Claude Haberer of Pictet & Cie looks at the skills and attributes that relationship managers (RMs) need in today’s more challenging environment in Asia with greater pressures on revenue and compliance.
Date: Nov 2011
Tags: Regulation, Suitability, Compliance
To be successful in the current private banking environment, however, the regulatory dimension has become so significant that it can, to an extent, overshadow everything else, he explained.
So this market therefore requires RMs to now be able to judge situations, people and transactions in a new way, said Haberer.
Suitability requirements, for example, require ongoing judgment, meaning that the industry now needs more people who don’t just have the technical skills but who are also quite subtle in their ability to judge clients and situations.
At the same time, Haberer said this will lead to better-quality RMs in the market.
Impact of aggressive growth ambitions
According to Haberer, the pressure for revenue coming from every firm over the last three years – as a result of bank chief executives across the world generally feeling insecure over their jobs – has put immense pressure on the need to maximise revenue, decrease costs and make sure there are as many synergies as possible between different businesses.
In line with this, he said private banks in big banking institutions, which were previously not very prominent within the overall group, have suddenly come under scrutiny.
This in turn is putting RMs under a lot of pressure to produce, he explained, and for the first time probably in the history of private banking, RMs face a the choice: either perform as the bank requires with ever-increasing revenues and targets, and therefore jeopardise client relationships, or realise after many years of building relationships, they don’t want to jeopardise them but will not perform in line with their employers’ requirements.
This is driving a wedge between the bank and the RM, as well as in some cases between the RM and the client, said Haberer.
Every time an RM starts to squeeze a client on each transaction, the client will notice and observe this divergence of interest, he explained.
The market saw in 2008 that clients who are unhappy can complain and sue their banks, said Haberer, so this is a risk the banks and RMs run when they are too aggressive in pursuing performance for their own benefit.
Capitalising on the compliance burden
While the compliance and regulatory burden has been growing, Haberer said RMs can use this to their advantage when looking to deepen relationships with their clients.
For example, he explained, KYC requirements are an obvious area to achieve this. While RMs might say they can’t ask certain questions to their clients, today the regulators require them to do so, so bankers need to position this in a transparent way to their clients. And the result is that RMs can get to know their clients a lot better.
