Wealth Management in Asia 2016 - Hubbis

Wealth Management in Asia 2016

hubbis.com

ISSUE: AUGUST

2016

http://hubbis.com/

The last 12 months have been particu-larly tough for all industry players. The various challenges that organisations face are nothing new, but the pressures have been mounting to the point where chief executives are reconsidering their business models, along with the strate-gic choices they need to make, to remain relevant in Asia.

In short, this means re-focusing on the areas within which they believe they can provide real added value to their clients.

For some players, this has meant exiting certain markets or locations, or the in-dustry entirely.

For those with the conviction to con-tinue to compete in this space, they need to determine how to build a sustainable platform for the future.

Foreword

In many cases, this involves redesigning the core service model and digitising parts of the value chain.

A lot of conversations at the moment among industry leaders revolve around efficiency and enabling front-line staff to be more productive – to generate revenue opportunities rather than spending their time on more administra-tive tasks.

Meanwhile, the desire to develop more needs-based solutions for clients in Asia is a process which will take time – but will finally drive the change in thinking needed to lead to a new business model for wealth management in Asia.

The content in this publication covers these issues and more. I hope you enjoy reading and are able to benefit from these insights.

On behalf of BNP Paribas Wealth Management, I am delighted to partner again with Hubbis on this flagship publication – the 6th edition of an annual overview and outlook for the private banking and wealth management industry in Asia.

MIGNONNE CHENGCHAIRMAN & CHIEF EXECUTIVE OFFICER, ASIA PACIFIC

BNP PARIBAS WEALTH MANAGEMENT

CONTENTS

Section 1Business strategy

Section 2Local markets

Section 3Product & advisory offerings

Section 4Family wealth

Section 5Insurance in wealth management

Section 6Digital wealth

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Feature ArticlesA NEW LOOK-AND-FEEL FOR ASIAN WEALTH MANAGEMENT In a more challenging year for wealth management and private banking than the industry has seen for a long time, defining and articulating a clear value proposition is essential to meet today’s client expectations and behaviour.

WILL PRIVATE BANKING IN ASIA THRIVE OR WITHER?As consolidation gathers pace and polarisiation within this segment continues in the face of rising costs and thin margins, how should private banks adapt to thrive?

CONTENTS

Expert InsightsTHE EMERGENCE OF ASIAN MULTI-FAMILY OFFICESPhilippe Legrand of London and Capital Asia

PROVING THE VALUE OF PROFESSIONALISMNick Pollard of CFA Institute

WHY PRIVATE BANKS WILL LIVE OR DIE ON INNOVATIONMignonne Cheng of BNP Paribas Wealth Management

MAYBANK KEEPS FOCUS ON SUSTAINABILITY IN PRIVATE WEALTHAlvin Lee of Maybank

A NEED TO BE NICHEBrian Shegar of Emirates NBD

HOW BEA IS EYEING CHINA FOR WEALTH MANAGEMENT GROWTHGrace Chow of Bank of East Asia

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RE-IGNITING THE REVENUE ENGINEWealth managers have found it tougher than ever to make money in the first half of 2016. But beyond just proposing new investment strategies for clients, they need to drive needs-based conversations to adapt and provide a more relevant offering.

CHANGING THE RULES OF THE ADVISORY GAMEBetter advice in Asia can only come with the willingness – and ability – of wealth managers to position products as solutions, drive simplicity and transparency, and enhance client service. A focus on long-term portfolio value must replace the (continued) tendency towards short-term conversations.

A PRESSING NEED TO ENHANCE THE DISTRIBUTION MODELHaving discussions which are more focused, relevant to clients’ needs and actionable, will create a more realistic chance of bringing the concept of ‘advice’ to life in Asia. This calls for asset managers to hone in on the ways they engage, support and communicate with fund gatekeepers across wealth management.

CONTENTS

THE COMPONENTS OF A SUCCESSFUL WEALTH OFFERING IN INDIAKaran Bhagat of IIFL Private Wealth Management

KASIKORNBANK SHOWS WAY TO SERVICE HNW THAISJirawat Supornpaibul of Kasikornbank

BRINGING A BROADER AND DEEPER OFFERING TO THAILANDDon Charnsupharindr of Citi

THAI INSURERS JUMP ON DIVERSIFICATION BANDWAGONKris Chantanotoke of Thai Life Insurance

CHANGING THE PHILIPPINES INVESTMENT MIND-SETRobert B Ramos of Union Bank of the Philippines

CATERING TO A MORE GLOBAL OUTLOOK IN THE PHILIPPINESNanjo Berba of Philam Asset Management

CAN MALAYSIA CREATE A REAL CULTURE OF ‘ADVICE’?Robert Foo of MyFP Services

PHYSICAL GOLD: ARE YOU READY?Seamus Donoghue of Allocated Bullion Solutions

GIVING CLIENTS THE PRODUCT PROPOSITION THEY WANTLavanya Chari of Deutsche Bank Wealth Management

HOW CITI IS ENHANCING ITS ADVISORY OFFERINGPaul Hodes of Citi

GETTING ONTO A BANK’S FUNDS DISTRIBUTION PLATFORMStewart Aldcroft of Citi

MAKING THE SWITCH FROM PRODUCTS TO PORTFOLIOSDamien Mooney of BlackRock

WHY BANK DISTRIBUTORS MUST RE-TUNE PRODUCT PLATFORMS June Wong of State Street Global Advisors

DRIVING A NEEDS-BASED CONVERSATIONShikha Gaur of Aon Hewitt

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NO ROOM FOR COMPLACENCY IN DISTRIBUTIONAlison Brown of HSBC Global Asset Management

FACILITATING A MORE CONDUCIVE INVESTMENT LANDSCAPEKevin Talbot of Aviva Investors

THE CHANGING LANDSCAPE OF OVERSEAS PROPERTY: CHINA FACTORPiers Brunner of Knight Frank

FACING UP TO THE REGULATORY REALITY OF TRANSPARENCYAndri Manatschal of PwC

PLUGGING A GAP FOR LONG-TERM STRUCTURING ADVICENigel Rivers of Capital Solutions

GREATER TRANSPARENCY RAISES PRIVACY AND ADVICE RED FLAGSStephanie Jarrett of Baker & McKenzie

KNOCKING ON ASIA’S ONSHORE OPPORTUNITYJonathan Hubbard of UBS Wealth Management

BROADENING THE INSURANCE FOCUS ON HONG KONG’S WEALTHYThomas Young of Generali

EYEING HEALTHY PROFITS FROM A MORE MOBILE CHINARainbow Pan of Bupa Global

A PROCESS TO DIGITALISATIONPeter McMillan of Thomson Reuters

WHY BANKS MUST RELY ON FINTECHSRalph Mogicato of Angel investor and entrepreneur

WHAT IF AN UBER WEALTH WAS BORN?Raj Ganesarajah of Intellect Design Arena

Private Banking | Asset Management | Treasury & Trading | www.ubp.comPast performance is not a guide to current or future results. The value of investment interests can fall as well as rise. Any capital invested may be at risk and you may not get back some or all of your original capital. UBP is authorised and regulated in Switzerland by the Swiss Financial Market Supervisory Authority and is authorised in the United Kingdom by the Prudential Regulation Authority. UBP is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority; it is a licensed bank regulated by the Hong Kong Monetary Authority (HKMA) and a registered institution regulated by the Securities and Futures Commission (SFC) in Hong Kong for Type 1, 4 & 9 regulated activities; and is regulated as a merchant bank by the Monetary Authority of Singapore, is an exempt financial adviser under the Financial Advisers Act (Cap. 110 of Singapore) to carry on certain financial advisory services, and is exempt under section 99(1)(b) of the Securities and Futures Act (Cap. 289 of Singapore) to carry on certain regulated activities.

We combine investment expertise with agility to bring you a broad range of performing strategies, tailored to your personal needs.

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ProfilesEFG SHOWS CLEAR CONVICTION FOR SCALEJoachim Straehle & Albert Chiu of EFG International

FOCUSING ON WHAT MATTERS TO CLIENTSNigel Preston of St. James’s Place Wealth Management

THE ROLE FOR BOUTIQUES IN ASIA’S NEW WEALTH LANDSCAPEFebby Avianto of Falcon Private Bank

HOW HSBC IS PURSUING ITS DESIRED PRIVATE BANKING MODELSandeep Sharma of HSBC Private Bank

FOCUSING ON WHAT YOU’RE GOOD ATEvrard Bordier of Bordier & Cie

BANK VONTOBEL EYES ASIA WITH OFFERING OF GLOBAL ACCESSGeorg Schubiger of Bank Vontobel

STEADY GROWTH WITH AN EYE TO THE MILLENNIALSVincent Chui of Morgan Stanley

INVESTEC STRIVES TO SET NEW ADVISORY TONE IN HONG KONGCatherine Kirchmann of Investec Wealth & Investment

DRIVING AN ALL-ROUND INDIAN PROPOSITION FOR HIGH-END CLIENTSAnshu Kapoor of Edelweiss Global Wealth Management

KASIKORN ASSET MANAGEMENT’S VISION FOR THAI DISTRIBUTIONBenjarong Techamuanvivit of Kasikorn Asset Management

A NOVEL APPROACH TO WEALTH ADVICE IN THAILANDPaul Gambles of MBMG Group

A WEALTH OF OPPORTUNITY FOR RHB BANKU Chen Hock of RHB Bank

HOW CREDIT SUISSE IS LEADING AN ASIAN ASSET MANAGEMENT CHARGEMichael Levin of Credit Suisse

SHEDDING LIGHT ON THE ANATOMY OF A FAMILY BUSINESSHans Diederen & Angelo Venardos of Heritage Trust Group

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Event HighlightsCOMPLIANCE IN ASIAN WEALTH MANAGEMENT FORUM 2016 Gearing up for greater compliance scrutiny

ASIAN WEALTH MANAGEMENT FORUM 2016 - HONG KONG Redefining business and advisory propositions

INDEPENDENT WEALTH MANAGEMENT FORUM 2016 Independent firms can grab more AUM, but growth hurdles remain

ASIAN WEALTH MANAGEMENT FORUM 2016 - SINGAPORE Mapping out the future for Asian wealth management

WEALTH THINK 2016 - HONG KONGRethinking business models in Asian wealth management

MIDDLE EAST WEALTH MANAGEMENT FORUM 2016 Enhancing capability, capacity and pipeline in the Middle East

THAILAND WEALTH MANAGEMENT FORUM 2016 Thai potential heralds new dawn for wealth management offerings

PHILIPPINES WEALTH MANAGEMENT FORUM 2016 A need for more investment and conviction in the Philippines

MALAYSIAN WEALTH MANAGEMENT FORUM 2016 Finding the way forward in Malaysian wealth management

A GENERATIONAL MIND-SET TO SERVICING FAMILY WEALTHShanker Iyer, Sunil Iyer & Sanjay Iyer of Iyer Practice Advisers

SUN LIFE EMBARKS ON PATH TO TAP THE WEALTH PIPELINEJason Dehni of Sun Life Hong Kong

TOKIO MARINE CARVES LIFE INSURANCE NICHE IN SINGAPOREJames Tan of Tokio Marine Life Insurance Singapore Ltd.

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A GENERATIONAL MIND-SET TO SERVICING FAMILY WEALTHShanker Iyer, Sunil Iyer & Sanjay Iyer of Iyer Practice Advisers

SUN LIFE EMBARKS ON PATH TO TAP THE WEALTH PIPELINEJason Dehni of Sun Life Hong Kong

TOKIO MARINE CARVES LIFE INSURANCE NICHE IN SINGAPOREJames Tan of Tokio Marine Life Insurance Singapore Ltd.

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CONTENTS

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Published by Hubbis. Printed in August 2016 in Hong Kong. © Hubbis (HK) Limited 2016

All rights reserved. No portion of this book may be reproduced, duplicated or copied by any means without the prior written consent of the publisher. No legal responsibility can be accepted by the author or publisher for the content which appears in this publication.

Michael StanhopeChief Executive OfficerHubbisT (852) 2563 8766E [email protected] www.hubbis.com

INVESTMENT SOLUTIONS FORUM 2016 - SINGAPOREFinding investment solutions for challenging markets

INDIAN FAMILY WEALTH FORUM 2016 Managing Indian family wealth

Co-published ArticleREGULATORY CHANGE MANAGEMENT FOR INVESTMENT SUITABILITY AND BEYONDPrasanna Venkatesan of Synpulse

DirectoryPEOPLE AND FIRMS WHO SUPPORTED THIS PUBLICATIONWe very much appreciate the participation and contribution of key individuals and organisations in the Asian wealth management community to the content in this publication.

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Citi Private Bank (“CPB”) is a business of Citigroup Inc. (“Citigroup”), which provides its clients access to a broad array of products and services available through bank and non-bank affiliates of Citigroup. Not all products and services are provided by all affiliates or are available at all locations. In Hong Kong, this document is issued by CPB operating through Citibank, N.A., Hong Kong branch, which is regulated by the Hong Kong Monetary Authority. In Singapore, this document is issued by CPB operating through Citibank, N.A., Singapore branch, which is regulated by the Monetary Authority of Singapore. Any questions in connection with the contents in this document should be directed to registered or licensed representatives of the aforementioned entity. Citi and Citi with Arc Design are registered service marks of Citigroup Inc. or its affiliates.

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9,000

USD1.73 trn

KBank’s private banking business has amassed over

9,000 HNW clients and more than USD19 billion

in overall assets Page 109

UBS kept its place at the top of the Scorpio Partnership global ranking of the 25 largest wealth managers,

with more than USD1.73 trillion in AUM

Page 36

USD20 bn

Firms with less than USD20 billion in AUM

may find it hard to sustain operations in Asia

Page 6

47%

China’s HNW growth has resulted in a 47% increase in the

amount of money flowing into Hong Kong

between 2012 and 20148

75%

75% of the performance of average advisory portfolios

in a private bank under-perform

discretionary portfoliosPage 144

44

With branches and sub-branches covering 44 cities

on the Mainland, BEA’s network is second only to HSBC’s

among the foreign banksPage 92

Content colour coding - for Hubbis articles

REGULATION & COMPLIANCE

INVESTMENTS

FAMILY WEALTH

SKILLS

STRATEGY & BUSINESS

TECHNOLOGY

viii WEALTH MANAGEMENT IN ASIA 2016

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FEATURE ARTICLE

2 WEALTH MANAGEMENT IN ASIA 2016

A new look-and-feel for Asian wealth management In a more challenging year for wealth management and private banking than the industry has seen for a long time, defining and articulating a clear value proposition is essential to meet today’s client expectations and behaviour.

A July 2016 report by Oliver Wyman says that to sustain profitability, the wealth management industry needs to redesign the ‘core’ HNW service model and digitise parts of the value chain.

More specifically, it says organisations should explore new sources of value creation, such as platforms that enable investors to access opportunities such as growth-stage financing or direct real estate investments. This is in response to the report’s findings that AUM growth is expected to slow from 7% per annum over the past five years to 5% per annum until 2020.

The messages are consistent with many other well-respected annual studies does on the industry, including those by Capgemini and The Boston Consult-ing Group, for example.

The conclusions are broadly based on the fact that the forces which drove performance in wealth management in

recent years are changing, and firms will need to take action on costs and devel-oping new ways of engaging with clients to maintain revenues.

In turn, adds the Oliver Wyman report, entitled: “Wealth Management: Running faster to stand still,” and co-authored with Deutsche Bank Research, business leaders will need to sharpen their focus

on client acquisitions and managing attrition risks, in particular with respect to inter-generational wealth transfers.

“I agree that 2016 is, and will continue to be, challenging for the wealth manage-ment industry, not just in Asia but glob-ally,” says Fredrik Lager, general manager at SEB Private Banking in Singapore. “What we see in particular is that the

“Wealth managers with less than USD20 billion in AUM may find it hard to sustain operations in Asia.”

MARC VAN DE WALLEBank of Singapore

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FEATURE ARTICLE


is tackling rising cost despite margin compression,” he adds.

According to Lager, it may take time before there is a return to a more stable financial environment. “In the mean-time, banks will suffer at a top-line level.”

SHIFTING LANDSCAPEThere is little doubt about the scale of the opportunity bearing in mind the region’s wealth demographics.

Capgemini’s World Wealth Report 2016, for instance, said that in 2015, HNW wealth continued to hit new record highs, aided especially by Asia Pacific overtaking North America as the num-ber-one wealth market. And Japan and China emerged as engines of global growth, registering double-digit increas-es in both the population of HNW indi-viduals and UHNW wealth growth. To-gether, the two countries drove nearly 60% of global HNW population growth. And if past growth rates hold, Cap-gemini predicts that Asia Pacific is likely to continue to be a dominant force over the next decade, representing two-fiths of the world’s HNW wealth, more than that of Europe, Latin America and the Middle East and Africa combined.

Yet while wealth is growing, revenue is challenged and costs keep rising.

In such an environment, some practi-tioners say that only banks with critical mass can offer the breadth of global products needed to thrive.

In line with this, along with a maturing and increasingly-competitive private banking industry in Asia, consolidation seems inevitable. “The increasing cost of doing business and squeezed margins could force out some players whose

restrictive approach towards invest-ments,” says Lager, referring to the upcoming US Presidential election, Brexit, oil prices, Europe’s migration problem, broader geo-political unrest and China trying to cope with its loss in industrial momentum.

And the low-yield environment on the macro front is a problem both for clients and banks. “Return on all invest-ments is lower, hence spreads have to be thinner for clients to have a decent return,” explains Marc Van de Walle, global head of products at Bank of Singapore. “In a nutshell, the challenge

activity income has dropped quite con-siderably over the last six months.”

MULTI-PRONGED CHALLENGESMarket volatility and economic uncer-tainty are adding to the pressures of a wealth management industry already challenged by operational efficiency, margin pressures and regulatory re-quirements. Most clients seem to be waiting on the side-lines, having adopted a wait-and-see approach towards investments.

“There are a lot of things going on glob-ally which, I believe, warrants this rather

“It would certainly ensure enhanced professionalism

over time if we could stabilise management

turnover and as a result of that, RM turnover.”

LONNIE HOWELLUCAP Asset Management

“Coupled with the growing complexity of doing business in

multiple jurisdictions, private banks will have to modify and

fine-tune their business models and strategies.”

JASON LAIThirdrock Group

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FEATURE ARTICLE


core market is not Asia,” says Amanda Chen, deputy head of wealth manage-ment, for Nomura in Asia ex-Japan. “I expect more consolidation in the private banking space to meet regulatory re-quirements as well as to meet banks’ needs of investing in technology to digitise salesforce and clients.”

According to Van de Walle, firms with less than USD20 billion in AUM may find it hard to sustain operations in Asia. In line with his prediction of further consolidation in the Asian wealth man-agement sector, he sees business moving to larger companies. “Smaller players will find it harder to offer the range of products and services that the region’s rich are looking for.”

Speaking at Hubbis’ flagship wealth management event in Hong Kong earlier in 2016, Lonnie Howell, chairman of UCAP Asset Management, described this trend as reflective of what is going to continue to happen in the industry.

But though the minimum size to be successful keeps rising, due to cost of compliance, pressure on margins and the cost of technology, firms cannot ignore the importance of local scale.

This is because Asia typically requires a different business model, skill-sets, people and platforms. So it is not just global scale but also the scale within Asia that matters.

Almost regardless of size, Ronald Lee, co-head of private wealth management at Goldman Sachs in Asia ex-Japan, said at a recent Hubbis event in Hong Kong that it is impossible to over-estimate the value of having a consistent strat-egy. “Another factor that leads to success is being true to your culture.”

From his perspective, it is key for firms to have a differentiated offering, given that clients in Asia are spoilt for choice.

RE-SHAPED BY REGULATION These trends have come in the wake of the far-reaching impact of stricter regulation over the last few years. This has re-shaped the industry for good, particularly in terms of KYC and AML. And banks are grappling with how they keep pace with the scale, speed and costs of these and other current and planned changes.

There is no excuse any longer for banks not try, to the best of their ability, to

ensure all clients are fully transparent – both in relation to tax and plausibil-ity of wealth.

“The times when clients could ‘hide’ behind banking secrecy are dead and will never return,” says Lager. “This will become even more evident when CRS kicks in fully in 2017 and 2018.”

The ‘Panama Papers’ incident also caused a lot of work to work on inquires and in-house checks. Yet this had more of an impact on the public debate, says Stefan Kuhn, head of compliance, private banking, for Credit Suisse in South-east Asia. “How much privacy do you allow for those vehicles and how do you ensure proper oversight?”

An immediate impact of the stricter regulatory environment is the fact that private bankers spend a lot more time today on administrative work, which in turn leads to less client-facing time.

The broader strategic implications, however, include forcing banks to rethink where to operate. In particular, tax laws, cross-border rules and regula-tory requirements relating to onshore resident investors will continue to chal-lenge the traditional offshoring banking model, says Chen.

Regulations relating to product suit-ability and selling processes will also re-shape the industry, she adds, to move away from a volatile and high-risk trans-actional model to a more portfolio ad-visory and management approach.

