Francis Koh of Singapore Management University explains how more comprehensive training and education can plug the talent gap in Asian wealth management – and avoid falling short of client expectations.
Date: Dec 2010
When it comes to the basic skills that wealth managers need in order to be successful over the long term, Francis Koh said in an interview that they need a good base understanding in portfolio management, combined with the rudiments of finance, economics and accounting – all put together in a holistic way and in terms of how they can be used to help clients make decisions and understand the mechanics behind investment instruments.
As a result, he said there needs to be a more integrated way of teaching these foundation courses with a wealth management focus.
Ideally, suggested Koh, there needs to be a degree or other kind of specialised training allowing this to be developed over time. This would be more effective than the current focus by the industry on filling the gaps by poaching or getting wealth managers to do short courses to get a certain competency, he explained.
Wealth managers need to have a more comprehensive and holistic understanding to serve the client in a broader-based way before they go into more specialised areas, added Koh.
A lack of training
According to Koh, the tradition of wealth management has not been fully entrenched in the Asian mindset, or event in the institutions of higher learning.
It is a new profession and therefore takes time for the market to understand it in the context of it being an important component of professional training, he explained.
What’s on offer
To try to give junior bankers a rounded wealth management experience, at the undergraduate level, Koh said Singapore Management University (SMU) offers a major in finance with a wealth management track, involving four to five subjects with a more holistic overview, before students focus on individual asset classes.
After doing courses on portfolio management, hedge funds, fixed income and equities, in addition to the wealth management overview, hopefully the undergraduates have a better fee of what it take to be a wealth manager, he explained.
At the graduate level, there are two Masters of Science degrees, said Koh – one in applied finance and the other in wealth management. This second degree requires students to spend one year, full time, focusing on five modules in study blocks of two-and-a-half weeks. In-between these, they go for internships at various banks to have the chance to see what the banks do to integrate theory and practice.
About 40 to 50 students do the course, he said, either people who are already in the industry and want to deepen their skill sets, or people who are young professionals and want to convert to become wealth managers.
The aim is that by the end of one year they have acquired enough skills to be relevant and hit the ground running in various roles the industry, said Koh.
Pitfalls of minimal training
Koh said the danger of not putting sufficient time and resources into training advisers, and therefore there being a lack of well-trained individuals, is that eventually the industry will suffer a client backlash.
Clients get unhappy when they see their relationship managers moving to other banks and then have to either shift their account or tell their story to a new person at the existing bank about their needs, financial status and family situation, he explained.
As a result, he said, if there are enough people at every bank to provide the stability and continuity then clients are more inclined to be loyal to the institution.
For the banks, this is potentially one way to retain clients and avoid situations where they are not well-served and fall between the cracks when advisers leave, said Koh.
Differentiating overall service quality
Whether by branding, service orientation, product class or family needs – the problem is that many banks are not completely clear which client segments they are serving, said Koh.
Clients would have a better feel for which banks they should go to if the organisations moved to a more branding- or competency-based service orientation, he explained. For example, some banks should specialise and identify their strengths – whether in research, product orientation or service orientation –and this would give clients a choice. At the moment, it is not easy to differentiate most firms.