Europe wrangles with quality of wealth management

European regulators are demanding that wealth managers are better qualified, but private banks are still attracted by star quality, rather than building from the bottom up.

Despite all the talk of a skills-shortage in Asia, which resulted in private banks hiring hairdressers, there’s a dearth of talented wealth managers between 30-40 years old able to service a burgeoning demographic of clients in Europe, said Sebastian Dovey, managing partner of wealth management consultancy the Scorpio Partnership.

London still houses the most multi-millionaires of any global city, more than 4,224 according to a new report by Wealth Insight, which also features Frankfurt and Paris in the top 10.

“Most wealth managers are run like Chelsea – they buy in proven star quality that can perform immediately, but they need to be more like Manchester United – training and fostering talent through an academy,” he said. “Private banks want a quick fix, but it doesn’t solve the problem longer term.”

Some of the larger wealth managers have been tackling the issue through internal training programs. UBS, for instance, runs its wealth management academy, Credit Suisse puts its wealth management trainees through a training program, as does Coutts and Barclays.

However, regulatory demands are prompting some universities to target wealth managers with professional qualifications. Cass Business School has just started a part-time MSc in Wealth Management that it offers to CISI or CII candidates for between £12,000 ($18,245) and £15,000 ($22,806) that runs from year to 15 months.

Professor Andrew Clare, Associate Dean of Cass’ Master of Science (MSc) program, said:  “Higher education institutions have been slow to respond to the growing student and industry demand for specialist wealth management training.”

The Singapore Management University has been running a full-time MSc in Wealth Management for nearly ten years and Napier University and the University of Luxembourg both have similar courses.

“Universities are starting to tap into the growing demand for grass roots training for wealth managers, but courses still very much focus on the technical financial elements rather than softer skills like marketing, which is a mistake,” said Dovey. “The question is whether recruiters will assign any particular value to them.”

The specialist wealth management recruiters we spoke to said that wealth managers were more concerned with making sure that their private bankers had the right qualifications, but this wasn’t the most important criteria when hiring.

“Rightly or wrongly, wealth managers still want private bankers to have possession of their own book of transferable clients,” said Dudley Edmonds, co-founder of wealth management recruiters Culliford Edmonds. “In the case of investment bankers switching sectors, they’re given a few months to build up a book or leave. Clients, and client relationships, remain the most important thing.”