More importantly, as the volume and pace of regulatory change continues to weigh on the profitability of private banks, which in some cases have led to de-marketing and industry consolidation, banks will need to narrow their focus.

“The Panama Papers had more of an impact on the public debate. How much privacy do you allow

for those vehicles and how do you ensure proper oversight?”

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FEATURE ARTICLE


“The nature of private banking is es-sentially suitcase banking,” says Adriel Loh, managing director and global head of compliance at Bank of Singapore. “Regulators are becoming stricter on the conduct of unlicensed activities onshore. Hence, banks do need to have a robust framework of do’s and don’ts of what can be done by a visiting RM onshore without breaching local regu-latory requirements.”

According to Jason Lai, founder and chief executive officer, Thirdrock Group, coupled with the growing complexity of doing business in multiple jurisdic-tions, private banks – particularly small-to-mid sized players – will have to modify and fine-tune their business models and strategies. This means tar-geting specific client segments and geographies instead of a full-service proposition to all, he explains.

“This may include reconsidering re-gional expansion, de-marketing where necessary, and investing in technology that enhance process automation, risk management and relationship manage-ment,” says Lai. “Strategic technology-related investments, in particular, may become a best-in-class point of dif-

ferentiation among players and have the potential to enhance wealth for both wealth managers and their clients.”

CHINA BECKONINGWhen looking for the biggest wealth management openings going forward, however, a common question is how to make the most of the China opportunity.

This has become more tangible for in-ternational banks and other advisers in the wake of the slowdown of the Chinese economy in recent years. This has increased the appetite of Chinese HNW individuals for diversification and overseas investment alternatives, giving international wealth managers oppor-tunities to gain traction in the market.

“While most wealthy Chinese individu-als still prefer to manage their own wealth and investments, they are gradually recognising the importance of professional advice to preserve their wealth and mitigate risks,” explains Lai.

Data also suggests that these clients are entrusting an increasing percentage of their investable assets to third parties, he adds, from an average of 25% of their investable assets in 2009 to 65% in 2015.

Taking advantage of this potential however, requires, firms need to navi-gate effectively through the increas-ingly complex legal and regulatory policies, dynamic political environment and slowing economy.

To date, many international institutions have “dipped their toes in water”, but they still lack the full suite of licences to do private banking or have enough of an onshore footprint to ensure cov-erage on the manufacturing side, says Neil Harvey. chief executive officer for Credit Suisse in Greater China. “As li-censing regimes change, we will move people onshore over time and increas-ingly the offshore and onshore markets will converge,” he adds, “We are posi-tioning the firm for that move.”

When assessing whether to collaborate to accelerate access to the market in China, Bassam Salem, region head, Asia Pacific at Citi Private Bank, is wary of joint ventures. “I have not seen that many successful business strategies that are based on a joint venture.”

Even those institutions which have invested directly have found China a difficult place to make money. “The vast majority are not making money,” says Michael Blake, chief executive officer, private banking, Asia at UBP. “China is a tough market in which to succeed.”

Yet he is positive about the interna-tionalisation of China and demand for offshore products. “This is a massive opportunity for Hong Kong-based wealth managers.”

Lai says wealth managers also need a thorough understanding of the specific attitudes and approach of this diverse population of wealthy Chinese to wealth and wealth management so they can

“As licensing regimes change [in China], we will

move people onshore over time and increasingly

the offshore and onshore markets will converge.”

NEIL HARVEYCredit Suisse

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FEATURE ARTICLE


better tailor their advice and solutions to meet the needs of this crowd. “The newly-rich who accumulated their wealth rapidly through the growth of innovative industries like technology tend to be relatively young,” say Lai. Statistics suggest that 80% of them are under 50 years of age. Plus, he adds, they tend to be more aggressive in their investment styles with a focus on wealth creation, rather than wealth preservation.

The newly-rich are the most attractive segment also for Joseph Tam, executive vice president and head of private banking and wealth management at Wing Lung Bank. “They are the first generation of new rich since the Chinese economic reforms in 1978,” he explains. “They are mostly in their early 50s, they are entrepreneurs and not familiar with offshore investment markets. They will be the most profitable segment.”

At the same time, the relatively early stage of development of the wealth management industry in China also means the infrastructure and talent pool may not be as established as other global wealth management centres. “So there’s still a lot of room for investor education. And the opportunity here is for wealth

management firms to provide sufficient information, recommend appropriate products and more importantly, mitigate risks for their clients,” adds Lai.

And apart from domestic banks, Lai believes competition may also come from unexpected sources such as WeChat, the instant messaging plat-form, that has made advances into fi-nancial services, and online commerce giants like Alibaba.

“Digital delivery will be key in China,” explains Harvey.

ENHANCING REPUTATIONMore broadly for the wealth manage-ment industry going forward, it needs to work on improving its reputation among clients for service quality.

While there are various ways it can do this in terms of more narrowly-defined value propositions, many practitioners point to the need for a review of com-pensation models.This is focused on the RMs, who are still central to the proposi-tion, but all the other interaction points with the customer will become more important as well.

Encouraging longevity of RMs would generate the greatest benefit, according to Howell, “It would certainly ensure enhanced professionalism over time if we could stabilise management turnover and as a result of that, RM turnover.”

Ultimately, clients like stability, adds Salem. “We sometimes forget that private banking is predominantly a relationship business. A client can relate to the person at the top and stability is a positive thing,” he explains. “If we have stability and lon-gevity, then there is a strong bond between the client and the bank.”

“If we have stability and longevity, then there is a strong bond between the client and the bank.”

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FIRM PROFILE


EFG shows clear conviction for scaleDespite recent damage to BSI’s reputation, EFG International sees a lot of value in bringing together complementary businesses to drive scale. And the pure-play Swiss bank is acting swiftly and decisively to realise this opportunity.

It might seem an under-statement to say that EFG International’s integration of the BSI business is coming at an es-pecially challenging time. But the firm’s senior management is just as convinced about the move as it always was.

The deal, announced in February 2016, was driven by an ambition to combine the two private banks into a top-five Swiss firm of a size and scale sufficient to thrive in an era of costly regulation, stiff competition and uncertain global financial markets.

Eyeing the CHF170 billion (USD174 billion) in combined AUM, those running the show remain excited about the busi-ness prospects.

“With each [of the organisations] having a strong focus on private banking, the two banks have a lot in common, and by joining forces, we will be able to make an attractive value proposition to clients, employees and shareholders,”

explains Joachim Straehle, chief execu-tive officer of EFG International.

MATCHING OF MINDSIt doesn’t matter to Straehle that this deal sees the 140-year old-plus BSI tying up with a bank which only launched in 1995. His confidence in the cultural fit is based on what he sees as both banks being client-focused, solution-driven and entrepreneurial.

More fundamentally to Straehle as a driver for the merger, the high cost-in-come ratios and challenging environ-ment – in terms of regulation, financial markets, staff retention and other areas of private banking – shows the scale required to do private banking in a prof-itable way today.

This is becoming clearer to see in the wake of the consolidation which has been underway over the past couple of years – in terms of banks downsizing in certain markets, closing operations

JOACHIM STRAEHLEEFG International

completely in some locations, and even selling their businesses altogether. For those institutions which are not pure-play private banks, they are increas-

WEALTH MANAGEMENT IN ASIA 2016 13

ingly aware of the seemingly dispropor-tionate risks of providing a private banking offering compared with the value it brings overall.

“It is not valid anymore for some firms to do this type of business,” adds Straeh-le, who says he expects to see fewer private banks going forward. But those which survive will be more focused on what they do best.

Yet this creates a good opportunity for banks with a differentiated business model, adds Albert Chiu, head of the Asia region for EFG. “The merger with BSI will allow us to move to a different league and also be in a position to benefit from the consolidation happen-ing in the market.”

The merger also makes sense when looking at a world map.

The two banks are complementary geo-graphically – giving each other access to

new markets, such as in Switzerland, and across Europe, Latin America and Asia.

In Asia more specifically, EFG brings 320 staff, including 100 client relationship officers (CROs) to the table, compared with 300 staff and 70 relationship man-agers at BSI. In terms of AUM, as of the end of 2015, EFG counted CHF16.2 billion, and BSI CHF12.4 billion.

In fact, in each region of the world, besides the UK, the combined bank will have at least CHF25 billion in AUM, which Straehle sees as a key number when it comes to size.

NO ROOM FOR DOUBTTo some observers, the crackdown and enforcement action on BSI in Singapore

Swiss escrow account which, at closing, will contain 51 million EFG shares issued to BTG Pactual as consideration, with shares locked up for two years.

The fine and the penalty will result in a reduction in the purchase price. The indemnities and escrow account remain unchanged.

From EFG’s perspective, it believes that a line has now been drawn – from a Swiss and Singaporean regulatory standpoint – in connection with this matter.

As a result, it should constitute another important step to remove related regu-latory uncertainty for clients, employ-ees, investors and other stakeholders, says the bank.

ALBERT CHIUEFG Bank

“The merger with BSI will allow us to move to a different league and also be in a position to benefitfrom the consolidation happening in the market.”

(SGD13.3 million in fines) and Switzer-land (CHF95 million in penalties) in May and June 2016 might seem too much for anyone to bear.

But EFG certainly went into the deal with its eyes wide open.

“What has happened [to BSI] shows why we have indemnifications in place up to the purchase price, plus a large amount of shares in escrow,” says Straehle.

More specifically, it was agreed in the share purchase agreement that the in-demnity will be backed by a material

EFG International also received ap-proval in late May 2016 from the Swiss Financial Market Supervisory Author-ity, FINMA, for the proposed acquisition of BSI. This was granted on condition that BSI is fully integrated and legally dissolved within 12 months.

With a view to a swit and orderly closing, the process for obtaining the other regulatory approvals for the trans-action is also on track, says Straehle.

“With the many employees that display professionalism, knowledge and integ-rity every day at both banks, I’m con-

FIRM PROFILE


vinced we have a successful future ahead of us,” he adds. “We will work with BSI to ensure a smooth transfer of clients and employees.”

It is expected to complete at the latest in the fourth quarter of 2016, as origi-nally announced.

CREATING STABILITYThe integrated nature of the deal is reflected in the July 2016 appointments to the executive committee and a new management structure for the com-bined EFG and BSI business – which includes five executives from BSI: Renato Cohn, Reto Kunz, Maurizio Mo-ranzoni, Gerald Robert, and Renato

staff as it can as part of the integration with BSI.

This is important for Chiu, in particular, given his expectations that the business will significantly grow in line with op-portunities in the region.

And going forward, the bank will screen clients from BSI and enforce compliance standards as it integrates the newly-acquired assets worldwide.

From a technology perspective, mean-while, the integration is expected to be relatively smooth. For example, rather than many different legacy systems, both banks have just one – Temenos for

“We want to be seen as a bank which focuses on offering private banking services, with a global network in the

regions we consider to be important.”

Santi. This will become effective as of the date of the closing of the transaction.

“This should help to provide stability and reduce any insecurity in relation to the merger,” says Straehle.

Adds Chiu: “There has been a lot of emotion around what has happened to BSI in Singapore, but the EFG manage-ment has worked hard to quickly outline our plans in terms of transferring BSI staff, clients and the business as soon as possible.”

Another stabilising factor has been EFG’s commitment to taking as many

EFG, and Avaloq for BSI. They will con-solidate the platform using EFG’s exist-ing platform.

Where there is still work to be done, however, is in working to combine various personnel strengths as part of a team, to bring together individuals in a focused way.

“We do not want to continue in the old ways of having CROs specialised in dif-ferent areas,” says Straehle.

At the same time, the EFG model might also help ensure that the bank doesn’t inherit BSI’s problems. Given that it

looks to only hire senior and experi-enced private bankers, they should have an understanding of the long-term nature of their business.

CLEAR VISIONStraehle wants to enjoy a “fresh start” ater integrating the platform. “We want to be seen as a bank which focuses on offering private banking services, with a global network in the regions we con-sider to be important, especially in Asia.”

In line with this, he is determined to ensure the offering remains advice driven, albeit making it clear that the bank can still offer clients the asset management capability. “It is always important to be in the top quartile in terms of performance,” he adds, “to demonstrate to clients we can do the asset management also.”

And by focusing on what it does best, EFG should be well-placed with its know-how and bankers to service the types of clients that its offering is most suited to – those individual and families with USD10 million or more in net worth and who have an international portfolio and lifestyle. “For these clients, we have much bigger advantage than local banks,” says Straehle.

Ultimately, he doesn’t see any real dif-ficulties in maintaining the EFG model and value proposition once the BSI ac-quisition is complete.

While various aspects of how the banks operate need to ironed out in order to find a middle ground, the broader objec-tives seem reasonably well aligned. “Both banks see the importance of the client being at the centre, and we want to give them advice,” says Straehle. “This is a business model we are very specific and clear about maintaining.”

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The emergence of Asian multi-family officesPhilippe Legrand of London and Capital Asia explains why the growth of Asian multi-family offices offers a new option for those looking for service beyond brand.

The changing landscape of Asian wealth management has led to a growing number of senior bankers offering their services in a regulated environment but outside the traditional banking platform.

This has come in the wake of the 2008 financial crisis and various other chal-lenges since.

For a lot of banks, wealth management is not their core business, nor does it account for a large part of their income. So with a tougher market environment and greater risks of damage to reputa-tions, banks have re-assessed whether they want to be in this business in Asia, beyond their home markets in Europe and the US.

As a result, menus have shrunk at many institutions, in terms of what they can offer and what they are willing to discuss with customers, says Philippe Legrand, chief executive officer and founder of London and Capital Asia.

At the same time, for clients in Asia, which are increasingly sophisticated and entrepreneurial investors, they require more than a standard wealth management offering to meet their corporate, lending, wealth management and family-related needs.

According to Legrand, trends such as the internationalisation of wealth, coupled with a growing focus among clients on real estate and other illiquid assets, don’t play to what banks want to do for clients. This is because these services and products are not based on assets that can be put on the balance sheet, he explains.

In response to this, the concept of multi-family offices in Asia has emerged, says Legrand. This segment now accounts for between 5% and 10% of private wealth assets managed in Asia.

By being outside the bank, these inde-pendent firms are not limited by any

PHILIPPE LEGRANDLondon and Capital Asia

menus, explains Legrand, so can focus on alternative options beyond liquid assets – ranging from real estate to private equity to direct investments.

FIRM PROFILE


Focusing on what matters to clientsSt. James’s Place Wealth Management is adamant that its advisers should be interacting with clients as much as possible despite a growing administrative burden. So it has created a support infrastructure and approach to investing to match, says Nigel Preston.

Quality not quantity is an over-used term, but one which rings true for St. James’s Place Wealth Management (SJP) in Singapore.

The firm is growing steadily, but at a rate which Nigel Preston, chief executive officer for the local business, is confident won’t compromise the service levels, investment proposition or brand repu-tation that SJP proudly makes a point of upholding.

“We are pursuing comfortable growth in a way that we can manage it and continue to deliver on our commit-ments to our clients and Partners,” explains Preston.

BRAND PROTECTIONSJP is realistic in its growth objectives. It inducts around one partner a month at the moment and is looking forward to increasing its number of financial advisers in Singapore from 35 to 40 by the end of 2016. But the firm will only

do this if it finds suitable people: that is, individuals who share the same values as the business and would there-fore make the right fit. Because of this, Preston explains that SJP tends to only look for individuals with proven track records from well-respected firms.

When a new Partner is invited on-board, there is a suite of business development managers in place; professionals who are specifically appointed to provide support, add value and help grow the Partner’s business in a safe, considered way which encourages maximum benefit for their clients.

Inevitably, this means working within the spirit of the local regulation in Singapore, to meet the expectations of the balanced scorecard framework amid the various initiatives on the FAIR agenda.

The firm has invested to keep on top of this. From a single compliance officer in

NIGEL PRESTONSJP

Singapore at the start of 2015, it now counts six full-time staff in this function. They spend their time, says Preston, ensuring quality is assured whilst MAS

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FIRM PROFILE


regulations are fully understood and adopted. SJP has also appointed group business risk managers to support the management team.

“We aim to help our own Partners build their businesses in the right way with client relationships being based on longevity,” explains Preston, “and un-derstand how we should be servicing our clients.”

INVESTING MORE SMARTLYIn its mission to constantly bring the best value to its clients, the firm is continu-ally developing its investment offering.

Local market research is conducted to enhance the product range and overall service, which Preston sees as a real differentiator: the investment manage-ment approach is not about simply bringing a UK-centric proposition to clients in Asia.

“When they look at the market place globally, there are thousands of options for them to choose from. This in itself can be confusing.”

As a result, the developments in this area are important to give confidence to clients about how the firm can help them with those investment decisions.

ALIGNMENTThe upshot of SJP’s processes and overall approach to doing business is to ensure its Partners can spend more time with clients on their financial plans and to understand their latest circumstances.

This is increasingly core to staying rel-evant to clients given that people now seem to move between locations and change jobs more oten. “It is important that we understand our clients’ chang-ing attitudes to risk and their financial and other objectives,” explains Preston.

ner’s book to someone else internally who is capable of servicing those clients,” he adds.

As a result, client relationships are managed from the outset with a long term view in mind, helping to foster a longer term relationship.

“We have paid out hundreds of millions of pounds in our UK business based on these schemes, showing that they really do benefit both the client and the Partner,” says Preston.

“We are pursuing comfortable growth in a way that we can manage it and continue to deliver on our

commitments to our clients and Partners.”

A clear approach to investment management

SJP’s philosophy reflects its beliefs that no single investment house has a monopoly on investment expertise, and it does not employ in-house investment managers.

Instead, it selects a number of external managers of what it considers to be outstanding ability to manage its range of funds.

This has a number of advantages. First, it gives the firm the freedom to select best-in-class managers from the global investment market to manage its funds on behalf of its clients. Secondly, it enables it to change any of these managers at short notice if it has lost confidence in them, without any charges, tax or inconvenience to clients. And thirdly, it offers clients a real opportunity to diversify their investments by spreading their money across funds managed by different managers with different styles.

“We are geographically worldwide with local flavouring. We have seen that whether or not we already have in place some local fund managers in Asia, there is demand for more.”

As a result, the firm is working on iden-tifying a greater variety of fund manag-ers specialised in Asia.

“Choice is the biggest challenge our clients in Asia have,” says Preston.

This is also a proposition which is de-signed to attract Partners to join the firm. “All our relationships are built on longevity as part of our value-based reward scheme,” explains Preston.

This enables an individual, at a later stage, to capitalise on the recurring income stream they have built up over the years from the excellent service they provided their clients. “We play the role of the broker and offer a Part-

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Gearing up for greater compliance scrutinyWith the regulatory and compliance burden getting heavier and more complex than ever before for wealth management institutions of all types and sizes in Asia – the event revealed key strategic challenges and initiatives that anyone who wants to survive must act on quickly.

Among the many compliance-related challenges confronting financial institu-tions across Asia in 2016, perhaps the most prominent continues to be on the AML, onboarding and tax transparency sides of the business.

While this wasn’t considered the biggest issue according to a sentiment poll of compliance practitioners and front-line advisers at our Compliance in Asian Wealth Management Forum 2016 in Singapore in January, it is clearly the priority for regulators.

As a result, senior practitioners said at the time that the AML and tax-relating reporting must remain high up on the priority list for wealth management organisations. This included the Common Reporting Standard (CRS) and Automatic Exchange of Information.

A clear take-away, therefore, was that it is ever-more critical for institutions and advisers alike to make sure the back-ground checks and client due diligence they do are done right and monitored.

The various global standards and drive towards transparency don’t just require new procedures, enhanced and ex-panded. In addition, a significant chal-lenge highlighted was the timeliness of these procedures.

For instance, although a lot of countries have announced they will be early adopt-ers, they haven’t yet signed the necessary inter-governmental agreements or put their own regulations in place.

Institutions must get their governance right in terms of operational risk manage-ment and compliance. Are the respon-

sibilities and boundaries clear? Probably not in most cases, said speakers. Risk functions were advised to turn from being reactive to becoming proactive, assuming the governance structure can support such decision making and re-sponsibility under one roof.

At the same time, given the new report-ing obligations, the industry must guard against the risk of misinformed clients.

Ethical compliance was another area discussed as being under more and more scrutiny – and expected to come under a sharper regulatory spotlight.

Newer themes also emerged as issues: information security and data privacy, arising from various mishaps.

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EXPERT INSIGHTS


Proving the value of professionalismCFA Institute is taking to the streets with a new initiative to drive greater awareness of the value of the qualification and professional accreditation.

Re-affirmed in a survey released by CFA Institute in early 2016, it is clear that investors today expect higher levels of transparency and communication than ever before.

At the same time, they are increasingly holding their investment managers to the highest ethical standards, while they are, as investors, always laser-focused on returns.

Meeting these requirements is no easy task. But it demands a certain level of professionalism, bolstered by technical knowledge and market experience.

This is where CFA Institute believes it can flourish. And especially in the type of market environment that is now con-fronting asset and wealth managers.

“We intend to more strongly articulate the value of the CFA designation to investors such that industry firms un-derstand the benefits of employing

charterholders through what we believe in and advocate,” says Nick Pollard, managing director, Asia Pacific at CFA Institute.

