Disarray and distrust in the incumbents lure international wealth managers to Australia. Being Swiss commands a definite premium.
Insular, with a compulsory saving scheme and disproportionate strategic advantages for incumbents, Australia should be one of Asia-Pacific’s most promising wealth management markets to navigate.
However, a damning report by the Australian Securities and Investments Commission (ASIC) reviewed the financial advice on products provided by top banks and wealth managers in Australia and observed that in «75 percent of advice files, advisors did not demonstrate compliance with the duty to act in the best interest of their clients».
Dismantle This Culture
The transgressions cataloged in the ASIC report as well as in a more detailed finding by the Royal Commission led by Justice Kenneth Hayne could be based on a Hollywood blockbuster, they are that dramatic. They are also as varied.
Australia’s largest financial institutions – including the hallowed AMP – stand accused of gouging investors for fees, not disclosing conflicts and profiting from these conflicts of interests, often at the expense of the client. A crumbling compliance system that was easily sidestepped had created an environment for profiteering that put «the pursuit of short-term profit at the expense of basic standards of honesty,» according to Justice Hayne. The hapless commissioner believed the problem was so endemic, he saw no option but to dismantle the culture that had given rise to it.
No Real Processes or Platforms
«Although the largest asset managers ostensibly run open architecture platforms, the percentage of in-house products sold in the region is disproportionately high, why?,» asks one Singapore-based wealth manager who has worked in Sydney.
«The wealth management industry is immature – less than three decades old – and largely relies on self-regulation by either the banks or industry bodies like the Australian Association of Banks, to say it is conflicted is a gross understatement,» he says, confirming that even international banks fall foul of setting up appropriate processes and checks and balances that they would in other geographies.
Senior and Swiss
«Senior leaders – CEOs with a proven track record, COOs – are in great demand,» says one headhunter who has mandates open for both roles at leading banks in Australia. Furthermore, unlike the old days, there is no compulsion to look for home-grown talent as the default.
«There is a realization that importing best practices from mature markets will be the quickest way out of the mess,» he says. Credit Suisse wunderkind Francesco De Ferrari’s appointment as CEO of AMP in December last year is, he believes, the first of many such moves.
«We have got down to talking about the details – quality of life, schooling subsidies, travel, etc – with candidates,» he says of his attempt to woo talent down under. «Not having worked outside of Europe before is not a deal-breaker and being Swiss commands a definite premium,» he says.
