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Published November 6, 2010

Leafy trees and classes mellow private bankers

Wealth managers are going back to class to hone their skills for the post-crisis age

By FELDA CHAY


IT is the most unlikely place for a training ground of finance professionals - a sprawling 500,000 sq ft estate on Kheam Hock Road, with a colonial house perched atop a hill overlooking rolling green fields and tall leafy trees. Built in the 1930s, the Command House boasts features such as side wings that are angled forward - as if to embrace and welcome visitors - and a large overhanging roof.


FROM COMMAND HOUSE TO BUSINESS CAMPUS
This Kheam Hock Road colonial building now houses UBS Business University, where Switzerland's biggest bank trains its employees in Asia

Yet in the last three years, the house - previously home to General Officers commanding Malaya and Singapore and a venue for state functions under former President Ong Teng Cheong - has been serving a vastly different function from what it has been used to. It is now a home to the UBS Business University, where Switzerland's biggest bank trains its employees in Asia. To date, the campus has served as venue to 2,000 training events.

The bank declined to reveal the amount it pays in rent each month for the use of the gazetted national monument, but it's an easy guess that it is no paltry sum. And if money is a measure of one's commitment, then this must show how serious the bank is about training.

This impression of a strong focus on training is one that many banks, and not just UBS, is trying to create. It is also one that has become especially important, after the recent financial crisis led many investors to lose confidence in financial institutions and cast a shadow over the banker-client relationship. While most do not invest in a grand campus, banks are rolling out training programmes in earnest, and even those who deal with top clients - thought to be the more experienced relationship managers (RMs) - are not spared the training onslaught.

A fine example is Credit Suisse's Tee Fong Seng, vice-chairman for private banking and head of ultra high net worth, Asia Pacific, at the bank. Despite having more than 30 years of global banking experience, Mr Tee had to sit through a test and certification under Credit Suisse's newly rolled out Frontline Training & Certification Programme.

'They made me go through the test,' Mr Tee half grumbled in jest. But he sees the sense of the programme: 'Product engineering, for better or for worse, has provided new instruments for the clients. Some of them, if I may say, were not properly sold. All these surfaced during the financial crisis. Before that everything was hunky-dory.'

Now, product suitability has become a key word, said Mr Tee.

'Every step of the way, technical competency of the RMs has become more and more critical. It is not even important, it is critical. In the past, private banking was relationship banking. Today, it covers everything including technical competency and understanding of the clients.'

There is therefore a need to educate the clients and RMs, said Mr Tee.

He is, of course, not the only banker at Credit Suisse who has had to undergo testing and certification under the bank's new programme. Nor will he be the most senior. According to the bank, its programme is global in scale, and applies to its more than 5,000 client-facing front staff. And not a single one will be spared, said Credit Suisse's business school director John Paterson.

We hope that by end-2012, all of our existing client-interacting private banking employees will be certified, said Mr Paterson.

Necessary programmes

Training under the programme involves web-based and classroom-based initiatives, which will take the form of electronic tests, or e-tests, and a simulated client discussion. The programme focuses on investment topics such as mutual funds, alternative investments, foreign exchange, discretionary mandates, the advisory process and structured derivatives.

In Asia, all of Credit Suisse's assistant relationship managers, relationship managers, team leaders, investment consultants and the senior management team will have to be certified under the programme.

It has also set a rule in Asia where new arrivals are required to undergo front-line training within nine months of joining the bank, with skill refresher courses and certification offered every three years.

At Barclays Wealth, chief executive Tom Kalaris has rolled out a personal development initiative which requires all of its staff to complete 10 online training modules this year in areas like product and market knowledge, and sales and relationship management. This will come on top of other mandatory courses on topics like treating customers fairly.

This training focus will become only more intense over the next few years at Barclays Wealth. Mr Kalaris has pumped in an additional £350 million ($730 million) that will be used on people and technology investments globally from this year till 2012, with a chunk of this money to go into more personal development initiatives for staff.

All this is not an unnecessary splurge. Many wealthy individuals have made huge losses as a result of the financial turmoil and some have pointed their fingers at bankers, initiating lawsuits alleging negligent advice.

In Singapore, cases heard include that of businessman Oei Hong Leong, who lost an eye-popping $1 billion on foreign exchange and US Treasury bond transactions in 2008. He sued Citigroup's private banking arm in 2009 for negligence and misrepresentation. The case was ultimately settled out of court, with Mr Oei saying that he would continue to work with the bank again.

Most recently, prominent Taiwanese scientist Chang Tse Wen brought a suit against Deutsche Bank in the High Court in Singapore, alleging that the assistant vice-president of Deutsche Bank's Hong Kong branch, Johnny Wan Fan Ting, had provided him with negligent advice that caused him to lose US$49 million. The suit is still being heard.

These cases bring to the fore the importance of fair dealing and compliance within the wealth management industry - areas that that banks say they are focused on.

At DBS Private Bank, a target of 4,000 man hours of training for 200 of its RMs in Hong Kong and Singapore has been set - an initiative it started in August and hopes to accomplish by March next year. The training programme is structured in four areas, covering technical competencies, soft skills, compliance and functional skills.

Over at DBS Treasures, all incoming RMs are put through a six-week-long programme on the product suite of the bank, compliance guidelines, systems and processes. DBS Private Bank and DBS Treasures come under DBS Wealth Management, which employs about 240 RMs.

At Citi Singapore, senior relationship managers and private bankers are assessed on areas such as client satisfaction and compliance to industry and international regulations and guidelines, which the banking giant said are 'critical factors'. Those serving its high net worth clients across its wealth spectrum - Citigold, Citigold Private Client and Citi Private Bank - undergo 'rigorous internal training and are required to attain internal certification that is over and above that mandated by the regulators', said Citi.

Training and assessment

'These (training programmes) include regular workshops that arm them with technical knowledge on a range of asset classes in investments and treasury, as well as provide them with insight into market trends and the wider economic environment,' said Ong Lay Choo, head of retail banking for Citibank Singapore - which oversees Citigold and Citigold Private Client.

At Citi Private Bank, bankers are now required to go through more complex investment knowledge, sales and product training, which they are then assessed on, said Mark Morgan, director of human resources for Citi Private Bank globally.

'The assessment allows us to determine their ability to become a trust adviser to our private bank clients, who are themselves extremely financially savvy and experienced,' added Mr Morgan.