FAR AND WIDETo kick-start a new initiative aimed at achieving just this, the organisation has embarked on a far-reaching brand advertising campaign.

This involves billboards across key markets in Asia – including Hong Kong, Singapore, India, China and Australia, as well as in other parts of the world.

“We want to get the message across that we are not just focused on an examina-tion credential, but instead we are the professional body of the investment management industry,” says Pollard.

The headlines used in the campaign aim to underpin this message. Some of these include the following slogans, for example: “My clients expect great in-

NICK POLLARDCFA Institute

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EXPERT INSIGHTS


To give the message more meaning, CFA Institute has also called on charterhold-ers who are active within their local communities to feature prominently. in the campaign.

“We want to show the range of people who are charterholders, in terms of what they do as well as the markets we are in,” says Pollard.

While the messaging is consistent glob-ally, some tweaking for each local market is an important feature of the campaign. In Hong Kong, for instance, the organisation is looking to explain

the need to raise the bar higher, espe-cially in terms of market knowledge.

TIMINGIt might seem like a good point in the market cycle for CFA Institute to be giving some clear and strong reminders to the investment community about the need for professionalism and integrity.

Few market practitioners could argue with the fact that the time has come to more successfully equate the CFA In-stitute brand with an established profes-sion – akin to the legal, medical and accounting professions.

What a CFA designation means in practice

According to CFA Institute, practitioners who are charterholders are uniquely positioned to serve clients’ needs for several reasons:

They are trained in the highest industry standards and best practices – which translates to world-class investment knowledge, more insightful questions and deeper understanding of the global economic climate, resulting in greater perceived value of client service and firm engagement

They are bound to a client-first duty of care, loyalty, disclosure and compliance, putting investor needs first

They annually attest the Standards of Professional Conduct, which informs professionalism and integrity of capital markets, duties to clients and employers, investment analysis and recommendations, and conflicts of interests – bolstering client trust and firm integrity

Ultimately, CFA Institute says it is focused on getting more employers to demand professionals with the CFA designation.

And in particular, across Singapore and Hong Kong, for example, it is looking to increase visibility among private banks, family offices and in-vestment managers.

The ‘St. James’s Place Partnership’ and the titles ‘Partner’ and ‘Partner Practice’ are marketing terms used to describe St. James’s Place representatives.Members of the St. James’s Place Partnership in Singapore represent St. James’s Place (Singapore) Private Limited, which is part of the St. James’s Place Wealth

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The role for boutiques in Asia’s new wealth landscapeFebby Avianto of Falcon Private Bank explains why institutions of boutique size are more agile and aligned with their clients both in terms of culture and outcome, and why they have a key part to play in Asia’s evolving HNW and UHNW market.

Amid the polarisation of private banking in Asia, the boutique players have an opportunity to shine.

Despite the many challenges facing all industry players, as the needs of HNW and UHNW clients change, so too does the potential to offer them more than just portfolios and products.

“There is a need to not only manage their wealth, but also to help them grow their business and navigate the relationship between their personal and business wealth, both offshore and onshore,” explains Febby Avianto, head of private banking for Falcon Private Bank in Asia.

And these requirements remain, despite the political or economic situation.

The key, he adds, is to be flexible enough to adapt to the approach that will suit each client. This is made possible within a bank with a staff of 400 compared with a bank which has over 10,000 employees.

CLOSER RELATIONSHIPS PAY OFFTo articulate where it is important for a private bank to deliver something dif-ferent, Avianto defers to the people factor. “This comes down to the quality of the RM (relationship manager) and the understanding that they have of their clients’ businesses and personal financial needs,” he explains.

This then feeds into ensuring a team-based approach.

“I have worked in big banks, but I person-ally decided to join Falcon Private Bank because sometimes, big banks can be less flexible when meeting the many different needs of clients,” adds Avianto.

Investment opportunities are one such example. “For us, there is no limitation in the same way as there might be in big institutions, like having to work with the investment banking side of the busi-ness, or requiring minimum revenue to do a deal,” he explains.

FEBBY AVIANTO Falcon Private Bank

Putting clients with similar goals and interests together is also an important value-add. Take a client in the prop-erty business, for example, who needs

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FIRM PROFILE


financing for his building. Their local bank will likely charge them a rela-tively high interest rate due to the nature of such a project.

This is where Avianto says the bank can help. “We don’t only help the client who has a hotel he wants to sell, but I will find a client who wants to buy that hotel,” he explains.

“To do this, you have to understand each client’s business,” he adds.

This relies initially on an RM being able to talk to clients about the palm oil in-dustry, for instance.

This might then generate further advi-sory business as a result of uncovering a need a client might have to hedge a position, for example, or to structure a private equity deal.

Being able to act quickly is another benefit of a boutique bank that Avianto believes matters in such a match-making role.

LOCAL FLAVOURAs part of Falcon Private Bank’s aspi-rations for growth and deeper pene-tration in the key markets in South-east Asia, Avianto is focused on making sure he has the right RMs targeting the right clients.

“We need to have local RMs to provide local content and knowledge in cover-ing our target markets, and they are not just looking at the big cities, but also venturing into other parts of the country where we understand what different types of clients in these places need,” explains Avianto.

In Indonesia, for example, some indus-tries only grow in certain cities, meaning

that new wealth gets created in pockets. Coffee and rubber, for instance, come from the small city of Lampung, requir-ing bankers to get close to the producers and distributors of tractors.

“That’s why we believe having a sea-soned private banker who also under-stands the corporate banking market is necessary,” says Avianto.

“They need to be able to talk about the business,” he adds.

Mining these opportunities also involves Falcon Private Bank collaborating with local asset management companies and securities firms in each market.

The rationale, says Avianto, is that global transparency has made confidentiality redundant as a differentiator.

This is forcing banks to compete purely on their services, meaning customisation based on an understanding of the client and the local regulatory environment.

The new tax amnesty in Indonesia is a good example, he adds.

SOLID BACKINGAlthough Falcon Private Bank can promote its agility due to its size and structure, Avianto recognises the value of being ultimately owned by a sover-eign wealth fund.

“Clients have more faith in us for being owned by IPIC, as the sovereign wealth fund of Abu Dhabi, which is still rela-tively secure,” he says.

In addition to the financial stability that IPIC provides, it is a supportive parent, as Falcon Private Bank looks to grow in Asia and maintain its emphasis on being entrepreneurial.

Falcon Private Bank’s three-pronged value proposition

Swiss heritage

A Swiss-made experience backed by 50 years of advisory and investment competence to its clients

The Swiss heritage caters to HNW individuals, entrepreneurs and wealthy families in Asia

People

A genuine entrepreneurial spirit and strong flexibility with clients’ interest at

the centre An experienced

management team in Zurich to build on a track record of service excellence and flexibility throughout the international franchise

Much greater importance on relationship quality than quantity, with each

RM in Asia only managing a select group of clientele to ensure personal dedication and highly-customised financial solutions

Sustainable growth

Organic expansion and strategic focus on select and emerging markets (Switzerland, Eastern Europe, GCC and South-

east Asia A solution-driven approach

breeds core offerings in Asia of portfolio and asset management, advisory and client lending

From a regional hub in Singapore, growth plans are focused on Indonesia, Malaysia and Thailand


Redefining business and advisory propositionsPanelists at Hubbis’ 6th annual Asian Wealth Management Forum in Hong Kong in February 2016 highlighted the importance of long-term thinking to business models, scalability and how advice is delivered.

Perhaps the most significant take-away from this get-together of 300-plus high-profile industry practitioners was the face that far-reaching changes are un-derway in Asian wealth management, especially in the private banking space.

More specifically, speakers discussed the fundamental shit taking place – which should, ultimately, be good for the industry, clients and shareholders alike: greater transparency, more liquid-ity, and enhanced regulatory oversight – along with the banks’ responsiveness to this. This reinforces the need for institutions to identify and leverage off what they are good at, rather than trying to be all-things-to-all people.

Another strong theme was the impor-tance of incentives as a key tool in build-ing the right type of advisory proposi-

tion. Until compensation models are aligned with long-term goals and clients’ best interests, practitioners say the industry will struggle with its evolution.

Private banks were also considering how important scale is to their likely success, on the back of various an-nouncements around consolidation, most notably the EFG-BSI deal a couple of days before this event.

Yet local scale is also a key factor , given that Asia typically requires a different business model, skill-sets, people and platforms.

Meanwhile, the increasing influence and numbers of independent asset managers and multi-family offices is also considered positive for ensuring the long-term interests of clients.


Allocated Bullion Solutions Amicorp Group Infosys Finacle EY Henley & Partners Labuan IBFC Morningstar Numerix Old Mutual Global

Investors Principal Global Investors Vermilion Software AB AXA BEA Union Investment BVI House Asia Deutsche Bank Wealth

Management Enhanced Investment

Products Fundinfo Global Prime Partners HSBC Global Asset

Management IIFL Private Wealth Intertrust J O Hambro Capital

Management Legg Mason Swiss Life SwissAsia Thomson Reuters Tikehau Investment

Management

EVENT HIGHLIGHTS - ASIAN WEALTH MANAGEMENT FORUM 2016 - HONG KONG - FEBRUARY


Malik SarwarHSBC

Pius ZgraggenOLZ

David VarleyAXA

Albert ChiuEFG Bank

Eleanor WanBEA Union Investment

Michael LevinCredit Suisse

Riccardo LehmannSwiss Asia Asset Management

Anthonia HuiAL Wealth Partners

Eli BitanWingate Asset Management

Jan BellensEY

Harmen OverdijkCAIDAO Wealth

Norman ChanNAB Private Wealth Advisory

Richard CollisWillis Towers Watson

Antoine CandiottiIndosuez Wealth Management

Eric LuDeloitte

Jeroen BuwaldaEY

Peter McMillanThomson Reuters

Roger BaconCiti Private Bank

Arjan de BoerANZ

Freeman TsangLegg Mason

Jessica CutreraEXS Capital Asia

Philippe LegrandLondon and Capital Asia

Roger SteelSun Life Financial

Gaurav KumarPrincipal Global Investors

Rohit BhutaCrossinvest


Xavier BurkhardtTikehau Investment Management

Jennifer LaiHenley & Partners

Shanker IyerIyer Practice Advisers

Abhra RoyInfosys Finacle

Kees StouteHubbis

Ron LeeGoldman Sachs

Aksel KitowskiNumerix

Marcel KreisHubbis

Sameer ChishtyStreeton Partners

Damien RyanRyan Communication

Peter GolovskyAmicorp Group

Wing ChanMorningstar

Diamond LeeOld Mutual Global Investors

Seamus DonoghueAllocated Bullion Solutions

“Hubbis is performing a very valuable service in bringing a lot of [industry practitioners] together, putting them on the stage and making them express opinions… allowing a large audience to formulate views. It is an industry-enhancing activity.”Lonnie Howell, Chairman, UCAP Asset Management

Lonnie HowellUCAP Asset Management

Steffen SchadeAIA

Your Access to Emerging Markets Opportunities

Zurich | London | Abu Dhabi | Dubai | Singapore

FEATURE ARTICLE


Will private banking in Asia thrive or wither?As consolidation gathers pace and polarisiation within this segment continues in the face of rising costs and thin margins, how should private banks adapt to thrive?

Some of the recent global AUM figures for private banks highlights the extent of the challenges that many of these institutions face.

Research released by Scorpio Partner-ship in mid-July 2016, for example, highlighted the challenges that the world’s biggest firms face in achieving growth. Most institutions showed a

notable slowdown in AUM and a squeeze on operating margins – with market conditions and hesitant clients also suggesting tough times ahead.

Against this backdrop, UBS kept its place at the top of the Scorpio Partnership global ranking of the 25 largest wealth managers, with more than USD1.73 tril-lion in AUM, followed by Bank of America

Merrill Lynch which, at USD1.44 trillion, was marginally ahead of Morgan Stanley. There is then a big gap to Credit Suisse in fourth place with USD687 billion in AUM, followed (in this order) by RBC, Citi, JP Morgan, Goldman Sachs, BNP Paribas and Deutsche Bank to round out the top 10.

Even the average rise in net new asset growth of 33% on last year’s figures could not compensate for the lower values of client assets, the study found.

Asian private banking, on the whole, also reflects the difficulties in making the model work. Plus, Recent exits/sanctions in the Asian region – Barclays, BSI, Societe Generale, to name just a few – show that the landscape is getting more competitive.

Private banks are also realising that although wealth in Asia is growing as advertised, accessing this wealth is not as easy as they think.

“International banks tend to offer access to a wider

range of products, services and expertise that UHNW

clients are more likely to benefit from.”

BERNARD RENNELLHSBC Private Bank

A subsidiary of Horus Partners Wealth Management Group SA, Geneva

European and Asian expertise

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Personal attention, customized advice, tailor-made portfolios

Assets are with custodian of your choice

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HP Wealth Management (S) Pte Ltd

137 Telok Ayer Street #08-05

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Urs BrutschManaging Partner & Founder

Michael FooCIO & Partner

Stephane Schmid Partner

http://www.hpwm.sg/

FEATURE ARTICLE


ment providers to increase their share of wallet, she believes.

“Private Banks and wealth managers will need to focus on their core com-petencies and areas where they can demonstrate a clear value proposition in order to benefit from the rise in wealth [in Asia],” she says.

Some of the key components necessary for survival and success, according to Amanda Chen, deputy head of wealth management, for Nomura in Asia ex-Japan, are digital offerings in execution and portfolio reporting, quality advi-sory consultations and services, and having a niche in the market where the institution operates.

For Alvin Ma, Hong Kong-based senior managing director and head of private banking at EFG Bank, it is all about fol-lowing a certain type of model. This includes: being AML/KYC/CDD clean and compliant; offering managed advi-sory rather than execution only; focus-ing on solution-driven not just broker/

lenges around operations, technology, and talent management.

The good news, says Jing Zhang Brogle, chief executive officer of Edmond de Rothschild’s Hong Kong branch, is that research shows that many of the Asia’s HNW individuals hold less than one-third of their wealth with a wealth manager.

So there is considerable opportunity for private banks and other wealth manage-

Notable in the Scorpio Partnership re-search, however, was the arrival of two Chinese banks in the top 25 – China Merchants Bank and ICBC – both of which saw significant AUM growth on the year before.

STILL SCOPE FOR OPTIMISMThe various and mounting pressures on private banks are compounded by a combination of shiting client demo-graphics and needs, and existing chal-

KEY PERFORMANCE INDICATORS FOR THE GLOBAL WEALTH MANAGEMENT INDUSTRY

Source: Scorpio Partnership Global Private Banking Benchmark 2016 and Scorpio Partnership Client insight database, 2016

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0)

“Another factor that leads to success is being true to

your culture.”

RON LEEGoldman Sachs

LET’S SIMPLIFY THINGS.

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www.caidaowealth.com

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FEATURE ARTICLE


dealer-oriented services; having quali-fied, competent and licensed profes-sionals; providing asset protection as well as asset growth; and advising on corporate advisory in lieu of net-worth monetisation.

“There will be further industry econo-mies of scale via consolidation, in terms of NNA, AUM, ROA, cost-income ratios, formula-based compensation, and talent development and retention,” he adds.

This also shows the importance of what international banks can bring to the table over some of the domestic players – amid expectations that local private banks will play a greater role going forward.

NEW CLIENT DEMANDSIn line with the generally savvier, more demanding HNW individuals, in part due to the rise in availability of informa-tion via the web and increased market competition, the products and services they are looking for today are different from those before.

Plus, adds Fredrik Lager, general manager at SEB Private Banking in Sin-gapore, clients are much more cautious today compared with only a year ago. “Their expectations in terms of yield on their investments have come down quite dramatically.”

In line with this, clients are now looking for something extra from their private bank – guidance and direction, not only on investments, but also on family, philanthropy, retirement, succession and estate planning.

“It is less transaction focused and more sophisticated financial planning,” says Marc Van de Walle, global head of prod-ucts at Bank of Singapore.

At the same time, Bernard Rennell, regional head of global private banking, Asia-Pacific, global head of family gov-ernance and family enterprise succes-sion, HSBC Private Bank, says that when a client is considering the right private bank for their needs, one of the top concerns is how to find a bank that understands the region, and therefore their needs, while giving them access to investment products and wealth solutions that help them achieve their long-term goals.

In this respect, he believes that inter-national banks tend to offer access to a wider range of products, services and expertise that UHNW clients are more likely to benefit from. “This can range from access to investment opportuni-ties, including access to hedge funds, private equity funds and real estate club deals worldwide,” he explains, “as well as wealth planning services, such as family governance, trust and company administration and philanthropy advi-sory services.”

TYPES OF INITIATIVES TO CLOSE PROFITABILITY GAP

Source: Oliver Wyman analysis

“[Clients’] expectations in terms of yield on their investments have come down quite dramatically.”

FREDRIK LAGERSEB Private Banking

FA_Bordier_BestOfBothWorldAd_PATH.indd 1 4/8/16 1:18 pm

FEATURE ARTICLE


Clients also increasingly expect to play a more active role in managing their portfolios. As a result, clear and full accountability in advisory services and execution is important.

“Standardised product offerings are no longer sufficient to compete,” says Chen. “Clients expect banks to be able to provide wealth solutions beyond the investment portfolio, for example, M&A advisory, corporate finance and other investment banking solutions. They also expect transparency in fees, potential returns on investments as well as tai-lored advice.”

Private banks should also rise to the independent asset management (IAM) challenge. According to Thusitha de Silva, director at Cerulli Associates, they can provide opportunities for opening up alternative revenue streams. “Instead of looking at IAMs as a threat, private banks should cooperate to form an ecosystem where [everyone] can mutu-ally benefit,” he explains. “We see this happening to some extent in Singapore.” More generally, in a falling fee environ-ment and as investors become more savvy, he says private banks should also

be searching for new ideas to diversify their client base, tap potential in un-tapped markets, enhance accessibility to services through digital tools, focus on value-added advice and, at the same time, have a strong risk management framework for clients as well as product due diligence.

Further, beyond access to the latest products or new ideas, ever-more im-portant to clients is receiving relevant guidance and timely advice. “They ap-preciate that we can help them achieve their objectives with a holistic and

long-term plan,” explains Brogle. Trust is also key. “Many clients have multiple private banking relationships. However,” she adds, “we are seeing a gradual shit to consolidating their assets with fewer relationships. They prefer to go with banks they can trust and who offer them the best value proposition to suit their needs.”

Asian wealth managers also need to differentiate between the needs of the newer millionaires and those who have held their wealth for longer periods.

China is where most new millionaires are found; whereas other countries will com-paratively have more second- or third-generation wealth. “The latter will be open to discretionary services, while the former should be approached with advisory so-lutions first,” says Van de Walle.

In addition, adds Michael Blake, chief executive officer, private banking, Asia at UBP, there is growing internation-alisation of Chinese wealth.

The business has reached greater ma-turity a decade on, he explains, and Chinese families are much more open

“Following the tide of digital banking, private banks have to build up

digital platforms for communication, execution

and client servicing.”

ALAN LUKHang Seng Bank

“There will be further industry economies of scale via consolidation.”

ALVIN MAEFG Bank

Swaen Capital Pte.Ltd.No 8 Eu Tong Sen Street#19-89 The CentralSingapore 059818Tel: (65) 3109 1932Email: [email protected]


FEATURE ARTICLE


to traditional wealth management ser-vices than they were before. “The other big change is a greater openness to diversification and a desire for an inter-national footprint that wasn’t relevant to a lot of people before.”

INVESTING IN INFRASTRUCTUREOther than a comprehensive suite of products and range of solutions, having the right infrastructure and people has hence become essential for private banks to succeed.

At Bank of Singapore, for example, Van de Walle says technology has become important in the quest for operational efficiency, to be able manage costs, mitigate risks and give more value to clients. “We are invest-ing in cybersecurity, data manage-ment, data analytics and surveillance. For advisory, we are investing in port-folio analytics so that we can advise clients in a timelier manner, with more details in terms of performance at-tribution and risk management.”

The goal, he explains, is to enable private bankers to provide data for clients who want it, anytime, anywhere and on any device.

According to Chen, fintech will change the way private banks do business. “They are in competition with non-banks in offering multi-channel and digital models which offer transparency and speed in execution,” she explains. “The mobility of services and informa-tion will change clients’ behaviour to become more self-directed, and the relationship manager’s relevance in an advisory role will be challenged.”

Aggress Alan Luk, head of private banking and trust services at Hang Seng Bank: “Following the tide of digital

banking, private banks have to build up digital platforms for communication, execution and client servicing.”

Yet having this technology and infra-structure is not the end-goal in itself. “The rapid advancement of financial technology has prompted numerous discussions about whether the machine can replace the banker,” says Van de Walle. “My answer to this question is, until the machine can sense a human being’s exuberance or fears, not yet.”

Indeed, understanding clients’ needs will always remain paramount to the business of private banking. “Getting to really know a client and understand-ing their subtle needs is something technology cannot do,” he adds. “I believe humans require humans to in-teract with in the field of investments.”

As a result, recruiting the right talent continues to be the key for growth for all private banks.

