Private banks in Hong Kong and Singapore need to take on more 20 and 30-somethings, if they are to win market share from the rich millennials who are increasingly inheriting family wealth in Asia. But hiring juniors in large numbers isn’t easy in the private wealth sector.
Clients of private banks in Asia typically made their money more recently than those in the West, and the first generation of Asian tycoons is only starting to hand over control of their assets to their millennial offspring. This will result in the biggest wealth transfer event in over a century, according to UBS.
The children of Asian billionaires and multi-millionaires tend to be in their mid-20s to mid-30s, and they often prefer their private bankers to be in a similar age bracket, says former private banker Liu San Li.
“It takes a millennial to understand a millennial,” adds Liu, who’s now a business partner at wealth management firm Avallis in Singapore.
Younger clients prefer to be outspoken and forthright when dealing with their bankers, says Liu. But they might not be able to freely express themselves when talking with older relationship managers, out of respect for these RMs as “uncles”, says Liu, using the common Asian term for an older man (most private bankers over 40 are male). “In Asian culture, this could lead to communication and mindset gaps, so it could be a challenge for older RMs to build close relationships with millennial clients,” he adds.
Moreover, millennial private bankers are more “tech savvy” than their middle-aged counterparts, says Liu. This matters because private banks are investing millions into developing online products targeted at rich young Asians, who demand mobile access to their investment portfolios. As a result, RMs are increasingly using new technologies to help them execute trades and advise their clients.
Private bankers in Asia are also organising exclusive events for their millennial clients, reports Bloomberg. In July, Bank of Singapore hosted rich youngsters for five days in the Four Seasons Hotel, where it taught them about personal branding and AI, organised a business-pitch competition, and ran alcohol-fuelled networking sessions. An HSBC programme takes wealthy young clients to the rainforests of Borneo to learn how to influence their families to become more environmentally friendly.
These kind of initiatives can only take banks so far. Liu also believes that the new generation of wealthy Asians is more interested in investments and the financial markets than their parents are. “Younger bankers must be able to coach or educate them on investments and markets, and feed their hunger for product knowledge,” he says.
While older private bankers are used to serving clients with equity or fixed income products, younger RMs often focus on fields such as alternative investments, private equity, and environmental, social and governance (ESG) products, says former Merrill Lynch private banker Rahul Sen, now a global leader in private wealth management at search firm Boyden. “As wealth in Asia moves from the previous generation, RMs are being faced by the fact that traditional investment management models, which were prevalent just 10 years ago, are now being questioned by younger clients,” says Sen.
Unfortunately for banks, hiring a load of millennials in private banking is more difficult than in investment banking. Fully-fledged ‘young’ private bankers (with their own client books) are usually in their late 20s or 30s – they’re millennials, but aren’t as young as their IB counterparts. “Assets under management and net new money are the main KPIs for RMs, but these take a long time to establish as they mostly hinge on building long-term relationships,” says Liu.
Still, the industry is slowly getting younger, says headhunter Sen, adding that he thinks the average senior private banker in Asia is now in their 40s rather than their 50s, as was the case 10 to 15 years ago.
Image credit: Instants, Getty
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