Bespoke Banking

In a conference room in Singapore's Conrad hotel in early august, a gathering of Credit Suisse Group employees is in the throes of an intense role-playing exercise. As part of their training to become private bankers, the recruits take turns acting out the roles of bank "relationship managers" and their wealthy clients. Taped to the wall of the room are posters offering helpful tips on such challenges as "Resolving Skepticism" and "Resolving a Misunderstanding." Under the stern eye of Penny Radcliffe, head of Credit Suisse's in-house training program, their performances are carefully scrutinized and criticized. One stylish and confident young woman playing the part of a private banker is chided by a colleague for not asking enough questions about the client's family. A young male trainee, with the stressed-out look of someone taking his college-entrance exams, is admonished for asking too many pointed questions too quickly while neglecting to acknowledge the needs of his client with solicitous nods and smiles. After all, when it comes to selling advice?and financial products?to the rich, earning trust is the first order of business. "Relationship managers are forever eager to propose the right solutions," says Radcliffe. "We're always trying to say, 'Slow it down.'"

Slowing down, however, is the opposite of what's happening in private banking in Asia, where the business of helping wealthy individuals manage their fortunes is growing so fast that there's a shortage of bankers. The industry's largest players are planning for a rosy future: Citigroup Private Bank, a division of U.S. financial-services giant Citigroup, says it has already captured half of Asia's approximately 88 billionaires as clients, even as it launches operations in the relatively untapped markets of China and India. Also expanding their Asia footprints are Swiss behemoths such as Credit Suisse and UBS. The latter, which is already the world's largest private bank with $1.32 trillion in assets under management, had just 153 private bankers in Asia Pacific six years ago; earlier this year that number reached 600, most of them working in Hong Kong and Singapore. "By 2015, we expect the Asia-Pacific market to be bigger than the European market," says Kathryn Shih, the Hong Kong-based head of UBS's wealth-management operation in Asia Pacific. "The opportunities are huge." Says Sebastian Dovey, managing partner of Scorpio Partnership, a London-based consultancy to the wealth-management industry: "Asia Pacific is where most private banks are placing their bets right now."

That's because there's so much room for growth. According to a 2005 report by Credit Suisse, only about one in five wealthy Asians uses private-banking services, which run the gamut from investing in stocks, hedge funds and private equity to providing tailored advice on everything from estate planning to buying the right Learjet or yacht for your family. At the same time, the region's robust economic expansion is creating a population explosion in the champagne-swilling classes. Most private banks sell their services only to those who are, in the industry jargon, "high-net-worth individuals" (HNWIs)?people with fortunes of at least $1 million. The number of Asians who attained that status hit 2.4 million last year, up 7.3% from 2004, according to the 2006 World Wealth Report by Merrill Lynch and human-resources firm Capgemini. That compares with 2.8 million HNWIs in Europe, where the growth rate last year was 4.5%.

Indeed, Asia is minting more millionaires at a faster rate than just about anywhere else. The number of Indians and South Koreans achieving millionairedom last year surged a remarkable 19.3% and 21.3%, respectively, while Indonesia and Hong Kong recorded double-digit growth. The wealth of millonaires in the region is expected to grow 6.7% a year through 2010, according to the report, compared with 3.7% for Europe. Roman Scott, a vice president at Boston Consulting Group (BCG) in Singapore, says the soaring economies of China and India are behind the boom: "If you open up economies for two billion people in 10 years, multiplied by strong market performance and fewer capital controls, you get a phenomenal amount of wealth creation."

Last year, Asia's HNWIs were worth a total of $7.6 trillion, according to Merrill Lynch and Capgemini. That large number belies popular misconceptions about the private-banking industry. To the uninitiated, private banking is an exclusive little world of secret Swiss bank accounts and starchy "wealth advisers" plotting corporate takeovers and tax dodges with their superwealthy clients over lobster and Chteau Margaux. While the banks do offer many perks, it is no longer such a rarefied niche market. For many financial institutions, private banking is increasingly crucial to the bottom line. For example, 46% of Credit Suisse's pretax banking profit in the second quarter of this year was generated by private-banking operations. While retail banks must focus on volume by hawking me-too products to millions of less-wealthy customers, private banks can rack up bountiful revenues by offering a wide range of lucrative services to a smaller number of rich and superrich clients. It's not uncommon for a top private banker to thrive with as few as a dozen clients, who are happy to pay richly for personal guidance on such esoteric matters as, say, reducing taxes, setting up a low-risk-high-return hedge-fund portfolio, investing in emerging-markets property or establishing a charitable foundation. "The profitability comes in because the client has many different relationships with the bank in terms of private equity, real estate, trusts and stockbroking," explains Deepak Sharma, chief executive of Citigroup's global wealth-management arm for Asia and the Middle East. "This relationship is very deep and very broad." It can also be very close-knit, going beyond the nuts and bolts of standard personal finance. Citigroup Private Bank and UBS host wealth-management training sessions for the sons and daughters of their clients, for example, helping them prepare to manage their inheritance or even take over the family business. Kaven Leung, managing director for Citigroup Private Bank's north Asia and Canada operations, says he regularly takes trips to New York with the family of a multibillionaire Hong Kong tycoon to meet with market analysts and fund managers. Says Leung: "We try to address both the financial needs and the human needs" of customers.