Bigger bonus potential is swaying private bankers to smaller firms
The continuing poaching frenzy within Scotland's wealth management sector may be less about expansion and more a desire among private bankers to escape to a boutique for greater freedom and earning potential.
This week alone, Williams de Broë revealed that it had hired (another) two people from Barclays Wealth in Scotland - Rosie Daniels and Catherine McMorrin - while Barclays itself hired Paul Burd for its Glasgow office and indicated that more recruits were on the cards.
The latest moves are another example of the ongoing round of musical chairs in Scotland's wealth management industry. However, as we've pointed out before, most people seem to be gravitating towards the smaller players.
Part of the reason is that many of private bankers working at larger firms are increasingly being required to cross-sell products from other divisions of the group, at the expense of the relationship side of the role, and are having their bonuses assessed on their ability to achieve these sales targets rather than bringing in client money.
A classic example of this is at Adam & Co, where last year's staff exodus was largely blamed on its new lack of independence after it was incorporated into the wider Royal Bank of Scotland wealth management group. However, even the likes of Deutsche Bank also lost key staff to a smaller firm expanding north of the border - Quilter.
"Bigger banks are taking away the formulaic bonus structure and replacing it with discretionary payments," claims one senior private banker in Edinburgh who recently gravitated from a big bank to a boutique player. "If you don't cross-sell the bank's products, you don't get a good bonus. In the smaller firms, you're still judged on your individual performance."
Private bankers with ambitions to work for a smaller firm in Scotland have more options available to them after the likes of Ruffer, Brown Shipley and Rensburg Sheppards opened offices north of the border in the last two years.
The poaching among Scotland's wealth managers also relies on the assumption that a good, experienced relationship manager will bring a book of business across with them. Recent research by PwC, however, showed that client loyalty is now harder to earn and new competitors are challenging the dominance of established players.
"A lot of clients are signing up to lock-in periods, but we've had calls from former clients as soon as these come to an end," claims the private banker.
"Increasingly, firms are recruiting whole teams of people, so the client usually feels they have no choice but to move across with them," adds one asset management headhunter in Scotland.