Indeed, explains Chen, intelligent, technical and finance savvy advisers will be imperative as markets become more complicated.

CONSISTENCY AND CULTURERegardless of size and style of offering, to Ronald Lee, co-head of private wealth management at Goldman Sachs in Asia ex-Japan, says it is impossible to over-estimate the value of having a consis-tent strategy. “Another factor that leads to success is being true to your culture.”

He added that it is key for firms to have a differentiated offering, given that clients in Asia are bombarded for choice.

This is perhaps even more important in an environment where there are clearly more challenges ahead.

These include more competition from non-financial companies that are pro-viding alternatives to private banking services, such as IAMs.

“Against this backdrop, private banks have to figure out their strategies and positioning,” says de Silva, “as more sophisticated aspects of wealth man-agement like asset selection, alloca-tion and rebalancing of portfolios become automated and available to a wider wealth spectrum of investors at lower cost.”

“Chinese families are much more open to traditional wealth management services than they were before.”

MICHAEL BLAKEUBP

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Nordea Bank S.A, Singapore Branch is part of Nordea Group, the leading financial services group in the Nordic and Baltic Sea regions. Some products and services may, due to local regulations, not be available to individuals resident in certain countries and their availability may depend, among other things, on the investment risk profile of persons in receipt of this publication or on any legislation to which they are subject. Nothing in this publication should be construed as an offer, or the solicitation of an offer, to purchase, subscribe to or sell any investment or product, or to engage in any other transaction or provide any kind of financial or banking service in any jurisdiction where Nordea Bank S.A., Singapore Branch or any of its affiliates do not have the necessary license. Published by Nordea Bank S.A., R.C.S. Luxembourg No. B 14.157 on behalf of Nordea Bank S.A. Singapore Branch, 138 Market Street, #09-03 CapitaGreen, Singapore 048946. www.nordeaprivatebanking.com subject to the supervision of the Monetary Authority of Singapore (www.mas.gov.sg).

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EXPERT INSIGHTS


Why private banks will live or die on innovationBNP Paribas Wealth Management has carved out billionaires as a strategic growth segment, says Mignonne Cheng, explaining that this is an industry where being innovative and providing real solutions will be the difference between success and failure.

Despite the many challenges facing private banks in Asia, recent signs suggest this is an industry that continues to thrive.

A quick look at the latest World Wealth Report from CapGemini, for example, support this. It shows the pace and volume of growth, with Asia Pacific ex-ceeding North America for the first time.

The spotlight on compliance and gov-ernance is a crucial factor too. “The high bar for capital requirement, the increased transparency and greater scrutiny from regulators, and the prudent approach of private banks to business management, will provide clients with a stronger sense of safety and trust,” says Mignonne Cheng, chairman and chief executive officer for BNP Paribas Wealth Management in Asia Pacific.

Yet at the same time, Cheng’s bright outlook for private banking in the region

is balanced with the fact she also knows the status quo faces imminent change.

“I believe consolidation of the industry is likely to continue, as private banks need to achieve scale and efficiency,” she explains.

And as someone who has been active in the region’s financial markets for well over three decades, she is well-placed to judge the likely evolution in the look-and-feel of the marketplace.

STAYING AHEADThe way for private banks to ensure success amid today’s challenging envi-ronment will be to work hard at innova-tion. “This is in order to maintain rele-vance and better serve clients’ ever-changing needs,” says Cheng.

In particular, she explains, when dealing with UHNW families, there is no other type of offering which can provide the same combination of high-

MIGNONNE CHENGBNP Paribas Wealth Management

touch, highly-tailored, holistic yet trustworthy personal services of hand-picked, rigorously-selected and trained private bankers.


Identifying the next entrepreneur

Another sign of the innovative nature of BNP Paribas Wealth Management was its 2016 BNP Paribas Global Entrepreneur Report.

The survey revealed the emergence of a new generation of entrepreneurs under 35 years old.

Dubbed the ‘Millennipreneurs’, these are business starters from ‘Generation Y’, born between 1980 and 1995, also known as Millennials.

Their approach to business, in terms of their ambitions, results and leadership style, differs from that of other generations. For example, they create more companies, with larger headcounts and higher target profits.

They are also generally interested in the new economy, but are equally active in many traditional sectors including retail and professional services such as law and accounting.

The report was based on a survey conducted by Scorpio Partnership, analysing the behaviour of roughly 2,600 HNW and UHNW entrepreneurs across 18 markets in Asia, North America and Europe, with aggregate wealth of over USD17 billion.

Supporting wealthy women

As part of its continued approach to clear segmentation, for the second year, BNP Paribas Wealth Management brought together (in July 2016)around 30 women who lead international fast-growing businesses in 12 countries across Europe, the US, the Middle East and Asia, from which there has been strong participation both times.

This exclusive Women Entrepreneur Programme aimed to provide participants with a programme specifically geared to the real issues facing entrepreneurs, along with the opportunity to network and discuss their views on growth, innovation and leadership. The customised training programme was designed by Stanford University.

“Private bankers, as the last bastion of trust, must also maintain an enhanced awareness of their clients’ interest and protection,” explains Cheng.

“They must consistently present the right ideas to clients, seriously taking into account the relevant risk profiles of those clients.”

SERVING THE MEGA WEALTHY IN ASIAThis is perhaps most relevant for the ultra wealthy, which is an increasingly important target segment for BNP Paribas Wealth Management.

In line with this, the bank is rolling out a new initiative, Mega Wealth, to focus on the wealthiest individuals.

This follows on from the success that the private bank has found over the last few years in on-boarding billionaire clients. Indeed, it has reached a penetra-tion rate of 17% in Asia, and close to 50% in Hong Kong.

“This client segment calls for a holistic banking approach, integrating invest-ment banking and wealth management solutions,” says Cheng.

“The billionaire segment is our strategic growth lever. BNP Paribas Wealth Management is gearing

up its value proposition to this segment, in order to remain as the preferred partner to this

increasingly-important population of clients.”

For example, this demands specific credit solutions as well as private invest-ment opportunities as two of the key drivers of the initiative. “The billionaire segment is our strategic growth lever,” adds Cheng.

“BNP Paribas Wealth Management is gearing up its value proposition to this segment, in order to remain as the pre-ferred partner to this increasingly-important population of clients,” she explains.

EXPERT INSIGHTS


Maybank keeps focus on sustainability in private wealthThe Malaysia-based bank is continuing to build-out its offering to HNW clients at home and across the region, but with the focus on ensuring that any bankers and client assets are sticky, says Alvin Lee.

Alvin Lee has a clear vision about the growth he wants to see for the private wealth business over which he presides at Maybank – but he is also willing to take his time in ensuring it is the right type of growth.

More than two-and-a-half years since the Malaysian banking group launched a formal offering for HNW and UHNW individuals, Lee believes things are well on the way to making the investment worth it.

For example, he counts roughly USD11 billion in AUM across three booking centres, including the unit’s hub in Sin-gapore, Malaysia and Hong Kong as a newer, smaller location.

This has come from a combination of onboarding some of the wealthier exist-ing clients from the retail bank onto the private wealth platform, as well as at-tracting new clients to bring assets to the business.

Maybank has also implemented a new Avaloq platform to ensure it has the right IT systems and processes to deliver an enhanced suite of products and ser-vices to what was largely a retail-ori-ented business previously.

Now, the priority is scaling up in order to drive performance – and mainly at the front-line. But this doesn’t just mean hiring to bulk up the numbers at the expense of the strategy of longer-term sustainability that Lee is adamant about maintaining.

“We need to hire relationship managers (RMs), but they need to be the right people who also are a cultural fit for us,” he explains.

This comes down to how they view their careers and also the approach they take to advising clients. In line with this, Lee stresses the importance of the bank ensuring that its customers make money too. To achieve this, he wants

ALVIN LEEMaybank

to bring in bankers who are focused on developing a long-term career in private wealth management – not simply look to push products.

Suite 501A, 5/F, 9 Queen’s Road Central, Central, Hong KongWebsite: http://www.ttg.com.hk/Email: [email protected]: +(852) 2869 0801 Fax: +(852) 2523 4610

THINK INDEPENDENT. THINK TTGTTG is a leading independent private wealth manager, committed to providing unbiased professional investment advice to private clients, companies, trusts and charitable organisations.

Our goal is to develop long-term partnerships with our relationship managers and clients, founded on mutual trust, where the preservation and ongoing management of our client’s wealth is the primary objective.

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EXPERT INSIGHTS


TAKING ADVANTAGEWhile on one hand the timing for expan-sion might not seem ideal given the wider market environment, there will always be challenges and questions over the right time.

The Asian private banking industry, for example, is characterised by high costs – in terms of regulation and the general running of the business.

Indeed, this has been a factor over the past 12 to 24 months in many European private banks, in particular, reviewing the extent and scope of their operations in Asia.

PERKS OF BEING FRESHStarting a private wealth proposition from scratch has also enabled Lee to benefit from the advantage of not having to deal with a lot of the legacy systems and processes which weigh down some of his peers.

He also applies this type of thinking to implementing his plans for aiming to do more digitally.

Yet it is still early days. So, for the time being, he says he is looking to leverage on the other parts of the Maybank group, such as the Kim Eng securities venture and the retail bank.

“The private wealth industry has to be very careful not to let costs escalate to

the point where they cannot sustain or provide the required level of service or solutions.”

“The private wealth industry has to be very careful not to let costs escalate to the point where they cannot sustain or provide the required level of service or solutions,” says Lee.

He is also aware of the need to be more creative in how and where he looks for new talent to bring on board.

And he sees a big opportunity to hire corporate and investment bankers into a private banking role.

“There is a lot of re-tooling and training needed to do this, but this shows that there are potentially other areas to tap.”

Ultimately, he wants to continue to focus for the time being on those client leads which are what Lee calls “warm”.

The conversion rate so far has been around 65%.

In another two to three years’ time, he wants to have between 6,000 to 7,000 private wealth clients – the rationale being, that if each of them has, on average, between USD2 million and USD5 million with Maybank, then Lee can look to roughly USD20 billion in AUM. This is what he believes is the minimum critical mass to work with in today’s market.

Getting the ball rolling

The birth of the private wealth component of the Community Financial Services (CFS) business at Maybank, essentially meant the creation of a new unit.

The bank realised the potential to access a ready-made customer pool through a more dedicated offering. This could also help it generate new income streams and meet growing demand from customers for a broader service.

In Malaysia, for example, Maybank has more than 12 million customers, and is the largest bank with No.1 overall market share in consumer loans, retail deposits, unit trusts, loans, retail fixed deposits and CASA. The group also has a presence in all 10 ASEAN countries.

Lee was then hired to take charge of the private wealth business and harvest what the bank saw as a segment which was rightfully already its own. And it took a logical step by basing the team out of Singapore. This enables it to service a combination of local clients as well as use its offshore desk to cater to clients based overseas but who want to bank in Singapore.

The view was that in the medium term it could be a source of liquidity, and in the longer term, one of profitability. Even though it was decided to position the private wealth arm within the consumer bank, the strong collaborative culture in the group ensured it is closely linked to the corporate and investment banking divisions.

FIRM PROFILE


How HSBC is pursuing its desired private banking modelHSBC Private Bank took some bold decisions a few years ago to redefine its risk appetite. With a clearer sense of the type of business it wanted to do, and with whom, this mandate had allowed Sandeep Sharma, its head of South-east Asia, the opportunity to position the business for growth.

The first half of 2016 has been a tough time for all private banks.

The generally-unfavourable investment environment due to the volatility and uncertainty has resulted in lower bro-kerage and trading activities, worldwide.

This has highlighted the importance of business models built on more in-depth, needs-based conversations with clients, stemming from a deeper understanding of their needs and goals.

For HSBC Private Bank, this is exactly the direction it has been heading.

“We have defined our strategy as being the preferred private bank for clients of the wider group,” says Sandeep Sharma, head of global private banking, South-east Asia at HSBC Private Bank.

This includes servicing its commercial banking customers, to meet their per-sonal wealth needs.

“Everything we have done in recent years is based on pursuing that vision,” explains Sharma.

AHEAD OF THE CURVEThe strategy review that the bank did a few years ago was important in enabling it to define its risk appetite.

For example, it defined the markets in which it wants to grow, resulting in a consolidation leading to it operating today in key growth markets where the bank has a well-established HSBC Group presence.

It also combed through its client book to ensure that it banks with only the right kind of clients, where they are com-mitted to being compliant with its tax transparency requirements and efforts to combat financial crime risk.

In Sharma’s view, this was a forward-thinking move. “Over the next five years, I think the risk appetite for the whole

SANDEEP SHARMAHSBC Private Bank

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In terms of segmentation, although HSBC Private Bank’s minimum invest-ible assets for new client is USD5 million, given its focus is on serving the private wealth needs of HSBC’s com-mercial banking clients, it has intro-duced a Private Wealth Entrepreneur (PWE) programme.

PWE is an incubator proposition offered to HSBC Commercial Banking clients who are on course to building busi-nesses and, as such, expected to create wealth in the coming years. Essentially, these clients get to enjoy HSBC’s private banking solutions and services even if they might not meet the minimum in-vestible assets.

From Sharma’s perspective, the upshot of this re-positioning has created capac-ity for the team to grow its business in South-east Asia, by effectively tapping into the rising affluence in ASEAN.

For example, in the 2016 Boston Con-sulting Global Wealth report, Asia Pacific (ex Japan) is expected to hold a projected USD60 trillion of wealth in 2020.

It is also likely to surpass Western Europe as the second wealthiest region in 2017. The report also highlighted that Asia Pacific (ex Japan) is projected to hold 27% of global wealth in 2020 and its growth is largely driven through creation of new wealth.

THE BANK OF CHOICEThe HSBC Private Bank mission is to leverage its existing client base as part of the broader Group.

This is based on the viewpoint that more and more clients are looking to work with one bank for all their corporate and private banking needs.

“We see numerous cases where clients have a requirement for their business at short notice. If they have an existing relationship with the private banking division, it gives more confidence to the commercial banking team to turn around a solution very quickly,” ex-plains Sharma.

This works the other way round too. For the bank’s commercial banking clients, given that much is known about them and their business, it is much easier for the private banking business to consider the individual as a client by already having background on their business and how they’ve accumulated their wealth. “Clients prefer to deal with banks which know all aspects of their business and their family,” he adds.

ADDING CAPACITYSharma is certainly not complacent. “We now need to add capacity.”

There are various approaches that the bank is taking. One of them is to create greater efficiency and improve produc-tivity by ensuring its employees have the necessary training and resources to reach his or her potential.

The bank is also selectively recruiting, especially for seasoned relationship managers (RMs), product specialists and middle-office personnel to better tap into potential opportunities that lie within its commercial, corporate and retail banking divisions.“We have a lot of untapped potential internally,” explains Sharma. “Last year, net new money glob-ally was largely driven by internal col-laboration. I don’t think we are even close to mining half of these untapped internal opportunities.”

As Asia’s wealth grows so will the demand for the transfer of inter-gen-

erational wealth, he adds. “Given that HSBC has one of the largest corporate banking portfolios globally, we will benefit greatly if we are able to hone in on our collaboration framework with other group businesses and offer Asia business owners with a comprehensive suite of private wealth solutions.”

Yet size is less important compared with client satisfaction and the speed of providing relevant solutions.

It also needs to be about more than just bringing in people in order to just bulk up the numbers. Sharma is looking instead for RMs who believe in the bank’s risk appetite and why it has changed. It doesn’t want to populate its private banking business with indi-viduals still of the mind-set where they believe they need to be everything to every client.

HSBC’s Private Wealth Entrepreneurs Proposition

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The bank adopted a team-based service model, whereby a dedicated team comprises an RM, relationship executive and wealth adviser, to provide these clients with wealth advisory and investments solutions.

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Independent firms can grab more AUM, but growth hurdles remainSentiment among participants at Hubbis’ annual get-together for the independent wealth community in Singapore in March showed the optimism for this industry segment to become more prominent – but only if it can engender enough client trust in the model and lure more competent advisers from private banks.

Increasing awareness among HNW and UHNW clients of the added benefits of an independent adviser – especially during market distress – is a key factor driving optimism among practitioners that this segment can control more client assets and wield more influence amid an increasingly polarising land-scape within Asian wealth management.

Independent asset managers (IAMs) and multi-family offices (MFOs) stand to benefit from a mix of dynamics playing out at the moment: growing client wari-ness and skepticism about the service and performance they get from their private banks; a search by clients within the current financial market turbulence for models offering disruptive innova-tion combined with greater flexibility via a more tailored and relevant service; a desire for genuine independent guid-ance to manage market volatility and

uncertainty; and the growing appeal of access to alternatives not present within many bank offerings.

At present, less than 5% of private wealth AUM in Asia is overseen or managed by independent firms. But in 3 years’ time, two-thirds of speakers and delegates – from IAMs, MFOs, other independent firms, and some private bankers – predicted that between 10% and 20% of this AUM will be with firms such as IAMs and MFOs.

The main opportunities for these firms were considered to be: capitalising on their flexibility; capturing clients unhappy with the service and performance from private banks; hiring private bankers and advisers disgruntled with higher compli-ance scrutiny; consolidated and com-prehensive – and unconflicted – service; and flexible product range.


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Yet, the hard work is by no means over. And a number of hurdles remain. The top five challenges included: the compli-ance burden and keeping up with change; acquiring clients and convinc-ing them it’s worth paying a fee; being able to attract enough talent (pay, com-mitment, prospects, etc); bank plat-forms’ DDC process; and raising suffi-cient AUM for economic viability.

EVENT HIGHLIGHTS - INDEPENDENT WEALTH MANAGEMENT FORUM 2016 - MARCH


Independent firms can grab more AUM, but growth hurdles remain

Rohit BhutaCrossinvest

Steve DaviesJavelin Wealth Management

Liam Collins PwC

Angelo VenardosHeritage Trust Group

Rashmi LodhaAmicorp

Suresh WithanaTikehau Investment Management

Anthonia HuiAL Wealth Partners

Stirling R LarkinLarkin Group

Paul GamblesMBMG Group

Patricia ThomasIRM Family Office

Rolf HaudenschildMaroon Analytics

Ted LowGAO Capital

Federico DonatoFFA Asia

Khing GoMarc Faber Group

Paul HodesCitibank


Filippo FabbrisOclaner Asset Management

Leonardo DragoAL Wealth Partners

Philipp PiazFinaport

Steve BriceStandard Chartered Private Bank.

Yash MishraTaurus Wealth Advisors

Olivier DestandauEightStone

Rajini KodialamFocus Financial Partners

David VarleyAXA



Matthew R ByerSpectrum

Jeff MedinaAsia Cornerstone Asset Management

Jessica CutreraEXS Capital Asia

Mark NelliganPershing Securities

Dominic VolekHenley & Partners

Peter WilliamsLeonteq Securities

“It is good to see this forum is growing every year... and this year seems to be a breakthrough in terms of the optimism forthis segment of the industry.”Urs Brutsch, Managing Partner & Founder, HP Wealth Management

Urs BrutschHP Wealth Management

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FIRM PROFILE


Focusing on what you’re good at

As the fifth generation of the founders of Bordier & Cie, Evrard Bordier has a unique perspective. And he is looking beyond shorter-term industry pressures to build a genuine relationship-driven offering that dispels the myth that scale is critical for survival.

Evrard Bordier straddles two overlap-ping worlds: on one hand, he runs a private bank, trying to give his clients the best service he can; on the other, he is the fith-generation of a success-ful family business.

He balances the two as managing partner of Bordier & Cie – a 170-plus year old independent, international private bank.

This also gives him a perspective where he can be pioneering in terms of devis-ing a new strategy to stay relevant and profitable as a boutique player in today’s environment.

“We have gone past the point in this industry where it is viable to run a small business,” says Bordier. “It is no longer enough for the middle and back office to keep pace with the scale of opera-tions. Banks today need enough infra-structure to build the equivalent of a 20-storey building, regardless of size.”

ADAPTING TO THE MARKETThe first half of 2016 has been transfor-mative for Bordier & Cie in many ways.

From a reputational and regulatory adherence point of view, the private bank has a clean bill of health, and this is credited to the robustness of its op-erational infrastructure.

Yet Bordier acknowledges the need to regularly review the bank’s overall busi-ness strategy, especially against the backdrop of the regulatory, margin and other pressures he shares with his peers. “This is always a potential consideration, but what motivates me is the responsi-bility I feel to my ancestors to build the best business we can, and one which will stand the test of time,” he explains.

He is also in quite a unique position insofar as he is able to look beyond the short-term pressures of revenue targets that might influence the strategy of many publicly-held institutions.

EVRARD BORDIERBordier & Cie

His relatively small scale also alleviates the need to rely on hiring hoards of new bankers. Instead, he has the potential to be opportunistic.

FIRM PROFILE


Plus, it is arguably too difficult to extract the most successful relationship manag-ers today, anyway.

They tend to be financially-tied to their institutions, plus banks themselves have become a lot more effective at retaining client assets, even when their top bankers leave.

