Rodolphe Mortreuil, managing director of Mckinsey Mortreuil Clarke Ltd., on why private banks need to do more to cultivate a pipeline of talent.
Until a few years ago, to become a private banker one needed mostly a decent education, and a groomed appearance. A bright young graduate could hope to join a reputable firm out of university and be teamed-up with a senior banker who would, over the following three to five years, show him the ropes and enable him to create his own network of clients and referrals.
Times have changed. Shareholder-driven boardroom policies have forced the financial services industry to increase its pace dramatically and five-year strategies are reviewed every six months. Private banks have been unable to escape that trend and have considerably shortened the "honeymoon period", between the moment someone is hired and the time at which he is deemed to be a profitable asset for the firm.
Hit the ground hard (and start running)
Historically, a seasoned professional would be given 24 to 36 months to settle down in a new bank. A graduate would take three to five years to become a private banker. Today, a senior banker moving to a new bank is expected to deliver substantial results within 18 to 24 months at best. Nobody anymore is even remotely interested in a newcomer that has to be financially sponsored for a longer time than the average tenure of a modern CEO.
What does that mean for the industry? All reports and analysis agree on the fact that the number of high net worth (HNW) individuals is increasing globally. However, the industry as a whole refuses to invest the necessary time and money to train and form competent assistants to help already overworked bankers.
This is an incredibly narrow-minded attitude: by relying on hiring only from their competitors without nurturing new talent, the banks rely evermore on a dwindling pool of professionals to give them the growth rates needed by their board and shareholders.
Younger clients want younger bankers
Sooner or later, private banks will have to face up to the generational transfer of wealth, now that the wealthy baby-boomers are starting to retire. While a greying, senior private banker will convincingly argue that his thirty years of experience are valuable, it will become increasingly difficult for him to establish a personal relationship with a thirty-something heir whose cultural frame of reference belongs to a different generation.
Bright graduates can be hired for approximately 30k in Europe. Is it really too much investments to make for banks - who regularly post record profits - to ensure that a smooth transfer of knowledge and competencies within their own organisation?