Experts

Using Singapore's private banking Code to tackle pay issues

The forthcoming competency and market conduct requirements on client-facing staff in Singapore should provide an effective way for senior management of private banks to assess whether their relationship managers add as much value as they claim they do.

Date: May 10, 2011          Author: Anthonia Hui

Keywords: Compensation, Bonus, Training

The forthcoming competency and market conduct requirements on client-facing staff in Singapore should provide an effective way for senior management of private banks to assess whether their relationship managers add as much value as they claim they do.

Chief executives continue to grapple with how to deal with the issue of pay – both in terms of how to balance compensation packages between salaries and bonuses, as well as how much to pay in total. The majority of bankers, unsurprisingly, maintain that they should be paid more than they are.

Many young and ambitious private bankers, in particular, continue to take for granted a “discretionary” bonus, and even view it as their entitlement.

And if they don’t get what they expect, they are under the impression that it is acceptable to leave to find a bank which they think will pay them a good bonus.

So the minimum standards to be imposed by Singapore’s new Code of Conduct in relation to ethics, professionalism, client relationship management and risk management should – in addition to the many other positive benefits – be seen as a timely tool to provide an independent benchmark.

With the Institute of Banking and Finance to administer the new competency assessment regime, the Client Advisor Competency Standards, those private bankers who are required to take it can have no complaints that it is anything but objective.

If they fail the exam, and are therefore not allowed (according to the Code) to provide any financial advisory service to high net worth individuals on behalf of their institution, what value are they to their firm?

Further, the Code requires bankers to meet at least 15 hours of documented Continuing Professional Development each calendar year.

If they aren’t maintaining this in a way which contributes to their skills and knowledge, therefore, they also cannot justify any requests to increase their salary and bonus.

While this is clearly only one aspect of the complex decision-making process which relates to remuneration for private bankers, chief executives should welcome the Code as a way to help moderate the pay expectations of their staff.

As a result, both senior management and their respective line managers have an important responsibility to uphold the true spirit of this Code.

If they just pay “lip service” to it, they will have wasted a good opportunity put in place some more meaningful, measurable tools (such as qualitative factors rather than purely quantitative ones) to tackle the ever-so-difficult compensation issue, and help raise awareness within the relationship management community with a reality check of what they should be.

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