The Bordier & Cie approach, therefore, is to have more of a business develop-ment team. “We try to go systemati-cally through a particular country, one at a time. We are redefining how we approach the market,” he says.

that go beyond just managing their port-folios,” adds Bordier. “We take pride in executing a uniquely tailored touchpoint strategy for each of our clients to bring the Bordier experience to life.”

These strategic brand touchpoints adapt to clients’ individual needs and lifestyle preferences. “Enhancing the ambit of our client servicing is an essential element to deepening our clients’ trust in us,” he explains.

In line with this, the firm is building its repertoire of services that anticipate the need for a more involved wealth

“We don’t need to be good at everything, but only in one or two specific areas which clients will come to us for.”

management approach. “We think this is something we can continue to excel in as long as we play to our boutique strengths,” says Bordier.

In his mind, this needs to go beyond simply talking about protecting, preserv-ing and passing wealth on to the next generation. “Clients hear this from every private bank, and nobody stands out.”

As a result, he says clients oten get badly serviced, regardless of which bank they have an account with.

By contrast, Bordier is proud that the bank has retained what it calls its ‘human dimension’. This starts by having a frank and more realistic conversation with a client about why they even want a bank account in the first place.

Profit by partnerships

In trying to do things differently to its competitors, and at the same time play to the bank’s strengths, Bordier believes in partnerships as a key way to secure new client assets and grow profits in Asia, and without raising fixed costs.

This is important to being able to weather the expected trend towards more onshore wealth management going forward. “This poses a challenge to boutiques like us,” says Bordier. “Our model will never be geared up towards having licences in local markets.”

So to capture onshore revenue while remaining offshore, he sees alliances as the main avenue. The bank can charge for sharing specialist knowledge and training with institutions which are building their private banking offering. In return, it hopes to be introduced to clients who wish to bank in Singapore.DELIVERING VALUE

Going against the trend of standardi-sation, Bordier says he wants to provide a more tailored set of solu-tions and services.

“We want to be known in the market as the best boutique bank, but with an of-fering which is genuinely different,” he adds. “We don’t need to be good at ev-erything, but only in one or two specific areas which clients will come to us for.”

However, this must involve more than just marketing talk, and in its place be genuinely transformative in terms of the bank’s approach to how it adds value to its clients.

“Our relatively small size also means we are able to cater to client’s specific needs

In finding the right model, as every bank tries to pool its qualities, Bordier has opted for the relationship-based ap-proach, not a performance one. “We are taking the right decision in moving this way, and charging a fee for that.”

Likewise, the firm looks for clients who fit its business model and philosophy.

“Those who are willing to pay a premium for proficient private banking are aware of what our advisory fee entails,” says Bordier. “Our ideal client values the work we do for them and is willing to pay what we are worth for doing it.”

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FIRM PROFILE


Bank Vontobel eyes Asia with offering of global accessBank Vontobel is bullish on private banking in Asia despite the intense competition in the region which has compressed margins. Georg Schubiger says the firm’s boutique strategy allows a unique offering to HNW clients.

Being focused and targeted is a good thing in the Asian private banking in-dustry today.

In an increasingly-tough environment to even try to be all-things-to-all-peo-ple, downsizing, mergers, acquisitions and exits have started to happen more and more frequently.

But there is always scope for banks to develop businesses where they offer clients something they really need.

For Bank Vontobel, it is clear that the firm looks for differentiation rather than scale. “We have a boutique strategy that focuses on clients who want to diversify part of their assets internation-ally – across jurisdictions, asset classes and currencies,” says Georg Schubiger, member of the group executive board and head of private banking globally.

With a very lean set-up in Asia to offer these services, the firm has taken the

decision to basically operate as a wealth adviser to clients in the region, and book their assets in Switzerland.

Such a narrow focus, it is becoming more and more relevant due to a combination of market developments, as well as what the bank believes entrepreneurs and wealthy families are increasingly looking for, explains Schubiger.

GROWTH AMBITIONAs of 30 June 2016, Vontobel as a group grew its net profit by 8% to CHF105.7 million – based on strong growth in new money of 7%, enabling advised client assets to reach a new level of CHF179.3 billion (USD151.8 billion).

More specifically, in its wealth manage-ment division, it was able to increase its advised client assets to a new record level of CHF43.3 billion. This was due to organic growth and the acquisition of Finter Bank – thus achieving above-average growth compared with its peers.

GEORG SCHUBIGERBank Vontobel

However, investments in the recruit-ment of additional client advisers, the number of whom increased by 18% over the last 12 months had an impact on

FIRM PROFILE


the overall positive result. At CHF34.2 million, pre-tax profit in wealth manage-ment was higher than it was in the previous year.

Yet the strong growth in the wealth and asset management businesses over the last year resulted in significantly higher net fee and commission income, representing 66% of Vontobel’s operating income.

In Asia, plans are afoot to increase the impact of the region to the bank’s

form, where structured products of various providers are traded; these are also offered to private clients.

In terms of asset management, mean-while, some of Vontobel’s equity funds have posted above-average perfor-mance in recent years under US fund manager Rajiv Jain.

The bank can also offer a globally-di-versified, tailor-made portfolio to clients with USD3 million in AUM and up.

In line with this, Schubiger says Bank Vontobel is more focused on bringing on board advisers and wealth managers who understand the clients they serve. “Our ideal relationship manager (RM) is somebody who understands the invest-ment world from a global diversified standpoint,” he explains. “He or she needs to have a broader view on the one hand, but also understand how entre-preneurs think. This enables them to get a tailor-made service that takes into consideration the entrepreneur’s needs in wealth planning and preservation.”

DIGITAL DIMENSIONUsing technology to reach across borders easier and quicker is a further important component of Schubiger’s strategy.

Although the bank doesn’t believe that a digital interface can replace the face-to-face interaction with an RM, technol-ogy has allowed it to export its ser-

vices and products from Switzerland to Vontobel’s focus markets world-wide.

Also, in late 2015, it launched a secure mobile private banking app. This pro-vides HNW clients in China and Hong Kong with around-the-clock access to their portfolio and wealth management services using smartphone and tablet devices. Plus, it enables them to trade and speak live to their RM through encrypted instant messaging.

While Schubiger acknowledges the importance of Bank Vontobel being at the forefront of the digital revolution, however, it must also distinguish what will translate into an industry standard, and what will fall by the wayside.

Asian footprint expanding

While many Swiss private banks run their Asian operations from Singapore, Bank Vontobel has chosen Hong Kong in which to base its roughly 20-strong private banking unit.

In early 2016, the firm boosted its firepower on the relationship management side, selectively bringing in individuals with the experience required to implement Schubiger’s strategy. For example, it hired Christine Chen and Joannes Ho in March and April respectively, both from CTBC Bank, as senior relationship managers in newly-created roles.

As of June 2016, a new team of experienced private banking advisers has been in place in Zurich, hired specifically to cater to wealthy clients who are domiciled in Australia.

“Our ideal RM is somebody who understands the investment world from a global diversified standpoint.”

bottom-line. For example, it has a publicly-stated aim to place a focus on emerging markets in Asia Pacific, to strive to at least double its current busi-ness volume in the region by 2020.

In line with this vision, the target for AUM in Asia (in wealth management) is to grow it by at least double over the course of the next four years. Key to this for Bank Vontobel is emphasising its boutique strategy, which seeks to avoid having cost-intensive local booking centres.

RELEVANT SOLUTIONSAs this family-owned firm continues to try to distinguish its solutions for HNW clients, it puts value in being able to benefit from its investment banking and asset management arms.

In the case of investment banking, an important focus is the Deritrade plat-

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Mapping out the future for Asian wealth managementOur 7th annual event in Singapore for the regional wealth management industry brought together 400 senior individuals from across the community to discuss and debate the risks and opportunities ahead.

Despite Asia’s well-documented growth in wealth, the time has come for a reality check. Only a small number of private banks are profitable and the industry is increasingly polarising; with the larger, universal institutions on the one hand, and more focused boutique advisory firms at the other, making more headway. A look at where the net new money went over the previous 12 to 18 months has been clear evidence of this.

Discussions focused on how to address industry shortcomings, such as business models overly-reliant on transactional revenue, continued challenges in raising competency and productivity, onerous compliance obligations, and limited real innovation or automation.

In the face of the growing pace of con-solidation in Asian private banking, for


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example, over the last 24 months, the focus was on trying to find solutions to the lack of differentiation in strategies and value propositions of many organ-isations vying for market share. Further, with insurance companies making a foray into wealth management in Asia, the landscape is changing quickly.

Going forward, individual players agreed on the urgency to drive needs-based conversations with the right clients, backed up by real advice and relevant, contextual information.

Local institutions onshore also need to seize their opportunity to position their wealth management offerings as more strategic within the wider group. This is timely, as many foreign firms struggle with the demands of transparency and tax-related initiatives.

EVENT HIGHLIGHTS - ASIAN WEALTH MANAGEMENT FORUM 2016 - SINGAPORE - MAY


Toby SimpsonFriends Provident International

Kevin TalbotAviva Investors

Anurag MaheshDeutsche Bank

Abhra RoyInfosys Finacle

Arthur WuMorningstar

Koh Hoe ShinManulife Financial Advisers

Adriel LohBank of Singapore

Bassam SalemCiti Private Bank

Gary HarveyNexus Financial Services

Lim Say BoonDBS Bank

Mark WightmanEY

Bruno de PampelonneTikehau Investment Management

Jeroen BuwaldaEY

Jason MooGoldman Sachs

Amar BishtOrbium

Evrard BordierBordier & Cie

Greg KingFactSet

John CappettaBank Julius Baer

Markus BlattmannBank Julius Baer

Philip LungBNY Mellon Investment Management

Febby AviantoFalcon Private Bank

Frank TroiseLeonteq Securities

Veronique FournierBaring Asset Management

Oliver LeeOld Mutual Global Investors

R.N. Nagaraj PrasadhIntellect Design Arena


Patrick DonaldsonThomson Reuters

Max TiongDBS Bank


Ned PhillipsBambu

Paul HodesCitibank

Stefan KuhnCredit Suisse Private Banking

Smita ChoudharyBank of Singapore

David VarleyAXA

Jaideep BillaIntellect Global Consumer Banking

Derek GoldbergAetna

John RobsonQuantifeed


Marcel KreisHubbis

Mark SmallwoodDeutsche Bank Wealth Management

Hans DiederenHeritage Trust Group

Matthew DabbsAAM Advisory

Erdem OzgulNumerix

Nicholas KourteffUBS Wealth Management

Philipp Portmannfundinfo


Owen YoungStandard Chartered Bank

Ranjiv RamanCazenove Capital Management

Alexis TanHenley & Partners Singapore

Rodolphe LarqueCredit Suisse


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EXPERT INSIGHTS


A need to be niche

To survive one of the most challenging periods private banking has ever faced, a more focused and defined proposition is essential, says Brian Shegar of Emirates NBD.

A common concern among senior ex-ecutives in wealth management is the gloomy outlook for the industry in Asia.

They see it as one populated by increas-ing challenges from the many regula-tory obligations and compliance expec-tations, in turn requiring significant investments in people and systems. With rising overheads from these and efforts to tackle other business risks, private banks need to rapidly find a way to weather the storm.

According to Brian Shegar, head of Asia Pacific for Emirates NBD, the right proposition for many institutions without existing scale or size in this space is to focus on what they can do best for their clients.

“A niche strategy works best,” he ex-plains. “Private banks shouldn’t try to do everything, or cover all markets. They need to focus on their compara-tive advantage.”

FACING UP TO CHANGEPressure is coming from multiple sources. Clients, too, have become more and more demanding. “They expect finer pricing and lower transaction costs,” says Shegar. “These challenges are not to be under-estimated.”

Plus, a few clients have been able to successfully sue their private banks, so this places yet more emphasis for senior management on risk management and operational efficiency.

In terms of the competitive environ-ment, Shegar is also wary of what he calls the irreversible trend of fintechs. “Some institutions are trying to meet this challenge through collaboration and acquisition of fintechs. The banks which are slow to adapt to this phenomena could be bypassed in due course.”

Despite the need that will always exist for bespoke, tailor-made private banking services, he foresees the potential for

BRIAN SHEGAREmirates NBD

the private wealth management space also suffering a certain amount of dis-intermediation – especially given the threats that the banking industry is

EXPERT INSIGHTS


facing from robo-advisers and other digital advice platforms.

SUSTAINABILITY IN QUESTIONChange is clearly underway within the private banking industry in Asia.

Many banks have rationalised their busi-nesses, either down-sizing in some loca-tions, or pulling out of certain markets altogether, or even selling their busi-nesses entirely.

“It was inevitable that a shake-up in this industry would happen sooner rather than later,” says Shegar.

“The cost-income dynamics have become unattractive for many banks – not just their fixed costs, but also the impact of getting caught out by making mistakes,” he explains.

and commitment to continue to build out their wealth management offerings.

A CLEAR STRATEGYFrom Shegar’s perspective, this all works to the benefits of an institutions like Emirates NBD.

“We have a differentiated strategy in Asia, which gives us a niche so that we don’t have to compete with other private banks,” he explains.

More specifically, the bank services the growing pool of money that gets in-vested offshore from the GCC.

While this has traditionally gone to Switzerland, or London, particularly for real estate investments, the bank is increasingly seeing Singapore become positioned as an attractive offshore

“The cost-income dynamics have become unattractive for many banks – not just their fixed costs, but also the impact of getting caught out by making mistakes.”

As a result, to do well, he says manage-ment must have a granular focus on costs and revenues.

But the exit of some of the best-known brands from private banking in Asia in the last few years, has raised questions about how any of the smaller players can make it work.

In Shegar’s view, this plays to the strengths of regional banks with the size

investment centre for GCC clients. This is underpinned by Singapore’s world-class infrastructure and capabilities for execution and advice across all asset classes under the well-respected super-visory regime of the MAS.

The bank’s relationship managers in Dubai also play an important role, he adds. They try to help clients learn about opportunities to service offshore wealth, but still keeping it with the bank.

This is an evolution of Emirates NBD’s vision from the time of the opening of its Singapore branch in late 2010. As part of its strategy to play a pivotal role in facilitating and catalysing trade and investment flows between Singapore and the Middle East, the bank aims to be a gateway for providing private banking services to Middle Eastern HNWIs seeking to invest in Asia, and conversely for Asian investors seeking investment opportunities in the Middle East.

The Singapore branch also leverages on the bank’s niche competence in Shariah-compliant private banking and asset management.

ADAPTING THE ADVICEThe challenge of making money in today’s environment requires banks to focus on how they can better harvest their clients to deepen and broaden these relationships. For example, Asian families are looking to further diversify, protect and grow their wealth.

But with all jurisdictions under scrutiny, some of the structures used in the past are no longer viable. Plus, the potential universe of clients in Asia is more limited than before; any individuals which banks now deem as questionable in terms of source of wealth are untouchable.

“There is a lot of Chinese wealth, but the challenge would be meeting the compliance requirements banks face today in the onboarding process and managing this money,” says Shegar.

In general, wealthy Asian families also need to understand the rising demands of global regulators and the impact of current and prospective regulatory reporting requirements such as FATCA, CRS, etc, he adds.

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FIRM PROFILE


Steady growth with an eye to the millennialsVincent Chui of Morgan Stanley sees the challenges facing private banking as an opportunity to selectively acquire talent and grow the platform to give it the right scale and positioning – especially with the next crop of Asian’s wealthy in mind.

Perhaps one of the more prudent ways to approach the current private banking environment is to view 2016 as a transitional year for industry players to develop a rational view about sizing and aspirations.

Being realistic is certainly a take-away for Vincent Chui, managing director and head of Asia institutional equity distri-bution and private wealth management at Morgan Stanley.

“Private banking, notwithstanding its secular growth, has been affected by the very challenging investment and low/negative interest rate environ-ment,” he says.

It impacts both the flow and fees busi-ness, hence it is unrealistic for banks to manage their business using 2015 rev-enues as a baseline.

Whereas a few banks continue to seek to add headcount, “patience is prob-

ably likely to pay off given that cyclical headwinds will stay strong for a while,” adds Chui.

At the same time, it is hard to deny the importance of scale. But it needs to come via growth in the right way. Just bringing in additional clients isn’t neces-sarily going to be most effective, cer-tainly in comparison with additional revenue. “You can sign up as many clients as you want, but ultimately in this environment, most of them will probably be cautious,” explains Chui.

Where there is a big opportunity – and one of the drivers for him to position-ing the private wealth proposition in this direction – is to put in place the people, processes and infrastructure to attract and service the region’s wealthiest millennials.

TRADITIONAL STRENGTHSWith AUM of around USD2 trillion, Morgan Stanley is the biggest US wealth

VINCENT CHUIMorgan Stanley

manager. In Asia, its wealth manage-ment business adopts a very differenti-ated approach, leveraging on its synergy with the firm’s top-ranked institutional

FIRM PROFILE


securities and investment banking fran-chise and connectivity.

“Private clients benefit from that sig-nificantly in terms of investment ideas, research and products,” he adds.

On the flipside, the bank has deliber-ately chosen not to be aggressive in terms of lending on a stand-alone basis. Saying that, it does use lending as a tool to try to help its clients achieve their goals in terms of hedging or investment, as part of a more holistic approach.

As with its peers, the bank has found the investment conversation with clients to be a more challenging one over the past 12 months, and especially in 2016.

“The risk-reward is different this year versus the last two years, so any product that gives you low volatility and reason-able risk-adjusted returns is worth looking at,” explains Chui.

As a result, cross-asset product which generates a reasonable yield, such as 4% to 5%, is in demand, as long as there is a demonstrable track record and limited drawdown. Cash-equivalent products like money market funds and certificates of deposit are also highly-sought ater.

This is where it is essential to take a longer term view, he adds. “These types of prod-ucts are not very profitable for either the asset management company or distribu-tor, but to me it’s part of the service, and at a time when clients need advisers to help them take care of the problem of having too much cash.”

AN EYE ON WHAT’S NEXTWhere Chui does believe the bank can also make a mark, is in advising the next generation of Asia’s HNW and UHNW

investors. And he knows that wooing these individuals requires the firm to adapt its approach.

More specifically, this involves bringing on board relationship managers (RMs) who are more aligned in their thinking.

Plus, they need to talk to these clients about a wider set of solutions to meet a broader variety of needs and goals.

“The reality is, this next generation of potential clients is not going to spend all their time thinking about invest-ments,” explains Chui.

“Instead, they are much more likely to seek investment opportunity in a tech start-up, conscious of their investment’s environmental impact, and having more

This is a challenge for the industry as a whole, not just for Morgan Stanley.

The key thing, however, is to make a start along this path by investing in and sup-porting younger RMs.

Chui believes that the bank has an im-portant advantage in the current set-up in which he operates: with a crop of high-quality and well-experienced RMs who, on average, have 10 years-plus at Morgan Stanley.

This is in line with the strategy that he and his fellow senior management have on productivity.

“Our model focuses on delivering top quartile revenue per head, hence the importance of bringing in and retaining

“Our model focuses on delivering top-quartile revenue per head, hence the importance of bringing in and

retaining experienced RMs and product talent.”

work-life balance. And the mechanisms for delivering advice are different too.”

A younger generation of RMs is there-fore required to meet these needs, start-ing with advisers developing the right connectivity and better understand ing of how these clients think.

“Then, when this new generation takes over or starts to share responsibility with the first generation, we are already speaking their language,” adds Chui.

experienced RMs and product talent,” he explains.

Whereas Morgan Stanley’s Asia wealth business is estimated to be managing as much as USD60 billion, it is notable that its team of a hundred RMs is small among banks with similar AUM.

“This is a crowded industry but if we segment appropriately and execute well with the right talent, it is a very good business,” adds Chui.

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FIRM PROFILE


Investec strives to set new advisory tone in Hong KongA focus on service-led, discretionary investment portfolios for a targeted group of clients should enable Investec Wealth & Investment to articulate why and how it has something of value to offer. This is the strategy Catherine Kirchmann is spearheading.

As the ‘new kid on the block’ in Asian private wealth management, Investec Wealth & Investment has a clear strat-egy that it believes will enable it to weather one of the most challenging landscapes in recent memory. In addition to volatile financial markets, a number of players in the industry are also exiting this space, given the various pressures from regulation, margin com-pression and competition.

Yet the Investec Group didn’t rush its decision to open its new business in Asia.

As an organisation, it tends to leverage where it has existing infrastructure, so had comfort from its asset management presence in the region dating back to the late 1990s.

Plus, Catherine Kirchmann says the firm has a very focused strategy in line with the wider Investec Group’s plans to expand the division internationally.

More specifically, says Kirchmann, divi-sional director and responsible for In-vestec’s Wealth & Investment business in Hong Kong, the goal is to offer bespoke investment management ser-vices to affluent Chinese and expatriates in Hong Kong.

She is well-placed with her background to oversee this. For instance, her exper-tise lies in providing discretionary and advisory investment services to profes-sional investors, including HNW indi-viduals, charities, trusts, companies and clients of financial advisers. “The focus is very much on service rather than product. We don’t believe in putting clients in pre-determined boxes or pro-moting ‘off the shelf’ solutions.”

