In a world of cut-throat competition, Asia's private banks are paying senior relationship managers hefty sums ‘before performance' to build up sizeable teams, Greg Kuczaj, Asia Pacific head of Willis Towers Watson’s Global Financial Services practice has said.
‘Organisations that have chosen to be in the private banking game in Asia are making use of the ones who have decided not to be,’ he told Citywire Asia. ‘Since last year, there has been a big uptick in wages for relationship managers.
‘Some organisations are buying talent and hoping performance will follow. This is to be able to reach full staffing requirements -- because they have chosen to play the wealth boom in Asia and there’s a lack of supply of client advisory talent.’
According to Kuczaj, the average pay for an RM with 10 years of experience in Singapore is $175,000, with the range for job titles below and above being $130,000 - $230,000. In Hong Kong, for the exact role, the average is $200,000, with a range of $150,000 - $250,000.
'But it is dependent on many factors such as where the bank is headquartered, type of organisation (captive or independent) and size of book,' he noted.
One such factor is if the bank is doing well overall. ‘Very recently, they are being impacted by increased fee pressures, competition and regulation. Equity traders did quite poorly for most of the year too. So the revenue generated by private banks is subsidising the compensation levels in the divisions performing poorly, instead of being distributed to RMs.’
Outlook for 2017
‘In terms of total compensation, private bankers in Singapore and Hong Kong are looking at an 8-10% increase next year. For the base salary in particular, it’s about 3%,' said Kuczaj.
However, he foresees a reduction in bonus packages.
‘Bonuses used to be formulaic but now they will be much more discretionary, especially in the European banks,’ said Kuczaj. ‘They will be heavily impacted by the firm’s performance.’
A formulaic bonus gives the RM a percentage of the total annual revenue they bring in, in addition to the base salary.
‘But now, because of the regulations and rising risks, it’s much more of a discretionary play with the captive banks especially. It’s going to completely vary year by year.’
Drivers of compensation
According to the Hong Kong-based expert, RMs in the region are looking at the following banks: UBS, Credit Suisse, Citi, HSBC and Julius Baer.
‘They have a global platform, and that’s what clients want,' he said.
This year has seen mass hires by bigger wealth managers in the region.
‘Usually when banks hire somebody and spend money on training, they reduce the compensation pool for everyone for the year-end because it’s a zero-sum game. But some organisations have allocated a separate budget for expanding in Asia,' said Kuczaj.
Credit Suisse added a 100 RMs in Hong Kong and Singapore this year and CEO Tidjane Thiam wants to hit 180 by 2018. Julius Baer and StanChart are also on a hiring spree in the region.
Internal relationships also matter, he said citing the examples of StanChart’s global head, private banking taking ten Barclays client advisors with him in Hong Kong.
‘Private banks buy the lead RMs and the assistant RMs leave with them.’
StanChart, OCBC, Credit Suisse and Julius Baer are all competing post-Barclays’ acquisition by Bank of Singapore, he added.