Like other financial sectors, Hong Kong's private banking industry is far from immune to the rising costs and regulatory pressures that are reshaping the financial markets. At the same time, clients, many of whom are self-made millionaires, increasingly expect a lot more than investment advice from their private banks.
Kaven Leung, deputy region head for Asia-Pacific at private bank Julius Baer, says that not only has the private banking landscape changed significantly in the six years since the global financial crisis, the needs of clients have also evolved.
"In this 'new world' of private banking, clients are looking beyond performance and competitive pricing and expect their private banks to provide them with value-added advice and services," says Leung, who has worked in the sector for more than 26 years. "The relationships clients are looking for need to be based on trust."
Clients are looking for a holistic approach that not only takes into account managing an investment portfolio, but also helps with succession planning. They must be sure that their private bank relationship managers have the experience, mindset and perception to fulfil their needs, as well as the support and capabilities of the banks they work for. This includes having an in-house team capable of providing wealth and tax planning orchestrated by a relationship manager.
Making the point that private bankers can't be trained overnight, Leung says the majority of professionals at Julius Baer have more than 20 years of experience and have worked through the ups and downs of several economic cycles. They are able to apply the principles based on the tradition and experience of managing "old wealth" in Europe to the needs of Asian clients who have relatively new wealth
According to forecasts by wealth intelligence firm Wealth-X, the combined assets of Asia's wealthy are expected to surpass Europe's by 2020. As the number of high- and ultra-high-net-worth individuals rapidly increases in Asia, the demand for private bankers with this sort of experience is outstripping supply.
Enid Yip, Asia chief executive of Bank J. Safra Sarasin, says there will never be enough high-level private bankers. She stresses, however, that it is more the quality than quantity that matters.
"A great private banker must have the ability to win and inspire trust," Yip says. All the diplomas in the world mean nothing without trust, she adds, which is fostered through genuine listening.
A private banker has to also have a complete understanding of the client and their goals. "Private banking is about aspirations," Yip says. "It is our job to understand those aspirations and to have the passion to succeed in helping our clients to achieve them. It takes all of these skills, and financial expertise, to be a top performer."
Yip says that the aim of most senior private bankers is to be in a strong partnership with a bank of good reputation, strong financials and a solid platform. "They want to be with a bank that has a deep commitment to clients in Asia," she says. "If they are with a bank with these qualities, they can sleep well."
While Hong Kong and Singapore are competing to be regarded as Asia's private banking hub, Yip says private bankers don't need to think about hubs. "Hubs are for management," she says. "For a private banker, the hub is always the client, who is at the centre of his or her thoughts."
Dr Henri Leimer, chairman and chief executive officer of LGT Private Banking, says that while investment trends come and go, LGT prefers to focus on the long-term needs and goals of clients. The bank, which is owned by the Liechtenstein royal family, began as a family office for the princely House of Liechtenstein, which remains one of the LGT's biggest clients. "We listen to what our clients want and tailor a solution for that," he says.
For example, as clients' lives become more complicated, there is a need for more complex wealth planning and investment solutions. This calls for bankers with increasingly specialised skills.
"Twenty years ago, very few banks had structuring experts in-house," Leimer says. Today, however, you would be hard pressed to find a major institution without a team of dedicated private client lawyers and accountants, he says.
"We are always on the lookout for potential new hires who have unique or specialised skills that could add value to our client offering," he adds.
Leimer believe that a good private banker is usually a good listener who takes the time to understand what his or her client wants. It also helps to have an entrepreneurial spirit and a strong instinct for business.
"Since we are often serving not one person, but multiple generations of families, a good private banker should be able to think in the present and to also anticipate longer-term client needs," he says.