Until the financial crisis, external asset managers (EAMs) were virtually unheard of in Singapore. 80% of EAMs have set up their business in Asia since 2008, according to research from Synpulse. In the past few years, however, EAMs have taken off in the city state, with private bankers increasingly keen to move to these smaller, independent firms.
Urs Brutsch was one of the early movers. He left his role as a managing director at Clariden Leu in 2009 to launch HP Wealth Management, a Singapore-based EAM that advises private clients on investments across all asset classes. Brutsch says three main factors drove him to go independent. “Firstly, I felt the private banking model of pushing products wasn’t sustainable; secondly, I was tired of getting new and often conflicting directions from head office; and thirdly, I was hoping for a better work-life balance,” says Brutsch, who is HP’s managing partner.
Having worked in the EAM sector for 12 years, Brutsch says he has no regrets he made the move and now enjoys his job “perhaps more than ever before”. But private bankers who want to join EAMs need to “change their mindset”, says Brutsch. “If you continue to offer clients strictly what you did from within the bank, clients may question what value you can add through an EAM. The most important change is that as an EAM you genuinely work for your clients and with the bank, whereas as a private banker you work for your bank and with clients,” he adds.
This change creates a “different relationship” with clients because EAMs can offer products and services from a range of providers. “If you want to do more for your clients, then an EAM is the place for you,” says Brutsch, who spent about five years at ABN AMRO prior to Clariden Leu, latterly as head of private banking Asia Pacific.
In contrast to private banking, relationship managers (RMs) in EAMs don’t have targets to sell particular products. “You don’t have to sell anything, so you can genuinely bring to the client what’s best for them. That is particularly true when the EAM doesn’t work with retrocessions – because these can be a temptation to trade or select certain products over others,” says Brutsch, referring to kickbacks paid for pushing products.
A typical RM in an EAM has a lot fewer clients compared with an RM in a bank, says Brutsch. “We want to spend more time with and do more business with clients, and spend less time on paperwork. This is the reality if you have 20 clients instead of 150,” he adds.
If you want to join an EAM to escape the compliance burdens you face at a bank, you should rethink your plans, warns Brutsch. “We have the same regulations and standards as banks, and we’re also regulated by the Monetary Authority of Singapore. EAMs can’t take shortcuts when it comes to compliance, AML, and KYC. I’m convinced that the EAM model is the most honest form to advise a client because you’re free from KPIs, product considerations, revenue targets, net new asset targets etc. But no EAM should offer a bank RM an easy escape route to lower the compliance threshold,” he adds.
HP Wealth Management employs about 26 people in Singapore and will be hiring a couple of senior relationship managers this year. “Our RMs need to have an entrepreneurial spirit because they’re paid based on what they invoice their clients for investment management and advisory fees. We look for relatively senior RMs, who are independent and have strong client relationships. They need to be able to run a relationship themselves. While we provide support through senior management and the investment team, there’s no army of product specialists to help them. We all have to do mundane things and roll up our sleeves when necessary,” says Brutsch.
While private banks offer the opportunity to regularly rise up their ranks (e.g. from VP to director), Brutsch likes to hire RMs who prioritise long-term career growth over clinching new job titles. “If you’re looking for a promotion every two years, we’re not the right place for you,” he says.
Photo by Lee Aik Soon on Unsplash
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