Find the best and reject the rest

Recruiting client advisers is at the heart of the strategy of every wealth manager wanting to succeed in this competitive industry. There is no doubt that the well-documented large gap existing between the assets held by the private banking system and the growing wealth in the world, supposedly mainly still kept by private individuals in the retail banking system or even outside the financial system altogether, contributes to makes this topic as hot as ever.

Certainly private banks rely greatly on their relationship managers, either to gain the trust of high-net-worth individuals who have so far been reluctant to entrust a private bank with their wealth, or to snatch clients from competitors, or even retain and increase their share of the wallet of existing investors.

“We are recruiting advisers quite heavily,” states Etienne Barel, head of wealth management at BNP Paribas private banking in France. “Both to expand our franchise through the acquisition of new clients and to take care and develop existing investors’ portfolios,” he says.

The largest private bank in the French market has 850 client advisers, managing ?55bn of assets for 100,000 private clients. The bank plans to increase the number of advisers by 10 per cent during the two-year period 2006 to the end of 2007, explains Mr Barel.

“It is important that the ratio between the number of advisers and the number of clients remains stable,” he says, stating that the number of their private clientele is growing. But, of course, not all clients carry the same weight in terms of advisory service required.

Clients are segmented in five different groups, depending on various factors such as age, profession and asset size. “A 40-year-old client with ?1m will count as much as two 70-year-old clients owning ?700,000,” he says. If being young is a good ally to being active, an active investor has more requirements than an older investor who has already earned his money and seeks financial advice mainly to keep that wealth stable and transfer it to his family, explains Mr Barel.

Consequently, advisers at BNP Paribas are split into three different categories: those in charge of active clients, those taking care of “less active” investors, and those managing the assets of high-net-worth individuals.

Recruiting often becomes a matter of assigning the right adviser to the right client. “When we hire them, we try to determine who could be most suitable for one kind of client or another,” says Mr Barel. In-house training programmes are arranged to facilitate the move of advisers from one type of client to another, he says.

Background checks

To have a chance to be considered at BNP Paribas private bank, potential recruits must have experience in the financial sector, be it retail or corporate banking, asset management, corporate finance or perhaps insurance. “People taking care of clients’ money must have a financial background,” says Mr Barel.

‘It is important that the ratio between the number of advisers and the number of clients remains stable’ - Etienne Barel, BNP Paribas

Mario Cuccia, managing director of the personal financial services division at Ras, the Italian group operating under the Allianz umbrella, which is currently undergoing a complex restructuring and re-branding process as part of the integration project of all Allianz operations in Italy, agrees on this point.

Client advisers or ‘promotori’ at RasBank are recruited from other advisers’ networks or from the banking sector. The financial adviser has to be a professional with proven experience of being able to build a long-term relationship with the clients, based on a transparent and clear approach, capable of managing investors needs and expectations both in the positive and especially negative market periods, says Mr Cuccia.

“These are characteristics that make up the financial adviser’s DNA that can hardly be taught in training courses, unlike technical or financial subjects,” he states.

Following the acquisition of Commerzbank’s Italian network in 2003 and BNL Investimenti, BNL’s network of promotori the following year, today RasBank counts on 2,500 advisers, of whom 700 operate in the insurance companies of the group. “During 2007 we aim to generate an increase of assets under management of ?500m through the recruitment of new promotori,” says Mr Cuccia, who adds that the number of promotori itself cannot really represent the ultimate goal.

In the UK, recruitment of new client advisers is also a continuous activity at UBS. The giant Swiss-based bank has hired more than 20 per cent of its 300 private client advisers during this year-to-date, explains John Pottage, chief executive officer at UBS in the UK.

“The market’s opportunity far exceeds the number of people currently working in the industry,” he says. But unlike his colleagues at BNP Paribas and Ras, Mr Pottage believes in the concept of “lateral hires”, brought into the private banking industry from a different one. They represent a substantial proposition of advisers at UBS.

“We have focused a lot more on bringing people with the right skills and attributes into the industry rather than on merely re-circulating existing talent,” says Mr Pottage. “Also, because we have hired so many people over the last few years, we have built an expertise in assessing and integrating what we call lateral hires.”

‘It is better if the private banker has some interests in common with his clients. Often the relationship between the client and adviser goes beyond purely business matters’ - Xavier Declève, Fortis

If investment banking or other fields in financial services provide a good recruitment ground, in a small number of cases a range of different backgrounds such as legal, accounting or consulting are also considered. In some other cases, new advisers are recruited from a world as far from the financial sector as the army, according to Mr Pottage.

“More than having 10 years’ experience in wealth management, it is more important that people have the right skills, values and mindset and really want to build long-term relationships,” says Mr Pottage. The right skills are “a foundation of integrity, loyalty, and cultural fit”. The adviser also needs to have some intellect and numeracy, relationship skills or emotional intelligence, together with drive, energy and passion.

If advisers coming from the army will often have all these skills, the challenge is to bolt on some technical and product training, and coach and guide them, says Mr Pottage, and they will make “excellent advisers”.

Ex-soldiers or not, it is a fact that a lot of advisers join seeking a second career and want to build it for the long term, according to Mr Pottage.

