Asset Managers: Hunt the Hunters
Rising costs, declining margins and more competition: these are the challenges facing private banks. Thus finding the right type of client adviser has become imperative.
Robust economic growth and booming stock prices helped boost the value of global private wealth last year by about 7 percent to more than $66 trillion, according to the latest Wealth Management Report, compiled by Deutsche Bank with input from Oliver Wyman.
The authors of the report expect the value of private wealth to climb a further 5 percent to top $85 trillion dollars over the next five-year period (see graphic).
This is good news for private banks, which delivered respectable earnings in 2017. However they shouldn’t count their chickens yet, the authors warn, citing three critical challenges facing the industry: the focus on key competence, strengthening of the data and analytics sector and a new orientation for talent management.
Fewer Farmers, More Hunters
Greater priority needs to be given to the redirection of talent management, according to the report. This applies especially to the shifting of the front office away from the classical «farmer» profile to more sales orientated «hunter» types. While both profiles will remain important, they will play increasingly separate roles. The «farmer» will be mainly responsible for nurturing existing clients and understanding better their needs with the help of data analysis.
The «hunters» on the other hand will be tasked with acquiring new clients and raising the so-called «share of wallet». It depends on their skills whether the banks are able to generate new inflows of money, which at the end of the day will determine the profitability of the asset manager.
The report’s authors expect a slowing of growth in client assets in coming years. Higher regulatory costs and more competition will further erode margins, they warn. Asset managers will thus be well advised to step up the hunt for hunters.
Taking a Broader View
The best talents are highly sought after and thus expensive. At the same time, there is a danger for asset managers to recruit talents who don’t deliver the goods.
The study suggests recruiting beyond the confines of the financial sector, and looking more closely at other sectors, such as the luxury goods or guest- and lobby industries (see graphic).
Proximity to Super Rich Clients
Experts from these industries are likely to have the necessary skills to succeed in banking too, the study says. They would be good sales people, aware of their client wishes and – most importantly – maintain close contact with an ultra-wealthy clientele. The study also notes that the main source for net new money generation in the future will be wealthy clients (see graphic).
