BankBazaar Singapore – January 25, 2018
Singapore: According to a report recently published by Bloomberg, DBS Group Holdings plans to increase its relationship manager headcount by 10% to 20% in 2018 to capture the boom in the Asian private wealth management space.
Hiring of private bankers was increased by 20% last year to bring the current headcount to 200. DBS hopes that this move will help it tap into the quickly expanding private wealth management space in the Asia-Pacific outside China region, where it ranks sixth among the biggest private banks. The Asian private wealth market is currently estimated to be around US$19 trillion and is expected to jump to US$40 trillion by 2025. So far, the wealthy in Greater China and Southeast Asia have been driving the growth in prosperity in the region.
According to a Capgemini SA report cited by Bloomberg, private wealth in the region swelled by 8% to touch US$18.8 trillion in 2016. With steady expansion of wealth in the Asia-Pacific region over the last few years, private wealth managers have grown in stature and importance as the wealthy are seeking more advisory and transactional services for smarter wealth management.
Lawrence Lua, deputy private-banking head of DBS, confirmed in an interview in Singapore on Tuesday, that the bank is planning to distribute its hiring across the following three markets:
Mr Lua added that as private wealth was increasing at a phenomenal pace, a higher headcount was needed to capture a chunk of the total share. According to the distinguished banker, DBS has been lucky to have clients who are expanding their business, cash flow and liquidity quickly. Lua also said that the North Asia portfolio registered the highest growth in 2017 for the bank.
Top private banks in Asia are mainly known to follow a commission-based model wherein the size or volume of the transactions determine the size of business for the bank. The government in Singapore had directed banks to shift focus from product sales to client consultancy last year. This is more in line with the advisory approach followed by top banks in Europe.
While DBS is trying to facilitate the change, Lua feels that a complete change will only be possible when the clients are convinced of the benefits of the approach. Further expanding on his opinion, he said that clients in Asia were generally more transactional in nature. They would only start to pay a fee if they were convinced of the value proposition on offer from a long-term relationship with the bank.
This means that imposing fees on advisory services offered by the bank may not be feasible in the immediate future.
Bloomberg also reported that assets under DBS management has grown by 15% between 2012 and 2016 according to data available with it. Last year, AUM for DBS has risen by 23% y-o-y to touch S$195 billion.