SETTING THE TONEMany of the firm’s clients in the UK and Europe, as well as in South Africa, who are in some cases loyal for over 20 years, will testify to the firm’s client-centric approach.

CATHERINE KIRCHMANNInvestec Wealth & Investment

Now it needs to be transferred to Asia – something Kirchmann is confident about. “With our strong track record, tailored and flexible approach to manag-

FIRM PROFILE


ing portfolios, and the access our clients have to experienced and skilled invest-ment managers, we are well-suited to the unique needs of the Chinese and expatriate markets in Hong Kong.”

In particular, the people clients speak to are the investment managers, so can give much more specific information about the portfolio. This also avoids the all-too-common disconnect in some other firms which happens between the client and investment team sitting in the background without really understand-ing the client’s investment objectives and needs.

The evolving demographics in Hong Kong also offer Investec reason for op-timism. Not only are there growing af-fluent and HNW populations, but they are also getting younger.

“As wealth passes down from first to second generation, and from second to third generation, people take longer-term views in terms of wealth manage-ment,” says Kirchmann.

Meanwhile, the firm is also bringing a less-trodden fee structure to Asia.

It charges clients an all-in management fee. “This is important in a market where people are so focused on commission and brokerage,” adds Kirchmann. “But we believe that fees should be as trans-parent as possible.”

Ultimately, she predicts investors in Asia will become more demanding when it comes to the quality of advice.

“When people are focusing on what they are paying in fees, they want to get something for their money,” she explains, “to the extent that they want their investments properly managed

and they want to speak to individuals who can have an in-depth conversation about markets, asset allocation and portfolio construction.”

So while there will still be a large number of wealthy individuals who will opt for an advisory model, she sees there being a growing opportunity for the discre-tionary approach.

MEASURED GROWTHFor the time being, the focus for Kirch-mann is Hong Kong, although she says that she wouldn’t rule out expanding into other markets in Asia further down the track.

“We have only just begun here,” she says. “We got the go-ahead from the SFC in November 2015, but we officially launched the business in April 2016. We have started to gain some good momen-tum, taking on a number of new clients.”

One of the inevitable challenges she shares with her peers is finding the right people to join the team – a potential stunt to growth.

But the shortage is a slightly more dif-ficult one to fill in Investec’s case.

“We are not just relationship managers,” explains Kirchmann.

“We look for people who have got the depth of experience in investment markets,” she adds, “because what does differentiate us from many of our com-petitors nowadays is the fact that the person you are speaking to is the person managing your portfolio, not just handing it back to a team or putting it in a model portfolio.”

In fact, the outflow of some private wealth management firms from Asia is

Dedicated investment process

To support its value proposition, Investec has invested heavily in a dedicated central research function for its Wealth & Investment business.

This consists of an experienced team of analysts covering a wide range of equities, fixed income and collective investment opportunities.

The research team is fully independent of the wider Investec Group, but benefits from a collaboration of thoughts and processes.

The process it follows is a disciplined and consistent one, with the sole purpose of supporting the division’s investment managers in three core areas: asset allocation, equity strategy and collective funds

At this point in time, the Hong Kong division offers international and diversified portfolios.

When it comes to developed markets, Investec Wealth & Investment provides single-line stocks and bonds, whereas in developing markets, it uses mutual funds, but within an open architecture platform.

“We are best-of-breed rather than best-of-brand,” explains Kirchmann.

a positive development in her eyes. “We see an opportunity in this because there are some very good people in these organisations.”

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Rethinking business models in Asian wealth managementSpeaking at Wealth THINK 2016 in Hong Kong, leading practitioners within Asian wealth management explored some of the key themes shaping the look-and-feel for the industry going forward – as organisations rethink business models and re-define their value propositions.

In a tough year for the wealth manage-ment industry, chief executives and other banking leaders are reconsidering their business models, along with the strategic choices they need to make, to remain relevant in Asia.

At the same time, they are looking at how they can take advantage of the opportunities relating to China, includ-ing the offshoring and onshoring of Chinese wealth.

In line with this, we designed and hosted our first Hong Kong-based summit, in June 2016, for leaders from Asia and globally.

For private banks, in particular, they need to determine how to build a sus-tainable platform for the future. In ad-dition to having to increase scale, they

need to be able to deal with the cost and regulatory pressures they face.

Yet there is competition also coming from different segments and types of organisations within the wealth man-agement industry.

In terms of China, many practitioners believe that this market will be the driver for the industry over the coming decade, yet it is also a slowly-develop-ing one.

A lot of conversations at the moment among industry leaders revolve around efficiency and enabling relationship managers (RMs) to do more.

This involves digital capabilities in order to help them to generate revenue op-portunities rather than spending their

time on more administrative tasks, or doing research.

This won’t change the fact of challeng-ing market conditions, but it can help to make these individuals more produc-tive in the meantime.

Meanwhile, the desire to develop more needs-based solutions for clients in Asia is a process which will take time – perhaps another five to 10 years ac-cording to some estimates.

In practice, in the current environment, advisers need to focus on clients’ exist-ing portfolios, rather than continue to try to engage clients with new ideas. In line with this, the banks must also adapt their incentive structures, to think longer term.

That will finally drive the change in thinking needed to lead to a new busi-ness model for wealth management in Asia.

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EVENT HIGHLIGHTS - WEALTH THINK 2016 - JUNE


Ken TamRBC Global Asset Management

Neil HarveyCredit Suisse

Bobby BokThomson Reuters

Alan ArmitageStandard Life (Asia) Limited

Eddy WongJ.P. Morgan Asset Management

Nigel RiversCapital Solutions

Alan LukHang Seng Bank

Eleanor WanBEA Union Investment

Janet ChongDBS Bank


Martin CrawfordVistra Group

Roger SteelSun Life Financial

Alvin MaEFG Bank

Piers BrunnerKnight Frank

Jonathan HaRed Pulse

Michael BlakeUnion Bancaire Privee

Ron LeeGoldman Sachs

Bassam SalemCiti Private Bank

Robert RooksDeloitte

Joseph TamWing Lung Bank

Michael OlesnickyKPMG

Rosita LeeHang Seng Bank

Kevin LeeZhong Lun Law Firm

Howard BiltonThe Sovereign Group

Jung Ho RheeMirae Asset Global Investments (HK)


Timothy LoCIC Investor Services

Philippe LegrandLondon and Capital Asia

Stewart AldcroftCiti

Xiaofeng ZhongAmundi

TF ChengBNP Paribas Investment Partners

Alexandre VialeEY

Thomas YoungGenerali

Henry FuThomson Reuters

Thusitha de SilvaCerulli Associates



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CO-PUBLISHED ARTICLE


Regulatory change management for investment suitability and beyondIt may come as no surprise that in spite of turbulent financial markets, most global and local private banks in Asia are continuing to invest heavily in their operations in order to keep pace with the agility needed to service the growing market of Asian multi-millionaires. By Prasanna Venkatesan of Synpulse.

As digitally-savvy and wealthy custom-ers look out for more sophisticated engagement via online channels, banks also strive to find smarter ways to on-board these new channels and scale them across markets while being com-pliant. Although banks show the willing-ness to embrace such changes, they are limited by their internal inefficiencies and less-than-agile IT infrastructure.

Of the many regulatory topics that continue to challenge banks, invest-ment suitability has been one of the key topics that most banks struggle to handle effectively.

Although practices for careful advice were known in the market for years, regulators in Hong Kong and Singapore started issuing many clear directives on suitability standards ater the financial crisis in 2008.

In the last few years, many banks have resorted to tactical solutions to address

these suitability requirements. However, these solutions have resulted in added administrative overheads to their rela-tionship managers (RMs)and created complex control structures that are heavily-scrutinised during regulatory reviews.

TACKLING INVESTMENT SUITABILITY CHALLENGESImplementing a suitability framework in a pragmatic way requires deep un-derstanding of the private banking in-dustry in terms of regulatory require-ments, clients, investment products and risk management.

There are three key steps to implement-ing a robust suitability framework:

Formulate a pragmatic ‘portfolio approach’ to ensure that client’s investments are assessed at port-folio level instead of a transaction level, making it more meaningful in a private banking set-up

Implement ‘pre-trade checks’ in the order management system in a way that the RMs only need to focus on failed suitability checks and follow

PRASANNA VENKATESANSynpulse


Regulatory change management for investment suitability and beyond

the clear recommended actions presented via a unified dashboard

Devise a periodic ‘portfolio moni-toring’ mechanism to ensure that the client’s portfolios are moni-tored to detect unusual portfolio performance, risk mismatch, con-centration risks etc in order to address suitability risk in a proac-tive and timely manner

The majority of the large banks in the region have a good understanding on the principles of a successful suitability framework. However, they seem to be constrained with the challenges that IT

change management process and IT infrastructure present.

This takes us towards concept of digi-talisation and organisation agility where the industry needs to identify efficient ways of conducting business which extends towards the space of regula-tory and compliance topics.

THE RULE ENGINE SOLUTION: STRATEGIC PERSPECTIVE Traditionally banks have been big part of their change budget to implement the regulatory requirements (especially suitability) and the corresponding control processes to ensure compliance.

In spite of these large investments, most of the private banking businesses even today face formidable challenges based on two aspects.

First, there are still a lot of administra-tive overheads that the RMs and the clients face due to ineffective ways of implementing regulations that many times ignore the business context of private banking. This results in frus-trated RMs, unhappy clients and poor-ly-implemented control processes that are heavily-scrutinised by regulators.

Secondly, decentralised IT implementa-tions spanning across multiple core

Source: MAS and HKMA Suitability Requirements on a timeline

Source: Key steps in implementing a robust suitability framework

CO-PUBLISHED ARTICLE


banking components are too cumber-some and costly to maintain. This results in a less agile IT infrastructure that pre-vents scalability of regulatory implemen-tations across geographies or channels.

A central rule engine to develop and maintain the rules will not only allow ease of maintenance and future scal-ability but also enable central control and management of regulatory rules and internal controls.

As such, the rule engine is designed only to maintain the business logic relevant to regulatory checks and envelopes around the existing core banking systems. This architecture facilitates aggregation of relevant client, product and portfolio information before the business logic can be executed.

Such an implementation would enable other digital channels and different booking centres to connect to the rule engine and start leveraging the cen-trally developed regulatory rules.

This significantly brings down the cost and time to market for new channel or new booking centre integration.

The central maintenance of rules become paramount as regulators across different jurisdictions are coming in with aligned practices. Even in cases of BCBS 239 and CRS (FATCA/AEI) require-ments, the rule engine allows central pooling of data and managing output in a bespoke way. A regulatory change needs to be implemented only in one place and standard practices are avail-able across different channels and booking centres.

There are already established technology products in the market that allow such change agility that the banks could lever-age. One of the products even offers visually-customisable capabilities where a business user can directly adapt many configurations (for example, product scope) and simple business logic which makes the change even more efficient and controllable directly by business.

Given the rapid increase in client’s demand for digital channels that are accessible across the globe, there comes a strong need to explore strategic ways of implementing regulations across dif-ferent jurisdictions.

Banks that head down this path will definitely have an edge over the others in gaining strategic market advantage. The advantage and agility is even more needed for the mid-sized private banks in order to be able increase their effi-ciency of conducting business by adopt-ing digitalisation in relevant regulatory and compliance topics.

With our many years of experiences in shaping the topics on regulatory and compliance, Synpulse has developed and showcased specialised skills in this area. Backed by both business and tech-nology solution expertise, Synpulse is well-positioned to offer its support to clients in streamlining their regulatory implementations in an effective and meaningful way.

Source: Central rule engine that facilitates ease of implementation and scalability across channels and booking centres

• From Prospecting to Onboarding and Servicing

• Ensured & automated Risk and Compliance (KYC, Suitability, FATCA, CRS, MiFID, etc.)

• Getting your Digital Bank ready

rz_imtf_inserat a4_Icos.indd 1 03.06.2016 15:36:27

EXPERT INSIGHTS


How BEA is eyeing China for wealth management growthThe growth of The Bank of East Asia (BEA’s) wealth management business is being fueled by opportunities in China, says Grace Chow.

Despite the challenging business envi-ronment in 2015, BEA reported sus-tained growth in wealth management, largely as the bank has focused on growth in China.

general manager and head of the bank’s wealth management division.

With branches and sub-branches cov-ering 44 cities on the Mainland, BEA’s

GRACE CHOW Bank of East Asia

increasing number of Mainland-based entrepreneurs are conducting their business abroad.

“We have been trying to refer clients within our organisation as much as possible. We are now looking

at whether it’s possible for us to expand our onshore services via our Mainland subsidiary,

BEA China, to help clients manage their onshore and offshore funds.”

An important factor in its success during more difficult markets has been the bank’s extensive branch network in Mainland China, says Grace Chow,

network is second only to HSBC’s among the foreign banks. This has enabled BEA to generate business for its private banking division since an


CHASING THE CHINA OPPORTUNITYChow says that China remains a key part of the growth strategy for her division, despite the challenges for her industry and the broader market in 2016.

“With current market sentiment, clients are unwilling to take risks and would rather sacrifice yields and returns. In addition, clients are not so comfortable buying stocks,” she explains.

“We have not seen such risk-averse sentiment for quite a number of years,” she adds.

Given the lack of trading in today’s en-vironment, which in the past has played to the strengths of BEA’s wealth man-agement platform, the bank has been looking into offering more stable prod-ucts for a client’s longer-term holdings.

The focus on China, therefore, contin-ues to be strong, with the aim to attract assets from wealthy individuals as Chow believes this is where the bank has a competitive edge for the foresee-able future.

“We have been trying to refer clients within our organisation as much as pos-sible,” she says. “We are now looking at whether it’s possible for us to expand our onshore services via our Mainland subsidiary, BEA China, to help clients manage their onshore and offshore funds,” she adds.

EXPERIENCE COUNTSDeveloping these types of relationships will inevitably be done face-to-face, highlighting the importance of the em-phasis on relationship managers (RMs) with experience.

Although digitalisation and automa-tion are in the works of all the indus-

try players, the possibility of a robo-type RM is not something that Chow thinks is relevant for private banking in this instance.

Private banking, she explains, is still about a personal relationship and a tailor-made solution for clients, and robots may not easily take up the job, at least for some time.

INCREASINGLY STRINGENT REGULATIONSOperating within an increasingly complex regulatory framework, some private banking practitioners are con-cerned that the stringent regulatory

petency in the technical as well as in the ethical and compliance areas for private banking practitioners.

But she also believes that practical knowledge is equally important to a private banker to serve clients.

The account-opening process is another example where requirements are more stringent than in the past.

For instance, while a private banking account can be opened as quickly as within one to two weeks, it is quite common for the process to take three to six months.

“While Hong Kong’s wealth management business has its advantages, it needs to ensure

that it stays competitive and facilitates business by being both professional and practical.”

environment can create headwinds for the industry.

For example, in Hong Kong, recently-introduced exams as part of the joint government and industry-led certifica-tion scheme to implement the En-hanced Competency Framework do not factor in the value of an RM’s ex-perience as much as they should, ac-cording to some practitioners.

Fresh recruits who study hard seem to be performing much better than those who have been in the industry for 10 or 15 years. Chow agrees with the ob-jectives of an enhanced level of com-

Such evidence reflects the direction of the regulatory environment today.

And this means that private banking is now less about sitting across the table to reason out rules, and instead more about sticking to the letter of the various ordinances.

“Nowadays, we just have to follow the rules,” explains Chow.

“While Hong Kong’s wealth manage-ment business has its advantages, it needs to ensure that it stays competi-tive and facilitates business by being both professional and practical.”


Enhancing capability, capacity and pipeline in the Middle EastOur inaugural event for the local wealth management industry in the Middle East, hosted in Dubai in January 2016, highlighted key ways that the industry needs to develop to move to the next level.

There is little doubt about the poten-tial for wealth management and private banking in the Middle East. Statistics from various industry reports highlight growth – especially the fact that a large proportion is from newly-created wealth.

At the same time, Islamic finance has proven its resilience against economic headwinds is on a constant growth path. Dubai, in particular, is also well-posi-tioned to tap frontier markets around the region.

Yet practitioners at the event high-lighted that there is still a lot to do to develop the region’s and wealth man-agement industry.

At a client service level, a big focus must be delivering the right advice

from people capable and competent to do so. This will also help to remove confusion between what is retail/af-fluent banking versus private banking, said speakers.

From diversification to wealth struc-turing to client education to higher standards of professionalism, there-fore, organisations need to position their businesses in line with the op-portunities that exist, and define clear value propositions. This also includes reducing the dependence on oil and its price fluctuations, which has an impact on the fiscal situation of the various GCC countries.

At a business level, finding the right model that is suited to the most lucra-tive client segments – not just today, but more importantly tomorrow –

remains a challenge. And ensuring the right types of clients are on-boarded is key to maintaining a compliant and viable proposition.

Further, there is a lot more to be done within local financial institutions to position their wealth management of-ferings as more strategic within the wider group. This includes investing sufficiently in the technology, platforms and overall infrastructure.

At a regional level, meanwhile, there is a need for regulators to be more ‘joined up’, to provide clarity on cross-border practices/activities and remove reliance on tolerated practices.


Emirates NBD Allocated Bullion Solutions Amicorp Group Comarch FinIQ Jersey Finance Miles Software Principal Global Investors Profile Software Old Mutual International Thomson Reuters

EVENT HIGHLIGHTS - MIDDLE EAST WEALTH MANAGEMENT FORUM 2016 - FEBRUARY


Gary HalesJersey Finance

Karima AbdesslamiNational Bank of Abu Dhabi

Andrew PrinceAcuma

Ahmad Chahidi Emirates NBD Private Banking

Anthony JaganathanEmirates NBD

Gary Tiernan

Karine KheirallahFalcon Private Bank

Akash AnandProfile Sotware

Brendan DolanOld Mutual International

Dr Haroun DharseyDubai Islamic Bank

Deepak MehraCommercial Bank of Dubai

George TriplowErnst & Young

Kees StouteHubbis

Alastair Glover Wragge Lawrence Graham & Co

Damian HitchenSwissquote Bank

Fadi Al SaidLazard Asset Management

Gifford NakajimaHSBC

Lina TaherFriends Provident International

Andrew MortimerBarclays

David MarshallEmirates NBD

Fiona McClaffertyDeloitte

Georg HartmannLiechtensteinische Landesbank

Deepak AhujaRAKBANK

Gary DuganEmirates NBD

Hans GoettiBanque Internationale A Luxembourg


Peter GolovskyAmicorp Group

Maya Marissa MalekAmanie Advisors

Rajesh KhannaEmirates NBD

Mihaela MoldoveanuDIFC Wills and Probate Registry

Sean KelleherMondial Dubai

Yann MrazekM/Advocates of Law

Sandeep LalwaniMiles Sotware Solutions

Milan GanatraMiles Sotware Solutions

Subroto SomMashreq Bank

Tom AndersonKillik

Tim SearleGlobaleye

Greg Prosowicz, PhDComarch

Vic MalikBarclays

Luke JanssenTigerspike

Mahesh BulchandaniFinIQ

“There isn’t such an event that exists in the wealth management space in this part of the world. This is a great initiative.”Nayeem Khan, Chief Operating Officer, Qatar First Bank

Nayeem KhanQatar First Bank

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Driving an all-round Indian proposition for high-end clientsEdelweiss Global Wealth Management has shunned the oft-trodden route in India of pushing product, trying instead to provide real solutions to targeted groups of HNW and UHNW individuals. Anshu Kapoor explains the benefits this is bringing to the firm and its clients.

A growing number of wealth manage-ment players in India – especially the foreign private banks – are seeing mixed results (at best) within their businesses as the cost, regulatory and competitive challenges have mounted.

But in what is an increasingly polarising industry as a result, Edelweiss believes it is bucking the trend.

For example, explains Anshu Kapoor, the firm’s head of global wealth man-agement, 2015 was a good year overall for the firm across both wealth and asset management.

Today, AUM across the two businesses stands at the equivalent of around USD9 billion, split roughly evenly.

“We have reached critical mass now,” says Kapoor. “I think we are number three today, by any measure, in the Indian market for serving both HNI and UHNI clients.”

CLIENT FOCUS PAYS OFFThe firm’s strategy has been simple: to be completely focused on its clients. “We don’t look at it from an output perspective; we think much more from an input perspective,” explains Kapoor.

Carefully selecting its client segments to target is a key component of the Edelweiss approach. For example, on the UHNI side, it exclusively caters to new-generation and next-generation entrepreneurs, rather than servicing any ‘old wealth’.

The firm also has a group which caters to family offices and what it refers to as institutional clients. Within the family office client base, it further divides the market into ‘evolving’ and ‘evolved’.

An additional business line provides financing in relation to employee stock ownership plans (ESOPs), which the firm sees as a large and growing cate-gory. This involves a combination of

ANSHU KAPOOREdelweiss

lending money against the shares that staff own (or will own in the future), plus hedging the exposure and managing the concentration.


“A lot of other wealth managers only do investment management,” explains Kapoor. “Within our client segments, we are focused on their needs, so we have built our value proposition and teams accordingly.”