Xavier Declève, senior executive director at Fortis private banking in Belgium, is also aiming to increase his team of 40 private bankers by 25 per cent this year.

This is to cope with the growth of the market and to gain market share, explains Mr Declève. Indeed, the Belgian private banking market has grown spectacularly over the period 2002-2005, by 27 per cent compared with the European average of 12 per cent, according to a recent report on European private banking by consulting firm McKinsey.

Mr Declève stresses the importance of organising a mixed team of private bankers so that clients’ profiles can be matched as much as possible.

In this respect, everything counts: the job experience but also the family of origin.

“Clients belong to very old families, others are entrepreneurs but there also investors from showbusiness,” he says. “They can be very different, and it is much better if the private banker has some interests in common with his clients,” says Mr Declève. “Often the relationship between the client and adviser goes beyond purely business matters.”

Tapping new segments

Alois Pirker, senior analyst at Aite Group, a Boston-based independent research and advisory firm, offers one of the more frank and weightier points of view with regards to the topic of recruiting private client advisers. Mr Pirker believes “recruiting private client advisers goes hand-in-hand with the business model shift in the market”.

One in three of the main pillars in the implementation of UBS’s European wealth management initiative in 2001, aimed to develop onshore businesses in the five key European markets strategy, were recruiting people, in addition to devising the products to market and the platform to operate the business, he says.

‘There are characteristics that make up the financial adviser’s DNA that can hardly be taught in training courses, unlike technical or financial subjects’ - Mario Cuccia, Ras

There were two approaches taken, says Mr Pirker, who worked for seven years at UBS, both in Switzerland and in London, during the time that UBS’s on-shore strategy started. One was taking over whole companies, such as Laing & Cruickshank, the UK private client broker in 2004, which at the time doubled the size of UBS’s onshore business in the UK and the firm’s size in terms of advisers, customers and geographical reach.

The other approach was to hire people with extensive networks and train them to become financial advisers, to tap that extensive network of contacts that they may have had in the past. “UBS hired some top-ranked football players to train as financial advisers and reach into that space,” explains Mr Pirker.

Hiring some kind of “personalities” who can bring a brand to the firm and the network is a common approach in private banking, according to Mr Pirker.

The fields from which to recruit advisers can be the most diverse, ranging from professional opera singers to well-known winemaking experts. Arts people are also very interesting, says Mr Pirker, who pulls from his experience having also attended the full advice education at UBS as part of his career in product management.

“Very often people with close links to the aristocracy are very desirable, because that is where old money is,” says Mr Pirker, remembering that to capture the aristocracy’s wealth in Austria and France, hiring senior and well-connected people in that area was very much UBS’s tactic.

However, most heads of wealth management operations seem reluctant to admit that one of the most appealing “skills” in an adviser, particularly a senior adviser, is his book of business. If Mr Pottage reiterates that recruiting the right people does not necessarily mean that they have a book to bring, Mr Barel at BNP Paribas stresses that what is important to attract new clients is a strong banking network and a brand.

Brand power

“We do not really count on the network of contacts of the people we hire to acquire new clients,” he says. “We have a very strong franchise in our retail network and in our corporate banking activity in France, and we rely on the brand of BNP Paribas, on the power of our network and business.”

Nevertheless, partnerships are important to tap new market segments. For example, BNP Paribas has developed a specific programme in collaboration with a well-known French law firm, Gide Loyrette Nouel, to provide the future promises of the sports with legal and financial advice when they are still young, in the unstated hope of being then able to win the clients’ trust and manage their future fortunes.

To target other market segments such as entrepreneurs, communicating with BNP Paribas corporate banking is all we have to do, says Mr Barel. This is in order to identify those individuals who are in the process of making transactions or selling their business. “That is not easy, but it is a key point,” he says.

Mr Declève at Fortis also believes in the idea that advising clients is no longer a “one-man show”. It is instead important to work in teams and leverage the expertise and the different divisions of a large firm, as the adviser has the role of being the person offering the entry key of the client within the organisation.

“One of the key tasks of a private banker, in addition to understanding client needs, is to be able to liaise with all the different specialists and co-ordinate the various activities.”

Product experts support client advisers throughout their advisory activity, which is more and more a team-based process. However, the complexity of today’s products has increased a great deal and that puts some more pressure on recruiting more knowledgeable client advisers.

“The technical side of the job has grown quite a lot, so you need to take this factor into account. This is the reason why we have more and more people coming from the corporate side, which is a very technical job,” says Mr Mr Declève. “Also, clients are more and more sophisticated, and they expect their contact people to be more than someone on the commercial side who opens the door to them.”

Getting advisers up-to-date with new products involves sending them to new more specialist training courses, which often cover the whole range of skills from investment to soft skills. The risk is that the adviser then leaves the firm to join a competitor.

“Top players in the industry spend a lot of money on training the advisers and get them really effective,” says Mr Pirker. “As soon as the advisers are seasoned they become a hot commodity in the market and those players risk to lose them to better paying competitors.

“Keeping advisers on board and keeping them happier is one of the key ingredients to being successful in the wealth management business.”