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What It Takes To Be A Modern Wealth Manager

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With trends as varied as digital technology, hybrid working, sustainability, diversity and generational shifts, wealth managers are having to adapt to rapid change. We talk to firms and recruiters about what the career now consists of and the pressures involved.

Nowadays, wealth managers need to be more diverse, more tech-savvy, familiar with sustainable investment, more “emotionally” in tune with clients of all ages, and master complex financial and economic ideas. Oh, and they need to bring in money and obey the rules. 

In short, a wealth manager today needs to be a Renaissance man or woman. And with labour market bottlenecks in mind, finding such individuals isn’t easy. The image and reality of private banking has changed; it is not just about men talking to clients in mahogany-lined offices. In that sense, the sector has moved along with developments in other fields, David Durlacher, chief executive of Julius Baer International, told this publication.

“What hasn’t changed at the heart of the wealth management industry is a core love of the markets and of people. That has not changed and should never change,” he continued. 

“There is a shift at work; people are looking for more than just performance for the fees. People are searching for value for money, not just in terms of investment Alpha but also services. They want a service that’s personal and convenient. There is far more scrutiny of service,” Durlacher said.

There are some stark facts firms must consider. In the US, for example, a paper published by Focus Financial and JP Morgan found that 44 per cent of US registered investment advisor clients are 60 or older (Source: USA Today, 16 November 2021). The pattern is unlikely to be greatly different in other developed countries. At the same time, there is a much-discussed intergenerational wealth transfer shift going on as Baby Boomers pass away – trillions of dollars and the equivalent are in play. Younger HNW clients have new views and goals – not always those fitting with traditional wealth management. 

One way the industry must change is diversity – not just in terms of gender and race. There are high-profile women, for example, at the helm of financial firms (such as Jane Fraser, chief executive of Citigroup), but there is a way to go. When women-dominated wealth firms are in the news, there’s still a bit of novelty value. (Last week, for example, this news service reported that Vestia Personal Wealth Advisors, which has just named a woman CEO, has a workforce where more than 60 per cent of the payroll is female, which is more than double the sector average in the US.)

“I spoke to an excellent CEO who wanted to hire, and he said there would be nothing worse than having a bunch of clones. The trends are mainly going in the right direction of increasing diversity – but it’s slow going,” Billy Stephenson, managing director of UK-based Stephenson Executive Search, told this news service. 

“There are some brilliant initiatives coming to the fore. I’m involved in the Charter for Black Talent in Finance and the Professions – a charter that commits firms to creating and maintaining an environment where Black talent can be identified but also developed and promoted for the benefit of individuals and organisations. PwC, Allen & Overy and Barings have all signed up,” Stephenson said.

He referred to organisations such as Wealthiher – a group seeking to empower women in finance – as “getting a higher profile and quite rightly so. Companies are starting to implement strategies for their organisations and are reporting publicly on the steps they have taken to create and maintain an environment for the identification, development and promotion of diverse talent,” Stephenson said. 

Nick Dogilewski, partner at UK executive search firm Exeter Partners, said banks have tried to move towards a 50/50 male female split – with some reversals.

“It [gender equality] is more achievable at the junior levels, and there is the natural shortage of ladies at the senior level who choose family life over working,” he said. “The percentage numbers at the senior end are equalling out year-on-year as the banks have adjusted how they treat women, although this also varies from country to country – the UK is far better than some other more male-dominated countries.”

Dogilewski said one “Tier 1” bank went through a period about two years ago of “pushing most senior women out of their ranks,” going against the trend, although providing an opportunity for rivals to acquire skilled individuals.

ESG and all that
Inevitably, a trend affecting the industry and the skills required is environmental, social and governance driven (ESG) investment. This draws on science, for example – not always a topic private bankers graduate in. And then there’s the need for advisors to use the technology tools to explain how ideas such as ESG affect a client’s portfolio – and then relay that information clearly and crisply. 

And that means training is important, Stephenson said.

“Looking at a sample of 2,000 wealth managers, just 34 have a qualification in ESG – just 1.5 per cent. This is going to change, not just because wealth managers and private bankers know it’s important to their clients, it’s important to them,” he continued. “We’ve interviewed over 500 candidates in the past year, the majority ask whether our clients – their potential employers – take ESG seriously. If there is no evidence that they do they’re simply not going to attract the top talent we deal with.”

Dogilewski said there is a “big demand from clients and the banks” for ESG, while noting that the ESG expression can be overused. In skills terms, some advisors are having to learn the subject on the job.

In other areas of skills, digital technology is clearly important – far more than learning how to chat to a client over Teams or Zoom, or filing out a digital form. 