For instance, in the family office group, clients get serviced by a mix of former traders, investment bankers and insti-tutional salespeople. “This creates a different kind of team, which is able to deliver the solutions that clients need,” he adds, “whether this is capital, advi-sory, investment, leverage or tax struc-turing and planning.”

Perhaps the most tangible example of the client focus that Kapoor is keen to highlight is the fact that the firm invites clients to some its own sales meetings. “There are two clients on our real estate advisory board,” he says. “They help us select real estate projects to be offered to other clients.”

THE RIGHT PACKAGINGA challenge for any wealth management firm in India stems from the market continuing to be characterised as rela-tively short on product, yet long on product pushing.

So standing out requires a different ap-proach – one which is more about packaging a solution.

“We help our clients to spot opportuni-ties and trends, and be protected from risks,” explains Kapoor.

With a vigilant regulator which tries to prevent any kind of over-complication or complexity in the product offering for investors, Edelweiss’ approach is to agree an asset allocation with a client and then be smart and nimble in creat-ing opportunities.

For example, on the real estate side, the firm co-partners with clients in dis-tressed deals, as well as buying inven-tory and underwriting for commercial and pre-leased properties.

At the same time, Kapoor says the firm is very focused on building up its invest-ment platform, especially since this is not something which can be easily replicated. The rationale is, that in ad-dition to be able to provide products via the platform such as structured investments, this also gives the firm certain capabilities to service the client.

FINDING THE RIGHT TALENTDespite the opportunities and market potential, one of the drags on growth in Indian wealth management continues to be the availability of talent.

Yet Kapoor says Edelweiss won’t com-promise. “We have an internal policy that we only hire what we consider to be ‘A-raters’.”

Such an individual needs to pass a series of tests. This starts with product, then includes an MBA-like analytical test and a psychometric evaluation. Beyond its focus on the quality of intake, the firm then trains and grooms these people over time.

The reward for those who get through the door is an environment of zero politics and opportunity for growth. “We give our people the canvas to paint on,” says Kapoor. “To us it is not impor-tant what someone has done before; it is what they want to do in life which is more important.”

Reflecting the ownership and incenti-visation structure of the firm, its em-ployees and founders own a combined 55% of Edelweiss.

KEEPING IT LOCALNotable about India’s wealth manage-ment landscape over the past 12 to 18 months has been the fact that some of the foreign players have been unable to grow their operations.

Yet addressing some of the key chal-lenges in terms of capacity and capabil-ity, and being able to scale the business, starts by ensuring that it caters to the needs of the local market.

“India is an onshore-only market, very much like the US,” explains Kapoor. “So no player, whether foreign or local, can work on an imported wealth manage-ment model.”

Becoming digitally-enabled

Acknowledging the importance of digital, Edelweiss has forged a partnership with IBM to build a digital infrastructure.

On the wealth management side, this involves some big investments, says Kapoor.

Salesforce is an example of what’s currently being implemented in terms of customer relationship management.

In addition, to stave off the threat from robo-advisors, the firm is in the process of building a simple online tool which its clients can use to invest.

This highlights more broadly the role that Kapoor sees technology playing as part of the interface with clients – ranging from digitising account opening to transaction processing.

EXPERT INSIGHTS


The components of a successful wealth offering in IndiaMany firms have tried – and failed – to tap the assets of India’s wealthiest citizens. Karan Bhagat believes that IIFL Private Wealth Management has devised a successful strategy based on the right blend of people, product and platforms.

IIFL Private Wealth Management was borne out of the vision of a group of senior professionals with significant private banking experience who, at the height of global financial turmoil in 2008, took a decision to join forces with India Infoline Group.

Since then, being more focused on ad-visory than distribution has enabled the firm to develop a sustainable business model that offers a high level of trans-parency and has been able to engender client loyalty.

More recently, IIFL Private Wealth Man-agement has been in fundraising mode, with the majority of the funds raised earmarked for reinvestment, particu-larly in non-banking finance. In Febru-ary, for example, it acquired non-bank-ing finance company (NBFC) Chephis Capital Markets.

For Karan Bhagat, managing director and chief executive officer of IIFL

Private Wealth Management, this is a particularly attractive segment.

“In India, fixed income taxation only reaches zero ater the investor holds it for three years, so if clients have liquid-ity needs they can draw against the portfolio. In India, many people invest their own money but they want a credit line against it,” he explains.

A WINNING MATRIXTo create the right mind-set and culture, the firm’s 90 or so employees now own 33% of the business, which has kept attrition low as staff feel more commit-ted. That is the ‘people’ component.

In terms of products, there is a need to be continually innovative while achiev-ing a standardisation in the offering.

“Even though most of the business in India and Asia is non-discretionary, the majority of the client portfolios have a similar product profile,” explains Bhagat.

KARAN BHAGATIIFL Private Wealth Management

As for the platform, there are a number of elements without which a firm cannot survive, he adds. “Obviously one is the NBFC aspect of the business for client


finance, but you also need a very solid technology platform, as well as a good equity brokerage set-up and research.”

With this in mind, Bhagat attributes the struggle of many wealth management firms in India to the ability of getting the three components of products, platform and people right.

“As time goes along it will only become difficult because investment required in these three facets will only be higher and retention ratios on assets will only be declining.”

have moved the money that it manages today from other advisers because he believes that it would have taken way too long to do so.

EVOLVING THE CONCEPT OF ADVICEBhagat describes the introduction of advisory guidelines in India as a major step forward in the development of the country’s wealth management sector.

“This has the power to consolidate, to look at all holdings under one umbrella and deal with multiple advisers through the custodian account as opposed to

Digital demands

There is little doubt that while digital technology will improve adviser effectiveness along with the client experience, user-led dashboards will change as platforms evolve and new ones are developed. In turn, this will make a big impact in terms of aggregation of data.

The outlook for robo-advisers, meanwhile, is less rosy among HNW clients. Dealing mainly with very simple products and ETFs, Bhagat says that robo-advisers have generally performed poorly compared with actively managed funds. “Over the last 10 years, active managers have consistently beaten the index by a big margin.”

“Plus, given the way the regulations are, an adviser’s ability to earn any kind of commission is effectively zero.”

In the interim, Bhagat says flow is more important than transaction fee income. “We are not worried about earning a specific fee on a transaction,” he con-firms. “We are more interested in being able to capture the flow of the transac-tion for the client. Given all the tax benefits in India for mutual funds, about 50% of our client’s portfolio will always be in these products, so we need to be sharper in this business to get access to the remainder of their portfolios.”

The firm’s retention rates are healthy, he concludes. “We are possibly a little less expensive in commoditised prod-ucts and a little more expensive in ex-clusive products, but we get the exclu-sive products because we are sharper in the commoditised space.”

“The advisory model is challenged by the commercial reality of the business.”

NEW PROSPECTSThe fact that many older entrepreneurs in India have exited businesses has created a pool of money that remains available for investment. “We also have professionals who are selling stock options and land, the proceeds of which can be collectively described as ‘new money’,” says Bhagat.

IIFL Private Wealth Management has found it easier to go ater this type of business. “Old money typically went with established wealth management brands,” he explains. “Even if you did break through, the client would possibly start with 5% of their portfolio and test you over 12 months to 24 months before scaling up their portfolio.”

So while the firm does business with established wealthy families, it couldn’t

individual segregated depository ac-counts with multiple brokers.”

Such reforms, driven by the Securities and Exchange Board of India (SEBI), have moved the country much closer to global regulations in terms of disclo-sures of fees.

In line with this, Bhagat suggests the majority of the larger firms are going to struggle to move to advisory mandates because the fee structure doesn’t support their cost base. He adds that IIFL Private Wealth Management is exploring internally whether it could potentially make such a move.

“The advisory model is challenged by the commercial reality of the business, because typically in India, clients have been averse to paying fees,” he explains.


Thai potential heralds new dawn for wealth management offeringsDiscussions at our 5th annual event in Bangkok for the local wealth management industry highlighted renewed belief in the opportunities for the country’s banks, insurers, asset managers and independent advisers.

The potential for open architecture platforms to evolve and facilitate a more holistic wealth management offering is gathering momentum in Thailand.

In a declining interest rate environment, clients are starting to look at new prod-ucts to diversify portfolios. They are moving from a risk-averse mind-set where they focus on savings via depos-its, money market funds and fixed income – towards equities, mutual funds and some alternatives. More broadly, with the growing wealth, the scope for banks and advisory firms to penetrate more clients with a wider array of investment products, insurance solutions and other services is more of a reality than ever before.

These were some take-aways from this event – attended by 275 senior indi-

viduals from the leading private banks, retail banks, investment advisers, brokers, insurers and asset managers.

Ultimately, clients are starting to want more choice. This is coupled with a more conducive and supportive regulatory environment in the country, offering the traditionally risk-averse investors greater scope to invest more offshore.

But the logistics to make this happen and take root will take time. There is still much to be done locally to raise advisory capa-bilities, the quality of the product offer-ings and consistency in standards. There is also a pressing need to enhance systems, training and processes.

More specifically, although local banks continue to have a lot of influence in terms of distribution, as they move from


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captive to open architecture, they will need to find innovative ways to develop more of the capabilities themselves.

EVENT HIGHLIGHTS - THAILAND WEALTH MANAGEMENT FORUM 2016 - MAY


Thai potential heralds new dawn for wealth management offerings

Samdarshi SumitGenerali Life Assurance

Theeranat RujimethapassTisco Asset Management

John RobsonQuantifeed

Adisorn SermchaiwongCIMB

Kittikun TanaratpattanakitMorningstar

Thomas FriedbergerTikehau Investment Management

Charnwut RoongsangmanoonMFC Asset Management

Kris ChantanotokeThai Life Insurance


Nont BuranasiriKasikornbank


Trawut LuangsomboonJitta

Don CharnsupharindrCiti

Mandeep NalwaTaurus Wealth Advisors


Sukit JarutchaiwannaStandard Chartered Bank

Vira-anong Chiranakhorn PhutrakulCiti

Evan GallagherASK Capital Management, Singapore

Michael Benz

Praveen JagwaniUTI International

Ted LowGAO Capital

Win PhromphaetCFA Institute


Ned PhillipsBambu

Ranjit KhannaUnion Bancaire Privee


Win UdomrachtavanichOne Asset Management


Scott MooreHenley & Partners

David VarleyAXA

Sumetha LewchalermwongFranklin Templeton Investments

Michael GagieMaples and Calder

Vinay KumarIntellect Design Arena

David MacDonaldHubbis

Philip LungBNY Mellon Investment Management


“I’m very impressed with how many industry practitioners are here, especially individuals who know the business and are willing to share insights without holding back.”Nont Buranasiri, Private Banking Family Wealth Management Advisory Head, Kasikornbank

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Kasikornbank shows way to service HNW ThaisWhen Jirawat Supornpaibul joined Kasikornbank (KBank) in early 2013, his mandate was clear: build the best onshore private bank in Thailand. Already, he seems to be well on his way to achieving this.

It is hard to see how KBank could have grown its private banking business any faster than it has to date.

Jirawat Supornpaibul’s strategy to scale this division under his leadership began simply by inviting the bank’s ‘privilege’ customers to upgrade their account status to ‘private banking’.

Underscoring his initial progress in just three years, his business has amassed over 9,000 HNW clients and more than USD19 billion in overall assets.

Added to this achievement is the part-nership it has forged with Lombard Odier in terms of family wealth manage-ment services, to widen its product of-fering and add a global perspective for KBank’s Thai client base.

Yet Supornpaibul is a realist who knows that the job is still far from complete. He is now focused on building KBank’s investment advisory platform to appeal

to Thailand’s growing number of HNW individuals in a more significant way. “Of the USD19 billion within the private bank, 60% is still in deposits and only 40% is under our advice. So we cannot really say yet that all of this is AUM,” he explains.

The challenge he faces, therefore, is to find ways to increase the take-up of funds and other investment services among the HNW amid an effort to nudge them along the path to a more advisory-type relationship with the bank.

BUILDING BLOCKSSupornpaibul’s plan is to build the private banking proposition around three pillars: quality of advice, quality of product, and quality of service.

With existing offerings ranging from stock trading to security deposits, he says the bank is well-placed to cater to most of the financial needs of HNW clients in Thailand.

JIRAWAT SUPORNPAIBULKasikornbank

However, he knows he needs to steer clear of servicing the typical short-term trading mind-set of local investors. Instead, he is exclusively focused on

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EXPERT INSIGHTS


helping customers to take a longer-term view on their investments.

“We are more focused on creating long-term wealth,” he adds.

This strategy has an added cost advan-tage; it allows KBank to have fewer relationship managers (RMs) in total. For example, it only has 50 RMs, with each looking ater around 200 clients.

“The number of clients for each RM might seem high, but since they don’t do short-term trading [for their clients], they do not need to be glued to a monitor the whole day,” explains Supornpaibul. “They can go out and meet clients and work with their portfolio.”

The approach of streamlining staff extends to the advisory offering too. For example, the bank has one financial adviser for every five RMs.

Here again, Supornpaibul rationalises this ratio because his RMs are also equipped to construct investment port-folios for their clients.

At the same time, he believes open ar-chitecture is the way to go. This also includes feeder funds for investors who are looking for more diversification by investing in overseas markets.

ACCESSING OLD MONEYThe centre-piece of the private banking strategy, meanwhile, is being built around KBank’s ability to straddle both capital markets and non-capital mar-kets-related demands of wealthy Thais.

In particular, Supornpaibul says that offering more than just investments is key to wooing HNW clients in Thailand, given that so much wealth is tied up in real assets such as property and land.

“Every one of my clients has lots of land, which is why we are expanding our non-capital market services,” he says.

“Our wealthiest clients have the chance to speak to Goldman Sachs, UBS, Morgan Stanley, Credit Suisse or others when it comes to capital markets, so we cannot compete on offshore products.”

So KBank is instead tapping on its wide, local network and knowledge base when it comes to the property market to gain a foot in the door with this client segment. “We have a broad network of people who want to buy and sell, and also we are the financiers of many prop-erty projects,” he explains. “As we have the expertise, this is an area where we can compete.”

For example, he adds, a lot of these types of clients acquire acres upon acres of land, but ater a while it becomes costly for them keep those assets without generating any return from them, because they just add to the tax burden.

“These people have expertise only in collecting land, not developing it. They also do not know how to sell it.”

The specific opportunity Supornpaibul sees is in advising these clients on the holding structure for their land so that it minimises their tax burden.

He believes that providing a proper service to clients in this area will deepen their relationship with the bank and could, in turn, make them potential cus-tomers for capital market solutions as well, in the long run.

“We look at the whole picture,” he ex-plains. “And at this point we don’t mind if we are not charging a fee for our advice. We want to build trust. Once we

Planning for the future

There are several emerging areas of interest for KBank. These include family office services, tax planning and creating family constitutions.

Private equity will also be important going forward.

In Thailand, for example, this part of the market is still relatively disorganised, so Supornpaibul wants to start to build a network of people who are looking to put their money into start-ups.

Unlocking more of the potential for private banking in Thailand also calls for changes from the regulator. In particular, says Supornpaibul, there is a growing need to meet the requirements of the land-owning HNW clients.

“Estate trusts are the big topic for discussion in Thailand. People are looking for asset-holding solutions that can keep their assets for many generations.”

At the same time, he adds, the regulators shouldn’t shield local wealth managers from overseas competition.

“I love to be in an open competition, I don’t want to be protected. If you are protected from international markets, you cannot improve your capability.”

help a small client who has his money tied up in land to get some of the pro-ceeds back, this individual could become a big client.”

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EXPERT INSIGHTS


Bringing a broader and deeper offering to ThailandWith the local stock market flat and interest rates low, a new approach is needed to service the investment and other financial needs of Thai investors all along the wealth spectrum. Don Charnsupharindr of Citibank is trying to drive such change.

Wealth management in Thailand is changing. At the top of the wealth pyramid, there is a small number of ultra-wealthy, with a growing number of indi-viduals in the HNW segment. Following in their footsteps is an-expanding group of mass affluent customers.

Inevitably, each of these groups is looking for a different kind of help in terms of investment opportunities and wealth-related needs.

Don Charnsupharindr, head of retail banking for Citibank in Thailand, has been doing some hard thinking about how to service these different sorts of customers in today’s more challenging and volatile environment.

“In the past few years, there has been a lot of development in the wealth space in Thailand,” he says.

The big question, is which clients want to start to delve more into mutual funds?

A TARGETED APPROACHWith three retail banking branches in the country, the Citi offering has to be carefully tailored to the bank’s cus-tomer base. This means focusing on the Citi Priority and Citigold segments.

Launched in 2016, Citi Priority focuses on clients with THB1 million (USD26,000) to THB3 million to invest. Citigold, meanwhile, looks at clients with at least USD100,000 equivalent.

The bank’s approach in Thailand over the past three years to drive a longer-term mind-set in investing has been to offer its clients a global allocation-type of advice.

During this period, Citi has seen clients show more interest in investing in Foreign Investment Funds (FIFs).

These are a version of the foreign funds that get wrapped by local fund houses. For example, Citi has Thai partners who

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what local regulations allow. Citi has also recently launched direct investment into some offshore funds.

Falling interest rates have also played their part in creating more opportuni-ties, awareness and interest in new types of investment products as part of a wealth management strategy.

“Just five years ago, one could easily see time deposits in the range of 3% to 4%,” observes Charnsupharindr, “but today it’s hard to get anything beyond the 1.5% to 2% range.” Times are even harder in the securities market. “The bond yield curve is around the 1.5% plus or minus range,” he adds.

have the potential to become Citigold clients,” he adds.

PROACTIVE REGULATIONRegulation also has its part to play in helping the market to develop.

For example, explains Charnsupharindr, the government’s deposit protection scheme has previously set out that all bank deposits are fully protected, al-though the authorities are gradually reducing this level. In the future, the limit will be reduced, to THB1 million.

Charnsupharindr thinks this change will encourage more people to start thinking about how they diversify their invest-

sumer. “I think this is absolutely the right direction,” adds Charnsupharindr.

Yet despite a more open market and the new freedoms it offers Thai investors, there is little doubt that they have a preference for investments in Thai baht.

As a result, the feeder funds as well as local funds will continue to be at the core of the wealth management busi-ness for banks like Citi.

For clients who are more sophisticated and looking to have some exposure in other currencies or to other products, meanwhile, they have the option of additional choices and alternatives. “We see it as something that complements and further develops the wealth man-agement industry in Thailand,” says Charnsupharindr.

Three challenges to Thai success in wealth

First, getting the infrastructure right – to give clients more flexibility and choice around what they invest and with whom.

Secondly, education – internally to ensure advisers have the right mind-set, and externally for clients to think longer term.

Thirdly, planning for the future – which is largely guesswork when looking 10 years into the future, but includes making wealth management mobile and enabling clients to review their portfolio and interact with advisers anywhere,

any time.“Citi as a global bank will play a role in terms of being that alternative choice for Thai clients.”

He sees this as creating opportunities too: “I think it encourages clients to think about how to manage [their wealth] in a more open-minded manner and not constrain their strategies to what they have traditionally been used to.”

While Citi does not compete on a branch basis with local players, its network, digital platform and the es-tablished card business it has, do provide other opportunities too.

“Our card business has a much broader presence in the Thai market,” explains Charnsupharindr.

“We then try to understand the client base and identify those individuals who

ments, in turn potentially expanding the relationship they have with banks.

“From this perspective, Citi as a global bank will play a role in terms of being that alternative choice for Thai clients,” he explains, “as well as having the broad product range for our clients to select from, especially bringing in offshore products that are really our strength for both our regional and global wealth management platforms.”

In general, the Thai government, in con-junction with the Bank of Thailand and the securities regulator, seems to have come a long way in terms of measures to create a more competitive landscape that will eventually benefit the con-

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EXPERT INSIGHTS


Thai insurers jump on diversification bandwagonThe affinity many Thais have had with savings products is slowly changing. And insurance providers want to tap this demand through diversification in the product offering and new distribution channels, says Kris Chantanotoke of Thai Life Insurance.

To date, around 50% of life insurance products sold in Thailand have been savings-related; basically an annuity endowment product with a guaranteed interest rate.

These provide the much-sought ater sense of security via a fixed return in a given year. And most of them have been sold through the banks.

However, the game is starting to change. With an expanding middle class and a growing awareness and under-standing of what’s available, growth in Thailand’s insurance sector is underway.

In response to this potential for a wider array of solutions, insurance companies are developing both their distribution channels and range of products. With such diversification, they believe they can penetrate greater market share.

The positive signals for the insurance sector are evident in growth predictions

from the Thai General Insurance As-sociation (TGIA) – 4.1% for life insur-ance and 1.7% for non-life insurance.

It is little surprise, therefore, to see providers looking to capture as much of this opportunity as they can.

Thai Life Insurance, the country’s third-largest player in this space, is well-placed among them. And it further bolstered its position in December 2015 by acquiring Thai Cardif Life Assurance.

At the time, one of the drivers for the deal was for Thai Life to be able to broaden its distribution capabilities, including its non-agency and tele-marketing channels. In line with this, it formed a new unit called Thai Life Part-nership Solutions.

