Pay and hiring: the ascent of the private banker

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The survey, by Mark Somers, head of the Wealth and Asset Management Practice at retained search firm Gow & Partners, found banks in the survey planning to increase relationship managers from a current total of 914 to 1,142 over the next twelve months, a rise of nearly 25%.

Somers says the figures reflect an unusually strong year for private banking recruitment: "Demand for private banks has been pent up by a lack of growth in the sector for the last two years. Now the market has picked up and everyone is looking for new staff to increase market share."

A study by the Scorpio Partnership, a consultancy working in the wealth management sector, found assets managed by private banks globally rose 13.1% in 2004 to more than $6 trillion worldwide. Profits were up by an average of 24% over the same period.

Somers says power in the sector has swung back in favour of relationship managers, away from product specialists who advise on specific kinds of investments.

Coutts, the UK private bank owned by the Royal Bank of Scotland, is among those looking for relationship management recruits. John Last, head of human resources at the bank, said Coutts is going through a growth period. The bank hired 60 relationship specialist over the past 12 months, says Last, and plans to hire another 30 in the next. "People are becoming more and more wealthy and no one's really cornered the market," he says.

Somers says some private banks are likely to find their hiring aspirations thwarted by staff shortages and poaching by rivals: "It's a finite market. There's a big difference between an intention to hire someone and actually being able to do it. More than half the organisations will probably be net donors of staff at the end of the year."

Although 60% of banks surveyed said a transferable book of business had become less important in hiring decisions, Somers says banks are likely to think twice before bringing in people without previous private banking experience and an established client list: "People are very conservative when they hire," he says.

Higher pay in Zurich

More hiring could lead to higher pay. The Gow survey put average pay for UK private bankers with between three and five years' experience at 55,000 base and an 11,000 bonus; bankers with five to ten years' experience received an average base of 77,000 and an average bonus of 28,000; directors received a base of 105,000 and a 40,000 bonus.

A separate survey by Mark Ritter, senior consultant at MCZ Management Consulting in Zurich, found pay for senior Swiss private bankers more generous still. Director-level customer relations specialists who bring assets can expect packages of 131,000 to 350,000 (CHF300,000 to 800,000) in Zurich. Ritter says struggling Swiss banks are eager to hire teams who can bring in new assets and this is forcing up pay.

By comparison, pay for private bankers in other European financial centres is typically lower. Sergio Zanetta, an associate partner at Proper Transearch in Milan says Italian compensation is typically 25% to 30% below the UK. This is despite the same keenness to recruit. "Private banking is the busiest market," says Zanetta, "Everyone's looking for someone to bring at least €1m of new business."

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