Private banking is still thought of as a safer profession than investment banking. Well I’ve never been one of those Excel jockeys so can’t really speak for the investment banking crowd, but I can speak for private banking and emphatically state that what once held true holds no longer so. There is not an oasis of security within the world of finance. Private banking is just another, “Oh dear it’s Friday, will I get fired?” finance job.
Just have a quick look at what kinds of vacancies there are for private bankers, and you’ll notice they are all “hunter” as opposed to “farmer” profiles. A hunter’s job is not to manage the client’s money, but to bring in new money (referred to as flow in the business)
In the past five years I have received what must come to a hundred calls from headhunters offering “an exciting opportunity for an entrepreneurial, hunter type banker” The deal is always the same: Someone who can bring €100m of assets within their first year.
I’ve been doing this business for quite some time and I’ve seen these so called €100m “superstar” bankers come and I’ve seen them go. Never have they brought that kind of money with them or taken it with them when they left through the door. So what makes you so special? Unless your dad is an oil sheikh or an oligarch you aren’t going to have the necessary connections to bring in that kind of money. Actually, if you have the connections with the oligarchs, in today’s environment, compliance would probably not open an account for them so that’s another potential demographic shut out.
Private banking has become a very, very difficult environment to operate in. Tightened regulation and increased transparency has changed the business, but the business has not changed with the times.
Make no mistake, there is a constant race to reinvent the wheel in private banking. In just the past few years we’ve had “asset allocation”, “open architecture”, “wealth management” now we are getting the “house view”, none of these have worked.
Don’t misunderstand me, there will always be a need for an adviser, but the new adviser will be different to the old wine and dine banker. Don’t just take my word for it. According to Seb Dovey the managing partner at Scorpio Partnership, a specialist in researching the wealthy.
“The demographics are shifting and there is a growing demand for a more value-driven and digital relationship.”
Why would any high net worth individual place their money in a bank, which doesn’t even offer real time web access to their portfolio? A bank where trade execution is not instant, but is still done via phone calls involving intermediaries?
If you do get into private banking you will be expected to go out there and bring in big ticket money with a platform and business model that is behind the times and in all likelihood expensive. Your one real competitive advantage is an appeal to people’s vanity, you will be working for a “prestige” and “exclusive” bank which if someone becomes a client they get to be part of. It’s a fickle foundation for a successful business model and certainly a poor guarantee of job security.
If the private banking sector is able to adjust to a more value-driven model that includes a real digital relationship with their clients, then there will be a spike in demand for younger, more digitally savvy bankers. Maybe they’ll have an easier life and go into the weekends assured that they’ll still have a job on Monday. Personally, I just haven’t seen that happening yet.
Banker's Umbrella is a private banking blog written by a veteran private banker who covers the not-so-boring stuff about life in private banking and wealth management.