The Banking Industry-Wealth Management Overview

The present study examines the relationship between the salespeople’s perceived quota difficulty, customer orientation, job satisfaction, and turnover intention among financial officers. Financial officers make an interesting group to study when examining these relationships. In this section, I will explain the content of wealth

management services and the job of a financial officer, and then give an overview on the domestic wealth management market in Taiwan.

2.4.1 “Wealth Management” Services

In Taiwan, the names being used for the wealth management department may differ from banks to banks, and their corresponding target customer segmentation may also vary, so far there have not been a formal definition available regarding wealth management services. The term wealth management has also been named as the

“Mass Affluent”, “Affluent Banking”, “Privilege Banking”, “Priority Banking”,

“Personal Banking”, etc. Hence, for the purpose of this study, wealth management services is defined as a specific banking sector targeting those customers having accessible liquid asset over NT$ 3,000,000 deposited in financial institutions, providing one-stop shopping financial services to them. Via different channels and medium, provide integrated and yet personalized services, such as personal financial planning, investment and savings, protection (life & illness), income replacement, pensions & retirement portfolio, mortgages/ property investment and wealth and asset management services. Wealth Management banking service is one of the most attractive businesses in financial services offering steadily growing revenue while requiring relatively little commitment of capital. By utilizing different financial tools, hoping to effectively provide asset management, protect customer’s assets from risk erosion and offer diversified investment portfolio and seeking to offer attractive in return. Simply speaking, the wealth management services simplest definition is to manage one’s wealth and asset based on different stages of each individual’s lifetime needs. It involved at least five aspects of services, namely asset protection, taxation planning, risk management, guarantee allocation and investment planning.

On the other hand, financial advisor, also known as personal account officer, customer relationships manager, are the ones that work for the wealth management department in banks and offer personalized financial services to their mass affluent customers. In general, the financial advisors are the bridge between the customer and the bank. They act as the liaison between what banks can offer to their wealthy customers. Banks, like any business, offer services to sell and need customers to buy

them. Seeking the consumer’s dollar in the face of tough competition relies on the efforts of financial advisors. The role of financial advisor is to offer investment, tax, trust advices for a fee collected by the bank. They deliver tailored advice to allow customers to make informed decisions about their wealth. Since this ‘new service’

has only been introduced to Taiwan in recent years, hence the financial advisor’s guidance is primitive and generally limited to cross-selling a bank’s own products.

The success of selling of services heavily relies on the officer’s customer relationship management skill as well as their professional expertise.

Financial advisors are generally assigned a monthly or quarterly sales quota to achieve, mostly are calculated based on fee income, new customer account attrition as well as their customers asset under management. Usually, once assigned quota has been achieved, monthly/quarterly or annually reward/incentive will be granted to the salesperson. The most frequent type of reward in the banking practice will be offering monetary reward or traveling incentives.

2.4.2 Overview on the domestic wealth management market

Foreign financial institutions have been offering wealth management or private banking services for many decades, but this concept has only been brought into Taiwan only over the past few years. The main reason was that, (1) the accumulation of personal asset was reflected on the increasing scale of disposable income, and it has only been significantly increasing over the past decade; (2) the grave global recession between 2000~2004 raised the demand and awareness of fixed income related financial products; (3) due to the financial liberalization over the past few years and the release of many new government legislation, and since foreign banks have been experienced wealth managers, offering flexible financial tools, thus provide a new market opportunity for the domestic banking whose main income was primarily from gaining deposit/loan spread and now opened an innovative way of creating revenues; hence, this service started to gain local banks’ attention.

Wealth management’s greatest attraction is that, in spite of add-on services, it is principally about asset management- investing customers’ money in return for a fee.

Those fees, particularly in difficult or recession periods, it is so welcomed like a lifesaver and a cash cow for the banks. While it provides stable income compared to the troublesome transactions of deal-making and lending. What makes it even more attractive is that it does not impose any burden on bank’s need for additional capital.

According to the relevant research conducted by Solomon Smith Barney (2003), Taiwan has been a promising land. The domestic family’s liquid assets over NT$

3,000,000 is about 450,000 accounts. In the coming ten years, its annual growth is estimated at 7~14% growth rate. By year 2010, the figure is estimated to double to over 1,000,000 accounts. Compare this data with those of more mature regions like the United States and Europe, Taiwan is considered as a fertile virgin land yet to be explored. And likewise, it attracted many world-known foreign banks entering the Taiwanese personal banking market sector over the past few years.

The affluent banking service was first inaugurated by CitiBank Taiwan in 1999, using CITIGOLD as their logo to offer high asset customers one-on-one services.

Over the past three years, Citibank Taiwan gained a very appealing growth rate of 69% merely from investment transaction and account management fee income. That is why banks of every description in Taiwan are plunging into this sector, launch new or reorganizing and renaming existing offering as such and unquestionably the demand for positions like personal account officers or financial advisors has reached to its peak.

However, with intense competition from both domestic and foreign banks, and the rise of recent unemployment rate in Taiwan, the jobs is no longer considered stable and since sales related tasks are assigned across the entire institution which may result important impact on employees job satisfaction and further influence their turnover intention. Simultaneously, it will have parallel effect on employee’s customer orientation, which may influence the employee’s service quality and jeopardize customer’s goodwill.