Waiting for Europe’s “appropriate response”

The Oct. 23 EU leaders summit is being billed as a make-or-break event where Germany and France, the main powers in the euro zone, must come up with radical solutions.

The Oct. 23 EU leaders summit is being billed as a make-or-break event where Germany and France, the main powers in the euro zone, must come up with radical solutions.

Brokerages cut down on novice hires, turn to experience

NEW YORK As brokerages search for ways to grow in a tight economy, many firms are cutting back on new adviser training programs and instead investing in experience.”We’ve consolidated a lot of the hiring,” Morgan Stanley’s (MS.N) president of global…

NEW YORK As brokerages search for ways to grow in a tight economy, many firms are cutting back on new adviser training programs and instead investing in experience.

"We've consolidated a lot of the hiring," Morgan Stanley's (MS.N) president of global wealth, Greg Fleming, said at the Reuters Wealth Summit this week.

He said that Morgan Stanley decided this year to cut the number of people it brings into its adviser training program by nearly 30 percent, to 1,250 adviser trainees per year, from 1,750 trainees.

On average, about two out of 10 in a typical training program will be successful and start a career at a firm, said Danny Sarch, a financial services recruiter based in White Plains, New York. Brokerages facing tighter budgets are weighing that with the greater certainty that comes with hiring an experienced adviser, Sarch said.

"Morgan Stanley, from their Dean Witter routes, had always been aggressive in hiring young trainees," he said. "It's becoming tougher. You don't see entire trainee offices anymore."

Jim Weddle, chief executive at investment firm Edward Jones, said the new financial adviser joining his firm is, on average, a career changer who is 37 years old and 10 to 12 years out of college. He said the firm recently raised productivity requirements of some of its advisers, and revamped its compensation plan.

"If you're recruiting better people who have been more successful in the past, you have to be willing to pay them," Weddle said.

Ameriprise Financial's Don Froude, president of the firm's Personal Advisors Group, also he expects his firm to recruit more heavily from the pool of seasoned advisers.

"Our model now, instead of bringing in the novices, is now recruiting experienced advisers," he said. "People who are coming into the franchise now are people who are coming from other businesses."

The strategy makes sense given the changing environment in wealth management, Sarch said. For one, advisers' clients have become more sophisticated over the past decade. Add to that the rise of mutual funds, exchange-traded products and novel investment vehicles. Together, it has created a stronger need for more experienced advisers, Sarch said.

An adviser's client base is largely built on long-standing relationships between the adviser and his or her client. That's true for both career-changing advisers and those who have built their client base for years.

David Drucker, a veteran Wall Street adviser who spent his early advising career at Morgan Stanley Dean Witter, said the bulk of advisers he sees in the industry now are between the ages of 30 and 50. He sees the focus on building up more established advisers as a positive.

"They (firms) have to give more support to the people who are paying the bills," Drucker said.

(Reporting by Ashley Lau; Editing by Jennifer Merritt and Walden Siew)



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Private banker pay holds up in tough market

ZURICH Stiff competition for top private bankers has kept a floor under pay even as low interest rates, flaccid client trading and tougher regulation squeeze industry profit margins.Sky-high pay and bonuses for investment bank counterparts may once …

ZURICH Stiff competition for top private bankers has kept a floor under pay even as low interest rates, flaccid client trading and tougher regulation squeeze industry profit margins.

Sky-high pay and bonuses for investment bank counterparts may once have turned private bankers green with envy.

But the drive to slash wage bills and rein in risk has made investment bankers expendable as many banks realign their business around more stable private banking.

"Pay was never extreme in private banking -- it's not as subject to a correction as in investment banking," Deutsche Bank global head of private wealth management Pierre de Weck told the Reuters Wealth Summit this week.

Stricter rules on capital have curbed profits in many areas of investment banking and a number of large integrated banks like UBS and Bank of America have pledged to cut back on capital guzzling businesses and shrink staff numbers, piling downward pressure on pay.

But in private banking, competition remains hot for advisers who can bring in a good portfolio of clients, helping sustain pay, said James Fleming, head of international private banking at RBS unit Coutts & Co.

"The war for talent is not quite the 100 years war but certainly 15 years," Fleming said at the Reuters Summit.

"Experience shows high compensation is a key part of retention, but also tools to do the job properly, and working for a brand that's forward thinking and progressive and providing good service for the client base."

Remuneration is by far the biggest cost center, well ahead of premises and technology, said Alexandre Zeller, head of Private banking, EMEA at HSBC, adding that banks have to put time and effort into finding the right people to serve its clients.