It is important for advisors to be proactive in keeping skills relevant and sharp, and not just rely on what their firms offer. That includes continuing professional development (CPD) work, Stephenson said. 

“With CPD, wealth managers and private bankers need to be making sure that they’re not left behind. I am a Fellow of the CISI [Chartered Institute for Securities & Investment] and 10 years ago I could have taken courses on bonds, hedge funds, etc. Today I can take `professional refreshers’ on fintech, cryptocurrencies and AI.  My clients think it’s important and so should I,” he said. 

A point made to this news service by several recruiters and firms is that being a capable wealth manager/private banker means working with often Alpha personality entrepreneurs and high-achievers who are able to “see around corners,” build new businesses and concepts. Wealth industry professionals need to keep up with such trends and share the excitement while keeping objective.

Demand for such individuals is keeping pay competitive. 

“Salaries for some are creeping up, there is arbitrage to be had for moves between banks where certain large banks have not adjusted salaries upwards over the last few years, also compounded with the lack of promotion available from one corporate title to the next,” Dogilewski said. 

“This allows a hiring back to promote and pay more in a move. There have been multiple instances in the last couple of years with banks offering a bigger fixed salary than the total compensation they were on before. Half the banks on the street have been slow to react. They have not taken care of their own staff as they should have opened their businesses up to attacks from growing hiring banks.”

“For many, loyalty is not the answer to compensation growth, and it should not take for someone to resign for counter offers to come in – most of the time it’s too little, too late and can be seen as quite insulting (as the banks could have rectified the issues earlier on),” Dogilewski continued.

Stephenson isn’t seeing much of a general rise in compensation levels – at least not yet. 

“It’s a hotchpotch of compensation structures now. Some private banks that have performed well but are linked to poor performing investment banks and asset management firms, have kept salaries flat and bonuses either at zero or are introducing `bonus clawbacks’,” Stephenson said. 

As others in the industry have told this publication, such as Chris Fisher, CEO of Multrees, there’s definitely a battle for talent. And that ought to be good news for any smart, motivated person of any gender, race or background looking at this industry. 

As if to underscore that point, figures on London’s financial services sector from recruiters Morgan McKinley said there were 11,008 jobs available in the first quarter of 2022, surging by 73 per cent from a year earlier. One standout data point is that people logged a 22 per cent salary jump when they moved jobs.

“The first three months of this year saw companies hiring in their droves and professionals with renewed confidence to move. It’s safe to say that firms have been desperate to hire,” Hakan Enver, managing director, Morgan McKinley UK, said. 

Back to the office
Another theme for the wealth management sector is a move back to the office – with some reservations. Bankers, lawyers and other advisors have long been used to working “on the hoof” – how many phone calls has this news service had with a banker from an airport lounge or foreign hotel reception? This is a mobile business, and not one for the nine-to-five mindset. But offices are here to stay – perhaps confounding some predictions of their demise two years ago. 

London office provider Argyll is perhaps understandably bullish about the office working situation. 

“As a client once said to me, ‘no one would take us seriously if our HQ was my kitchen table’ – he was referring to his clients, but the same is true of potential recruits. The right office can help firms gain an edge in the fight for talent, and it is something we are seeing post-pandemic,” John Drover, CEO of Argyll, told this publication.  

“For example, many of our fast-growing financial services clients are currently looking for young ambitious talent for whom a business’ location plays a big role in a job selection. We have therefore seen them taking offices at key hubs in London such as Bank or Mayfair to ensure that they have a range of bars, shops and eateries on the office’s doorstep and, in turn, can offer their younger recruits an active social life and quick access to the best of London,” he said. 

Argyll provides more than 8,000 customers with offices, co-working spaces, meeting room and virtual office services in prime central London locations. 

“Also, it mustn’t be forgotten that an office sets that all-important first impression. When recruits arrive for an interview, we have seen clients benefit from the brand credentials that a premium office affords. Think about the picture that a space with exceptional service, design and amenities – like breakout areas and IT support – paints. These things may be small to some but, in such a fierce war for talent post-pandemic, they are helping firms gain a competitive edge,” Drover said. 

“As Covid’s initial shockwaves have settled, we’ve seen that the office is key to recovery. Returning to an HQ, with the ability to regroup with colleagues, investors and clients alike, firms have been able to rebuild their sense of identity, consolidating essential relationships,” Drover continued. 

It’s clear that remote working has lost some of its charm for many bankers and financiers, as we’re seeing high occupancy levels across all our offices in central London,” he added.

Of course, not all wealth managers will agree on the specifics of Drover’s predictions  – and time is going to tell how significant a move back to offices will be, and how long the working-from-home pattern will last. One conclusion to be sure about is that the job of wealth management remains as challenging, but also exciting, as ever.