing and the industry needs to change with it,” he asserts. “Without proper training and qualifications, the people who are nurturing today’s private bankers might be instilling bad habits and outmoded ideas. Today, private bankers need to understand the real needs of wealthy families, emerging trends and how to move the industry on.”