According to private bankers, the biggest issue facing the industry is an economic one, with competition for clients and advisors coupled with the cost of regulation creating pricing pressure.

According to private bankers, the biggest issue facing the industry is an economic one, with competition for clients and advisors coupled with the cost of regulation creating pricing pressure. Other key issues are considered to be retention and recruitment of qualified, quality staff and the challenge of achieving increased market share and differentiation in what is in what is an increasingly competitive environment. These are the findings of a report created from output from the Meeting of Minds event hosted by Owen James and Scorpio Partnership earlier this year. The first of a series of events intended to take discussions about the private banking industry forward, brought together 30 private banking heads, managing directors and chief executives. The resulting detailed report covers key areas such as recruitment, retention and compensation, brand and the client: To access the report on the WealthBriefing Shop click here . “The aim of a Meeting on Minds is to create greater transparency in the industry, to share issues in common and provide impetus to strategic direction, rather than focussing on the status quo “, Cath Tillotson, head of research for Scorpio told WealthBriefing. “We did research amongst delegates before the event to elicit their issues and provided a pre-event research dossier. At the conference, impact statements led into discussion groups about wide-ranging subjects, including lateral recruitment and family friendly practices. This report is the full detail of the pre-research and those discussions.” Drilling down to the recruitment of private bankers, the report reveals that an overwhelming 94 per cent are recruited from within the industry and over half from competitors. Tapping competitors was also considered the highest priority target group going forward. Size is cited as main reason for not recruiting more inexperienced bankers or from outside the industry, with firms saying: “We need experienced hires and we are relatively small.” and “Given our size, we primarily need to recruit private bankers who are already known in their markets.” The report further reveals that private bankers consider the biggest issues to be facing their own businesses are the challenges brought about by international growth, including growth in multiple markets and jurisdictions; they way their firms operate, manage change and price their services; as well as regulation and compliance. In scoring critial success factors, the organisational ability to deliver a client focused service, investment in staff development and investment in staff acquisition are all seen as key to success. In terms of retaining top advisors, brand and reputation of the private bank is viewed as the most important criteria, followed by bonus, as well as having the right proposition to meet clients needs. Respondents felt that reputation amongst clients and their advisers should be the key focus of benchmarking by the community. A career in private banking is seen to be attractive for a wide variety of reasons including the fact that it is a growth segment, along with sophistication of clients and financial reward. Whereas 83 per cent of private bankers reveal some degree apprehension related to other distribution channels taking market share, most clearly have confidence in their chosen profession. Private banks (56 per cent) and wealth managers/financial planners(50 per cent) are considered to be the financial services most likely to grow “a lot”, whereas stockbroking is the area considered by the most people to be likely to consolidate (40 per cent). Accomodating different needs, breadth of service and providing a holistic service are seen to be key in private banks differentiating themselves from other financial services: “Private banks (should) have a holistic view on several needs of a clients and has to bring all the other experts smoothly together,” says one respondent. Likening private banking to supermarkets or telecoms sectors by way of the challenges they face, the internet and IFAs are both mentioned as possible threats. The gap appears to be widening between new and old wealth as a source of new business. Whereas entrepreneurs and those who inherit their wealth are seen as equal in terms of priority now, the entrepreneurial segment is prioritised over the established wealthy as a channel of future business. Seminars, events and exhibitions have used the most marketing spend in private banking over the last year, with PR in second place. The most successful marketing channel in terms of client acquisition over the last year is seen as referrals and networking (as well as the primary focus for the next three years) followed by events. Whilst the last twelve months has seen perhaps seen the biggest brand-building advertising campaigns in the industry’s history, advertising is considered to have been one of the least effective means of client acquisition over the last year. Looking at product design, not one respondent wanted more involvement in product design than they had, with 67 per cent saying that they had enough input into design, 17 per cent saying ‘of course’ because they manage financial products in house for their clients and the remaining 16 per cent happy to leave this in the hands of manufacturers. Scorpio managing partner Sebastian Dovey has previously told WealthBriefing of an increasing desire in the wealth management industry for a coherent trade association. This research reveals that an overwhelming 80 per cent of private bankers feel that the industry is adequately represented by an association, whereas 60 per cent feel it is too intrusively regulated. Of these, 38 per cent felt that a code of conduct should be agreed and broadcast loud and clear. The next Meeting of Minds event, with a focus on product and regulation, is to held on 20 November at the Berkeley Hotel, London, hosted by Owen James and Scorpio Partnership. The full 52 page report is available from ClearView Publishing, price £375. To access the report on the WealthBriefing Shop click here . Email: customerservices@clearviewpublishing.com Tel: +44 208 871 4019