Tough targets and “suffocating” compliance stresses push Asian bankers to the brink

Private bankers in Asia might be in demand, but onerous revenue targets and the tightening burden of compliance is pushing many to ever-higher levels of stress.

Relationship mangers (RMs) at private banks in Singapore and Hong Kong are “anxious and psychologically stressed” about delivering higher performance targets, says Pathik Gupta, head of Asia Pacific wealth management at consultancy McLagan. “Many feel their targets are unrealistic, especially at the mid to junior-level where banks have high expectations but RMs aren’t given enough time to perform. While private banks operate on a long-term relationship-building mantra with clients, they haven’t achieved this with their own employees, which is causing stress and dissatisfaction.”

Private banks have recently struggled to reduce compensation and compliance costs as Asian talent shortages have pushed up pay and the regulatory burden has risen, says Gupta. This has heaped more pressure on RMs to generate ever-higher revenues. “Banks are putting more stringent performance measurement criteria in place, expecting more frequent sales updates, and tracking bottom performers more closely. All these measures are creating a stressful environment for RMs,” adds Gupta.

“The rising cost of running an efficient and compliant private banking operation has increased cost-to-income ratios significantly at most firms in Asia,” says Clarence Law, a Singapore-based business advisor in private banking. “It’s only inevitable that RMs are now given increased revenue targets year after year.”

Revenue pressure in Asian private banking starts to really kick in after your first two years as an RM, when banks typically expect you to make a profit rather than just cover your costs, says Rahul Sen, a former Deutsche Bank and Merrill Lynch private banker, who’s now head of wealth management at search firm The Omerta Group in Singapore. “By year-three if you’re not making your numbers there’s a lot of stress and it’s also stressful when you join a new bank and it takes longer than expected for your clients to join you,” says Sen.

Regulatory ruin

Revenue targets are not the only cause of stress for RMs in Singapore and Hong Kong. The growing need for private bankers to spend more of their time on dull regulatory tasks is leading to what Gupta from McLagan terms “compliance lethargy”.

“Compliance pressure has grown with all the fines faced by many banks in the past year or so,” says Liu Sanli, an ex-Coutts private banker and a principal consultant at CA Search in Singapore. “It’s become suffocating for RMs, who are now more heavily regulated in cross-selling products, onboarding new clients and even getting extra AUM from existing clients.”

Despite private banks in Asia trumpeting new online platforms for clients, their relationship managers are in fact “inundated with more paperwork”, says Law. “The amount of money-laundering due diligence now done on clients, for example, is adding more and more stress on RMs.”

Moving to a new private bank may raise rather than ease compliance stresses, at least in the short term. “You not only need to ensure that you bring over AUM to the new bank and then generate 70 to 80 basis points on your assets, you have to do this within increasingly narrow risk and compliance parameters,” says Sen from Omerta Group. “It’s stressful as it’s going beyond the standard know-your-customer process. One banker I know was asked about a client’s wealth dating back to the 1950s – the new bank wanted to understand how he made his original fortune.”