Wealth Management-r1:AMM grid in qxp 12/24/09 9:45 AM Page 69
“Therearealwaysinherentconflicts,butIthinkitismanage- AndVonCannonconcluded:“Insideourorganisationwe
able.You[manage]thatwithaverystrongprocess,ascientific ponderhowtomotivatepeople.Peoplearemotivatedbyremu-
methodinmanywaysatleastfromabenchmarkperspective,in neration,butIthinkthecultureoftheorganisationisimpor-
termsofhowyoumeasuresuccessandhowyoumeasureprof- tantaswell.
itability.” “LookingfromtheoutsideIthinkweasanindustryhaveto
beconcernedaboutregulationandremunerationbecauseitis
REGULATORYREACTIONS goingtodrivegoodpeopleawayfromourprofession.Iwould
Evidentlytheprospectofincreasedregulationandscrutinyover hatetoseeoverkillinourindustry.”
issuessuchastaxevasionhasblownafurthercloudofuncer-
taintyoverthewealthmanagementindustry. THECHINACONUNDRUM
PeterFlavel,theglobalheadofStandardCharteredPrivate Inaseparatepaneldiscussionattheforum,businessleaders
Bank,recalledarecentmeetingheattendedinSwitzerland sharedtheirthoughtsonchallengesandopportunitiesthat
wherehewastheonlyAsia-basedrepresentative. existinChina’sprivatebankingmarketplace.
“Iwasthemostpositivepersonintheroom.Makenomis- Itiswidelyacknowledgedthatthedevelopmentofthemar-
take,onshoreinEurope,theprivateplacementpeoplewho ketisveryplainlyinthehandsoftheregulators,notthe
appearataconferencelikethisareworriedabouttheirvery providers.
existence.Thewholeissueofmoneythathasnothadtaxpaid Settingupalocallyincorporatedfinancialservicesfirmin
onitforgenerationsisahugeissue.” Chinaisriddledwithchallenges,notablyregulatoryrestric-
AskedbyFieldwhatthecostimplicationswereforabank tionsgoverningoperatinglicences,productsandservices.
fromincreasedregulation,Flavelsaid:“Whenthey[regulators] Andthenthereistheshallownessofthedomestictalent
sayyouhavegottohavemorecapital,thereisacosttothat.Do pool,theneedtounderstandthemarketplaceandtheabilityto
youthinkinvestorswillacceptlowerreturnoncapital?Of navigatelocalinfrastructure.
coursenot.
“Attheendofthedayitistheclient–whetheritisretail,
massaffluent,privateorcorporate–whoisgoingtoendup
“Iwasthemostpositivepersonin
havingtopaytheextrabitofcosts.
theroom.Makenomistake,
“Regulatorshavehadbanksgounderontheirwatchandso
theyarereactingtothat.Perhapstheyarereactingtoitlikea
onshoreinEurope,theprivate
pendulumandgoingtoofartheotherway.Butthatiswherewe
placementpeoplewhoappearata
areasanindustryandweneedtounderstandthat.”
Askedhalf-jokinglywhetherAmericanswerewelcomeat conferencelikethisareworried
Asianprivatebanksanymore,Flavelreplied:“Westillbank
Americansandtherearemanycompetitorswhoaren’t.Youjust
abouttheirveryexistence.The
havetobeverycareful.ButtheAmericanregulatoryauthori- wholeissueofmoneythathasnot
ties,Ithink,areactuallygoingtobedoingthemselvesoutof
businessonshoreintheStates.”
hadtaxpaidonitforgenerationsis
ahugeissue.”
PAYANDREWARDS
Almostinevitablydiscussionmovedontothesensitiveissueof
PETER FLAVEL, GLOBAL HEAD OF STANDARD CHARTERED PRIVATE BANK
remunerationandrewardforprivatebankers,atopicthathas
raisedtemperaturesgivengovernmentbail-outsofbanks. ButrecentlytheChinaBankingRegulatoryCommission
Flavelspokeoftheneedtodeferbonuspaymentsbecause (CBRC)announceditwouldputforwardmorerelaxedrules
“ifwedon’tdoitourselvesitwillbedonetousbyothers.We governingprivatebankingactivitiesbythemiddleof2010.
areallgoingtohavetobecomemorecompliant.Idon’tthink Itwasamoveuniversallywelcomedbyparticipantsatthe
purelydiscretionarybonusesaregoingtoworkwiththeregu- forum.EdwinLim,DBSBank’sheadofprivatebankingNorth
lators.” AsiaandGreaterChina,sharedtalkshehadjustheldwiththe
LokYimfoundhimselfinagreementandsuggestedthat CBRConhowShanghaicouldbecomeawealthmanagement
ratherthanworkingonayear-to-yearbasisitmightbebetter hub.
forbankstosetthree-yeartargetsforcompensationpurposes. “Isaidinsteadofregulatingeachandeveryproduct,they
“Thatisareasonableperiodoftimetogrowyourbusiness.” shouldjusttightenonthesellingprocess.Thatwaytheycan
Headded:“Anyformulathatispurelydrivenonrevenues deregulatetheproductdevelopment.Aslongasclientsunder-
onashort-termbasisneedstobeadjustedatleast.Ithinkthe standwhatthey’rebuying,youshouldjustletthemdowhatev-
newformulaswillbemoreintensive,amixtureofperform- erisrightforthem.
ance,returnonassetsandnetnewassets.” “TheresponseIgotwasthatthey[CBRC]aregoingtosepa-
Butheadmittedhewasstrugglingtofindawaytointegrate ratetheregulationsbetweentheconsumerbankandthepri-
riskmanagementintotheequationintermsofevaluatingthe vatebank,andtheyaregoingtobeabitmoreliberalwiththe
performanceofprivatebankers. privatebank.”
RenatodeGuzman,Asia-PacificCEOofINGAsiaPrivate LimalsourgedtheCBRCtoseektoestablishanindustry
Bank–whohadearlierspokenofthegrowingriseofonshore qualificationthatlocalworkerswouldneedtopossesstobe
localbanksattheexpenseofglobalplayers–said:“Oneofthe abletosellcertaintypesofinvestmentproducts.
lessonslearnedisthatgoingforwards,meetingcompliance “Ifthatcanbeappliednationwide,Ithinkthatwillbehuge
standardswillhavetoplayabiggerroleinperformancemeas- progressfortheindustry,forourselvesandforourclients,”he
urement.” said.
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