An increasing number of private bankers are taking the CFA. In 2009, 11% of all charterholders work within Private Client Wealth Management/Advisor. We see this trend continuing for three reasons:
Firstly, regulatory – after the events of the past 3 years, it is fairly safe to say that the regulators will expect further certification of people employed in the financial markets. This has proven to be the case with the Retail Distribution Review. Private bankers find themselves under the spotlight. Given the complexity of the products now sold to clients it is not surprising that the CFA has been included as one of the qualifications accepted. In addition, the CFA’s ethical coverage is very well regarded and reassures regulators and clients that their private banker’s moral compass is fully functional.
Secondly, private banks’ strategy – people matter in private banks and the war for talent is more prominent in this industry than most others. Recruiting from competitors is a zero sum game and most senior private bankers admit there is a need to increase the overall pool of private bankers. A number of private banks have recognized they have to formalize the process of increasing their pool of private bankers. They accept that lateral and junior hires will suffer from a lack of experience and be perceived by the client as being wet behind the ears. The CFA provides them with a 3 year pathway to achieve this. It also provides a natural selection mechanism for those that fail and those that pass. A new breed of private banker will be servicing clients in the next 5 years, they will be technically literate across multiple products and immersed in the numerate concepts of risk and return. The CFA will be the badge they flash to show their clients this.
Finally, the changing client demographic – in relation to the previous point. The client base has changed, they are also technically literate and expect the same of their private banker.
Richard Fernand, 7city’s CFA head, quotes:
“'CFA is increasingly being seen as the must have benchmark for private bankers. The days of boozy lunches and all day meetings at the test match are coming to an end.Clients expect their advisers to have a thorough understanding of products and markets. It's really marking the difference between generating sales and providing advice.”
Two caveats:
Firstly, the CFA is very tough to pass. The approach required doesn’t sit easily with the other competencies a private banker must have. 7city have built highly structured training solutions to enable some key banks to get their junior bankers through the exam but it requires a significant effort from all parties and some clever technology.
Secondly, the CFA is not the only qualification that is attractive to private bankers, the CISI PCIAM and related papers have gained in popularity over the past 5 years. It is healthy that there is competition. It will force the respective exam bodies to continuously evolve their syllabus and force their exams to approximate more and more to real world situations. One thing will continue, private bankers will take exams.