The days of making a quick easy buck as a private banker in booming Asia may be coming to an end. But you can still get rich tending to the money of the wealthiest, experts say. finews.ch reveals how.

When Asian wealth hubs truly began breaking out as serious finance centers, private banks rushed to hire up as much talent as they could – even high-end hairdressers, presumed to be extremely well-connected, became bankers to the wealthy.

The result? Teams of private bankers moved en masse and quickly from institution to institution, and in some cases covetous banks ended up in messy court cases against each other for poaching clients.

It has also led to a fierce war for talent, with banks eager for a piece of the burgeoning Asian wealth pie outbidding each other for top bankers.

S$1 Million Base Salary

Now roughly ten years later, after the initial euphoria has died down, and a global financial crisis washed out the less dedicated, an annual salary of S$1 million for the most well-connected private bankers in Asia still isn't unheard of – not including a bonus.

«There are very high prices being paid for scarce resources of really good private bankers,» EFG International Chairman John Williamson said at a recent conference in Zurich organized by Asia-based wealth management platform Hubbis.

But the froth is coming off again, according to an industry expert who says the days of getting rich quick are coming to a close.

Correction in Pay Due

«In future, salary levels may undergo a marked correction,» said Seb Dovey, managing partner of wealth management strategy consultants Scorpio Partnership.

That doesn't mean that private banking won’t remain lucrative, but it does mean that advisors will have to up the ante to stay competitive as ranks are thinned.

Swiss banker and independent asset manager Urs Brutsch has estimated that about one third of the roughly 3,000 client advisors active in Singapore are at risk. 

A key difference in private banking in Europe and Asia is the institutional versus the individual. In Switzerland, private bankers typically haven’t seen sky-high base salaries because a client’s relationship is with the bank, not the adviser.

S$27 Million in Four Years

In many cases the opposite still applies in Asia: though banks are increasingly institutionalizing client relationships to firms, the balance of power is still with the banker, which has given relationship managers pricing power.

The most extreme example is former BSI banker Yak Yee Chew, who was paid a total of S$27 million from 2011 to 2015, it emerged in court papers. His pay became public as part of the investigation into 1MDB. Yak has been charged with forgery and failure to disclose suspicious transactions.

Before 1MDB, Yak was considered a star banker and his salary and bonus are a reminder of what the most talented bankers could command from foreign banks eager to break into Singapore.

Living Up to Salary Expectations

Regulation hasn’t done the bankers any favors, a veteran Swiss private banker in Asia says.

«It’s tough for private bankers to live up to expectations and to justify the salary they make. I think sometimes they spend more time reading risk disclaimers than doing business,» said former UBS and Credit Suisse private banking executive Marcel Kreis, who now chairs the family office for the Myer Family in Australia.

«It’s very very difficult and it’s taken the entrepreneurial spirit out of the business,» Kreis said. He sees banks eventually segmenting their clients more strictly, for example towards the extremely wealthy, where banks are able to sell a broader range of services such as trust and wealth structuring, in addition to money management.

The end of easy money Dovey refers to has several causes: private banks are in a double-bind of rising costs, such as for regulation, and falling revenue, as clients back away from trading.

Profitable Within 18 Months

Clients in Asia have become more conservative this year compared to 2015, according to a survey conducted by Cerulli Associates, and increased their cash piles – which does nothing for banks.

«We used to be able to assume that private bankers would be profitable in around 18 months after joining. That's pretty rare nowadays – only the best, with a strong and loyal existing client portfolio, can achieve it,» EFG’s Williamson said.

Until now, many private bankers have forged careers by moving around quickly – but that is beginning to bite. Graduates entering private banking typically have less than two years to prove themselves, meaning make connections with the wealthy, win a small share of their assets to prove themselves, and ideally make a return on those assets in order to win a bigger share.

Private Banking Still Fun?

«The engagement with clients hasn’t changed: we still do the same-old, same-old, but the cost of doing it has gone up massively due to regulation and other factors,» Kreis said. «This has made it very difficult for private bankers and frankly some of them can’t hack it: they don’t have the contacts and you don’t give them the time to develop them.»

The best option for recent graduates is as an assistant to a senior banker who can acquire and may begin to pass on some clients to begin with.

So how much fun is the job, and what are your chances of getting rich doing it?

«You’ll work with lots of interesting people and do great things, but don’t join the industry if you are solely interested in your own personal enrichment. The key is you may well get financially well off slowly, and you'll do good things while you're doing it,» Dovey said.