"The value of staff in our business is actually extremely high," said de Weck. "When we make a new hire it takes 2.5 to three years for them to become productive. But the penalty for making the wrong pay decision in our business is very high."

Bankers at the Reuters summit generally confirmed their commitment to their businesses in Switzerland, although they said the strong Swiss franc was limiting profitability.

As competition limits growth in developed markets, the fight for staff was intensifying in higher-growth areas like Singapore.

De Weck said these factors have pushed the cost of Asian bankers higher than in Switzerland, while in London staff costs are about the same.

The business remains centered around people and relationships and downward pressure on costs can have only a limited effect on pay scales, said Pablo Garnica, European head of JP Morgan's private bank.

"You need to reward people to incentivize people to grow," Garnica said.

"At the end of the day you need to have the people capable of dealing with clients and complex situations. At the end of the day you need a human being talking to a human being."

(Editing by David Cowell)



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Private banker pay holds up in tough market

ZURICH (Reuters) – Stiff competition for top private bankers has kept a floor under pay even as low interest rates, flaccid client trading and tougher regulation squeeze industry profit margins.

ZURICH (Reuters) - Stiff competition for top private bankers has kept a floor under pay even as low interest rates, flaccid client trading and tougher regulation squeeze industry profit margins.

Private bank clients urged to avoid U.S. securities

GENEVA (Reuters) – Some Swiss bankers are advising clients to steer clear of U.S. securities ahead of a new law that would tax people with over $50,000 invested in stocks or bonds of U.S. companies…

GENEVA (Reuters) - Some Swiss bankers are advising clients to steer clear of U.S. securities ahead of a new law that would tax people with over $50,000 invested in stocks or bonds of U.S. companies...

Bankers warn of long crisis as rich seek comfort

LONDON Private banks are telling their clients financial volatility surrounding Europe’s debt crisis will continue for at least a year as more of the continent’s rich seek the comfort of household names or state backing when choosing where to bank.”…

LONDON Private banks are telling their clients financial volatility surrounding Europe's debt crisis will continue for at least a year as more of the continent's rich seek the comfort of household names or state backing when choosing where to bank.

"We are telling (clients) very honestly nobody knows how this is going to evolve and you have to be extremely careful in terms of your exposure," said Alexandre Zeller, head of private banking for Europe, the Middle East and Africa at HSBC.

Pierre de Weck, wealth management head at Deutsche Bank, said during the Reuters Global Wealth Management Summit that clients could expect at least another 18 months of volatility.

"If you're short term oriented and you cannot take pain, reduce risk because we are going to have a bumpy road over the next 18 months until this European sovereign crisis is resolved," he said.

The market volatility since the summer and fears over bank solvency have boosted the kind of institution often shunned during boom times, on account of perceptions they are old fashioned or conservative, bankers said at the summit in Geneva this week

"It has been an accelerating factor in the last few weeks, we have observed a flight to safety. Banks with solid balance sheets, with conservative management and approach to the markets, are seeing significant inflows on a global scale," said Zeller,

"If you look at it more locally, state guaranteed institutions are seeing significant inflows . part-nationalized banks or those with an implicit state guarantee," he said.

James Fleming, head of the international business at Coutts, a division of part nationalized British lender Royal Bank of Scotland, tracing its origins back to 1692, said it had attracted clients in the crisis seeking comfort in its history.

"All the major financial booms and busts in last 320 years, we've navigated our clients through. And I think clients see that," he said.

Yves Mirabaud, managing partner at Swiss bank Mirabaud & Cie, said the woes of large banking groups, most recently an alleged rogue trading scandal at Swiss giant UBS, was boosting the appeal of Switzerland's family-run partnerships.

"I don't know if the fact it is a family business is a selling point ... (But) when you see how the big banks have behaved the past few years I believe that the model is stronger than ever," he said.

(Reporting by Chris Vellacott; Editing by Hans-Juergen Peters)



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Bankers warn of long crisis as rich seek comfort

LONDON (Reuters) – Private banks are telling their clients financial volatility surrounding Europe’s debt crisis will continue for at least a year as more of the continent’s rich seek the comfort of…

LONDON (Reuters) - Private banks are telling their clients financial volatility surrounding Europe's debt crisis will continue for at least a year as more of the continent's rich seek the comfort of...

Bessemer goes on defense, on pace for best year

NEW YORK (Reuters) – Portfolio managers at Bessemer Trust, financial adviser to ultra-wealthy U.S. families, took an extremely defensive posture a few weeks ago amid some of the most volatile…

NEW YORK (Reuters) - Portfolio managers at Bessemer Trust, financial adviser to ultra-wealthy U.S. families, took an extremely defensive posture a few weeks ago amid some of the most volatile...