For the time being, however, bancas-surance continues to dominate sales in life insurance; accounting for half of the market in Thailand.

KRIS CHANTANOTOKEThai Life Insurance

“The deposit rates are not very high, so banks offer this product to make sure they can retain the customer and diver-sify their investments,” says Kris Chan-


tanotoke, senior executive vice presi-dent at Thai Life.

DIVERSIFICATION LOOMINGYet Thai Life’s rationale to broaden its distribution is certainly a sound one.

The low interest rate environment – plus the ever-reducing disparity between rates in developed and developing coun-tries – is impacting the appeal of savings products among the emerging affluent in Thailand. This is driving interest among customers away from the tradi-tional fixed income offerings towards products such as unit-linked policies.

they are trying to make sure their front-line staff are better educated about insurance and can discuss the options with customers based on goals and objectives – not just commission.

OPEN ARCHITECTURE Against this backdrop, Thai Life is in the process of partnering with a local bank to design a platform for customers to register all their insurance and asset management products, whoever they bought them from.

While still a work in progress, Chan-tanotoke says the platform will enable

“Anybody who has a proper touch-point with the customer can play that role, which means that an

insurance company today might be a wealth management company in the future.”

Chantanotoke says this shit is also taking place as customers become more aware of what they want to invest in and how they want to diversify their risk.

For example, he explains, they are looking for something more attractive, which varies the yield and enhances their opportunity to gain more.

This also highlights the importance for insurance companies of helping to drive more of a needs-based conversation with customers.

According to Chantanotoke, a number of the leading local retail banks are now more focused on segment marketing;

insurance agents to track their clients’ overall exposure to all asset classes, in turn helping them provide more tailored and relevant advice.

The partnership can also be extended to the product offering, he adds, creat-ing an open architecture for banks and insurance companies.

Such an approach to insurance is where he says the industry should head, bring-ing benefits to all parties.

“At the end of the day, the distribution channels need to become more open architecture, in selling more investment and financial products, and not only

their own products anymore,” explains Chantanotoke.

For example, the banks and other finan-cial companies can provide clients with a variety choices of products, including combining investment funds together with insurance solutions.

And insurance providers and asset man-agement companies alike can therefore then reach more customers through a single channel.

MORE TOUCH POINTSGrowth is on the agenda for Thai Life Partnership Solutions, meanwhile, to expand the number of firms it ties up with, says Chantanotoke.

It wants to broaden its partnerships from banks to non-banking institutions, including retailers, consumer finance companies and telecoms, furthering its customer reach in the process.

Going digital is another priority.

The firm is aiming to use new tools in order to go directly to customers, as part of efforts to increase the number of touch points beyond agencies and existing partners.

And Chantanotoke says he expects this will start to become more of a reality as insurance companies make a greater foray into wealth management.

“Anybody who has a proper touch-point with the customer can play that role, which means that an insurance company today might be a wealth management company in the future,” he explains.

“This is something we are looking at and expect to happen; it is just a matter of time,” he adds.

FIRM PROFILE


Kasikorn Asset Management’s vision for Thai distributionThe firm is looking to take its product offering, infrastructure, and digital and data capabilities to the next level as it strives to bring something new and wholly more international to wealthy Thai investors, explains Benjarong Techamuanvivit.

The key to wealth management, across most of Asia’s markets, is balancing demand and supply.

Customers’ needs are evolving rapidly and getting more complex, requiring providers to fit new products to their demands. All this has to be achieved within a tougher regulatory framework that is also changing.

by offering investment products which now span global markets. On offer are a mix of asset types, specific industries and regions.

And the firm is eager to expand direct investment capabilities to the regional level, says Benjarong Techamuanvivit, first senior vice president in the strate-gic planning division.

BENJARONG TECHAMUANVIVITKasikorn Asset Management

to index local and foreign mutual funds, to money market vehicles, ex-plains Techamuanvivit.

“KAsset has kept a keen eye on service, by ensuring its technology is up-to-date and multi-channel, making it relevant to

however clients want to invest.”

In Thailand, Kasikorn Asset Manage-ment (KAsset) has emerged as one of the country’s leading firms of its type

At the moment, it has a domestic market share of nearly one-quarter in various funds – ranging from active


Kasikorn Asset Management’s vision for Thai distribution

The firm has also kept a keen eye on service, by ensuring its technology is up-to-date and multi-channel, making it relevant to however clients want to invest.

A BALANCED STRATEGIC VISIONDoing this via digital solutions is very much front-of-mind for the firm as part of its strategy.

This includes enhanced platforms that make investment easy, under the banner of ‘Simplify Your Investment Life’.

For example, KAsset has said it wants to introduce investment portfolios customised for individuals’ financial aspirations. And in line with this, in the pipeline is a new service called ‘My Port Simulator’.

This will allow investors to find the most suitable asset allocation models.

across the globe. In February 2016, for example, besides FIFs, KAsset intro-duced K-AEC for direct investment in ASEAN stocks.

Further, demographic shits have moti-vated KAsset to develop products that cater to the needs of every market.

For instance, K-GA is suitable for inves-tors who prefer to diversify their invest-ments in various types of assets around the globe.

K-STAR, meanwhile, offers automat-ic investment unit redemption once the investment units reach their ex-pected value. This allows investors with little time to follow the markets to yield profits.

Additionally, K-GINCOME is for inves-tors which want a regular cash flow.

with online functionality for its range of mutual funds and other businesses.

When it comes to the product offering too, she says KAsset is not just focused on launching new products.

Instead, there is an ongoing review process to determine which ones to take off the shelf and which products need to be launched.

The ASEAN-focused funds are a good example. Plus, having such a capability also indicates the way forward.

“In the future there may be some other asset class that we can leverage via our research,” says Techamuanvivit.

The local knowledge the firm has is also important.

“We do company visits and research work ourselves and, of course, if we are talking about the longer term – three years onwards – I think the middle-in-come clients will still need our advisory service,” she adds.

Tangible growth goals for KAsset

With all the plans that KAsset has for 2016, it says that it expects to attract about 27,000 new customers over the course of the year.

The firm is also continuing to focus on growing AUM – from THB1.136 trillion as of December 31, 2015, by 4% year-on-year.

“When it comes to the product offering too, KAsset is not just focused on launching new products.

Instead, there is an ongoing review process to determine which ones to take off the shelf

and which products need to be launched.”

Yet while enhanced distribution will enable the firm to reach new investors, Te-chamuanvivit says product development remains a cornerstone of the business.

Externally, KAsset is looking to further diversify its investment options, driven by what it foresees as economic inter-connectedness. More specifically, the firm has plans to extend investments

IMPROVING INSIGHTSAmid these growth plans, Techamuan-vivit’s objectives, she adds, include im-proving business analytics.

“We are enhancing our customer rela-tionship management capability.”

These initiatives will also form the foun-dation to develop mobile tools along

FIRM PROFILE


A novel approach to wealth advice in ThailandMBMG Group has carved a niche within the country’s wealth management industry – an independent offering combining investments, insurance, corporate solutions and family office services. And it charges for the quality of its advice.

The real need for wealth management in modern-day Thailand can probably be traced back to the Asian financial crisis of 1997. Until that point, the cur-rency, the Thai baht, had been pegged to the US dollar, exchange control regulations constrained capital flows, and strict rules inhibited foreign owner-ship of Thai investments and assets.

Nearly two decades later, the initial need to manage the currency has given way to a broader requirement for invest-ment advice, insurance solutions and other services to meet the needs of emerging affluent as well as individuals further up the wealth pyramid.

What’s more, the inbound and out-bound flow of funds has been signifi-cantly liberalised and many qualifying Thai assets have been opened to wider overseas ownership.

In line with this, the product range in the local financial markets has gradu-

ally evolved and expanded – albeit at a slower pace than many investors and practitioners have wanted.

Despite a wide number of internation-al investment assets and opportunities being made available in various guises in Thailand, investors can still only get a much narrower range of options than they can in jurisdictions like Singapore or Hong Kong.

This is where Paul Gambles believes that the value proposition of MBMG Group really becomes clear. And, in particular, its investments-focused divi-sion, MBMG Investment Advisory. As co-founder of the group, and managing director of the investment advisory arm, Gambles has spearheaded the delivery in the Thai market of fee-based global advisory services – to both locals and expats alike.

The rationale has been the following: with wealth continuing to grow and

PAUL GAMBLESMBMG Group

customers starting to get more sophis-ticated and interested in venturing offshore, this approach can add invest-ments which are relevant – and inter-


national – to their portfolios. “It is very difficult to get global investment and wealth management advice in Thailand,” explains Gambles, who also serves as chief investment officer.

“While a lot of firms do a good job of offering local products, there is defi-nitely a shortage of international knowl-edge, so we tend to focus on bringing all of this together, consolidating what people do with their local and interna-tional exposures combined,” he adds.

VALUE OF A FEE-BASED MODELMBMG Investment Advisory’s business model is quite different from how the banks and other traditional players in the local wealth management industry

In pursuing this approach, Gambles is confident about how his firm has been performing in terms of delivering com-petitive and cost-effective products to clients. ETFs are one example of many.

COMPETITION DRIVING BETTER SERVICEThis type of competition and alternative for providing wealth management advice is also exactly what Gambles thinks the local market needs.

This is in order to create greater interest and attract more quality to the industry.

In general, there seems to be little incen-tive for most Thai retail banks to focus on private banking services, given their successes in the various retail segments.

“We get paid a fee, so the better the job our advisers do, the higher the chance they have

of getting an ongoing fee.”

As a result, there are few organisations around to provide real investment advice of the type that MBMG Invest-ment Advisory offers.

At the same time, there is a need for more people and products to continu-ally educate the wider market about the scope of global opportunities.

GROWING PIEGambles also says he has seen growth in the number of wealthy families in the 20 years he has lived in Thailand – in-creasing from a handful of those which

Doing the right thing by clients

MBMG Group has been focused on providing relevant advice to its clients in Thailand since opening its doors in 1995.

It has developed into a provider of investment advice, corporate solutions, insurance and family office services. And it has expanded from its initial focus only on expats to now working with many local clients.

Its advisory arm, MBMG Investment Advisory, is registered with and licensed by the Securities and Exchange Commission of Thailand, providing investment advisory services and as a derivatives adviser.

Among its advisory services are: financial and investment planning; investment funds; retirement funds; currency markets; trusts; wills & foundations; insurance; and tax planning.

operate. But Gambles says that he con-siders this to be an important learning curve for the market.

With the fees that the firm charges its clients based on the advice it gives to them, it places the focus and emphasis of each adviser on the suitability of what they are offering to their clients, to meet their needs.

“We get paid a fee to do this,” says Gambles, “so the better the job our advisers do, the higher the chance they have of getting an ongoing fee.”

control most of the wealth in the country, to several hundred.

In the meantime, he explains, more and more wealthy foreigners have decided to move to Thailand, or they might have chosen to buy a second home in the country.

These two groups are examples of the expanding demand for more effective and cost-efficient ways to manage wealth in the HNW and family office space, adds Gambles.


A need for more investment and conviction in the PhilippinesThe country faces a variety of hurdles to develop its wealth management industry. Overcoming risk-aversion to turn more savings into investments, expanding the product range, and developing more advisory capability are all key ways to breed investor confidence and engagement.

Wealth management in the Philippines continues to be characterised by ‘savers’ rather than ‘investors’. Inevitably, this is a consequence of the availability of mostly simple products. Innovation remains relatively stifled.

With three different regulators respon-sible for oversight for banking, asset management and insurance, there is no level playing field to provide products and services in an efficient way.

The win-win, it seems, will come when advisers offer needs-based selling via open architecture platforms, and when investors become a bit less risk-averse via investments and insurance solutions as a way to build and protect wealth.

However, to ensure any initiatives have meaning and will have an impact, the

regulator needs to step in to help en-courage a more structured and com-prehensive approach to investor educa-tion and professional development.

At the same time, banks need to evolve their offerings and models to really dif-ferentiate themselves, as fees and products are still too similar. Part of this relates to developing digital tools and driving a more relevant customer en-gagement; this is the focus for most banks for the time being. It is also critical as they look to make themselves more relevant for the millennials, plus to create a more long-lasting impression on clients today.

Priorities for the development of wealth management in the Philippines include: educating investors – as early in their lives as possible – to be more aware of

investing; enhancing the competency of bankers and other advisers / agents through more formal training and as-sessment; broadening the investment options via a greater array of investment products; and enabling more access to invest overseas.

These were among the key talking points at our 2nd annual event in Manila, where 250 senior individuals attended across the top retail banks, trust banks, securi-ties firms, insurance companies and local asset management firms.


Miles Software Solutions AG Delta Henley & Partners Allocated Bullion Solutions Asiaciti Trust ASK Group AXA Commerzbank Franklin Templeton

Investments J O Hambro Capital

Management Legg Mason Swiss Life Swiss Asia Thomson Reuters

EVENT HIGHLIGHTS - PHILIPPINES WEALTH MANAGEMENT FORUM 2016 - MAY


Phillip HagedornATR Asset Management

Robert B RamosUnion Bank of the Philippines

Dhawal KamathMiles Sotware Solutions

Aaron MullinsAsiaciti Trust

Frederico OcampoBDO Unibank

Roberto VergaraPhilippine National Bank

April TanCOL Financial

Gaurav MalhotraASK Capital Management, Singapore

Maria Paz GarciaBank of the Philippine Islands

Maria Lizette PerezMetropolitan Bank & Trust

Randell TiongsonRegistered Financial Planner Institute Philippines


Carlos JalandoniBank of the Philippine Islands

Ida MendozaCTBC

Michael EnriquezSun Life Financial

Reynaldo G GeronimoRomulo

Thomas HenzeSwiss Life

Clement LeeLegg Mason

Josefina T FnoMetropolitan Bank & Trust

Nina D AguasInsular Life

Rizalina MantaringSun Life Financial

Valerie PamaSun Life Asset Management

Rafael AyusteBDO Private Bank

Leonardo Roxas ArguellesUnicapital Group

Noel AndradaBDO Unibank


Stephen LingardFranklin Templeton Investments

Anthony Campbell-BrownAG Delta

David VarleyAXA


Sandeep LalwaniMiles Sotware Solutions

“The attendance was great and the coverage of all the key topics has been really good, including client engagement, regulation, new products and digital trends.”Maria Lizette Perez, Head, Private Banking Division, Metropolitan Bank & Trust

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EXPERT INSIGHTS


Changing the Philippines investment mind-setRobert B Ramos of the Union Bank of the Philippines explains why investor education and formal training for front-line bankers can make a wealth management offering more compelling. This will change how the country’s emerging affluent think about investing.

When it comes to the concept of wealth management in the Philippines, most investors still seem set in their old ways. With the mentality of ‘savers’, they prefer to hold most of their liquid assets in time-tested fixed deposits, rather than investing in mutual funds that offer the promise of higher returns and also more diversification.

A major appeal of time deposits is the 2.5% fixed return on offer. Yet while high enough to beat inflation, what they earn is significantly lower than the average 8% from equities on the local stock exchange.

As a result, it is difficult to see how most of these individuals can achieve their long-term financial objectives.

“There is much greater comfort with time deposits,” explains Robert B Ramos, first vice president and trust officer within the trust and investment services group at the Union Bank of the

Philippines. “People don’t talk about investments based on their current objectives, their time horizon, or their needs. What they do know is that equi-ties are volatile.”

Tied to this mind-set is also a preference for holding investment assets in the form of a trust.

Though these are widely-accepted structures in the Philippines, they make the process much more cumbersome.

“A trust is a complex structure,” adds Ramos. “It integrates the US asset man-agement and custody businesses into one service. It serves its purpose here but we need to learn from what is hap-pening in other countries.”

EDUCATION TO PAY OFFBeing able to deepen the understanding among investors generally of the value of wealth management relies on proper education about products.

ROBERT B RAMOSUnion Bank of the Philippines

Only then, says Ramos, will they be able to objectively evaluate the risks as well as returns trade-offs associated with investing – without getting disheart-


ened by short-term influences, such as market volatility.

In line with investor education, advisers too need to increase and widen their knowledge, he adds.

The common approach in the Philip-pines at the moment – not dissimilar to what happens in many Asian markets – is to sell products which are front-of-mind. And in the Philippines, this tends to mean a time deposit. “If we try to provide more in-depth training to advis-ers to enable them to understand what might be suitable for a client, it will allow them to offer different products and services that will fit the needs of these clients,” explains Ramos.

make it compulsory. At present, with bank staff able to take or leave these courses, few advisers lack formal cer-tification and training.

STANDING OUTBeyond the quality of their advisers, a big challenge for banks in the Philip-pines is to differentiate themselves, as fees and products are broadly similar. “Oten, clients pick one bank over another based on just one criterion: location. Clients go to a bank that’s nearest to them,” explains Ramos.

The surest way to make an impression on the client, therefore, is to enhance the customer experience. This comes back to the importance of quality of

Building the right wealth proposition for the Philippines

Union Bank has identified its target customer segment as the emerging mass affluent – meaning individuals with between USD80,000 and USD500,000 in investible assets.

The appeal of these individuals is clear, says Ramos.

They have the potential to generate more business as they grow in wealth and stature; they can also serve as a good source of referrals for the bank.

In contrast, the relatively few HNW and UHNW individuals in the Philippines present less potential for many local bankers; these clients like to place some of their assets in more mature markets such as Singapore and Hong Kong. It is also perhaps more realistic for local banks to target the affluent segment given the limited amount of product innovation.

“While there are different types of fixed income and equity funds to offer short-, medium- and long-term investment choices, the strategies adopted by different funds are more or less similar, if not identical,” says Ramos. “There is a need to bring in more variety.”

One way of adding variety to the product mix is to have an open architecture model, where banks can sell funds from other providers, says Ramos.

Union Bank is adopting this approach, he reveals, but this is at an early stage.

“Often, clients pick one bank over another based on just one criterion: location.”

But prioritising financial education for investors rather than advisers may result in a bigger bang for the buck.

It will, says Ramos, deter advisers from taking the easy road by trying to recom-mend products for a client without first taking the time to understand what is suitable for them.

The win-win will come when advisers embark on the road towards needs-based selling at the same time as inves-tors look beyond short-term gains towards building long-term wealth.

Meanwhile, to ensure that any initia-tives can have the most impact, the regulator is likely to need to step in to

advice. “Products are standard, so you can’t really be exotic in your offering. So you have to compete on experience.”

Those banks which are able to offer a broad array of products and services under one roof will also have a greater chance of success. But to achieve this, institutions need to change the way they sell products, to integrate various aspects of the wealth management process into a single function.

“If you create alliances that allow you to do different investments through one account, you are in a better position to succeed,” says Ramos. “Wealthier clients are short on time, so they want a one-stop shop.”

EXPERT INSIGHTS


Catering to a more global outlook in the PhilippinesWith restrictions in the types of funds which can be offered locally, Nanjo Berba of Philam Asset Management, Inc. (PAMI) explains what the firm is doing to capitalise on a growing interest among the affluent in accessing global investments.

With a growing economy that prom-ises better days ahead in the Philippines, more and more emerging affluent indi-viduals are eyeing global investment avenues to grow their wealth.

Seeing this unfold, PAMI is among those firms which is acting on this op-

of the strategies that PAMI has adopted to try to stand out.

As an ambitious local firm, which ranks itself as number-three in the asset man-agement pecking order – it is also trying to be innovative in terms of its distribu-tion model; it is moving to a digital

NANJO BERBAPhilam Asset Management, Inc.

plains Nanjo Berba, PAMI president and chief executive officer. These investors are already aware they are not going to get the kind of growth they want from

“The Philippines is a growing economy, which means the existing market will become more affluent.”

portunity by tying up with interna-tional peers to offer a broader set of products to its clients.

In a competitive market which is dom-inated by large foreign rivals such as Sun Life Asset Management, this is one

platform as well as tying up with the largest pawn-shop chain in the country.

“The Philippines is a growing economy, which means the existing market will become more affluent, and will want to invest more to grow their money,” ex-


bank deposits, which has to date been the preference of domestic investors.

FINDING NEW OPENINGSThe need to think differently about their investment strategy has driven an in-creasing number of the country’s wealthy to look to buy global invest-ment products such as equities, fixed income and balanced funds, on offer from various asset management firms.

In PAMI’s case, in order to reduce any delays in bringing product to market, the firm’s approach has been to launch feeder funds, sold by Citibank, which are invested in master funds run by Fidelity Investments.

This strategy has proven effective, says Berba, within a mutual funds industry which faces various hurdles to growth.

Two big challenges in the Philippines, for example, stem from the fact that investors have traditionally been risk-averse, not really looking beyond fixed income instruments offered by the banks; plus, tough regulators with strict rules make it difficult to invest in any-thing new.

In the funds space, for instance, while asset management companies sell mutual funds, banks sell Unit Trust In-vestment Funds, and insurance compa-nies also sell funds, these are essen-tially all similar in their look and feel – yet each is governed by a different regulator and therefore a different set of requirements.

However, the biggest growth hurdle remains the local investment mind-set. “Filipinos are generally very conserva-tive,” says Berba. “They like something that is guaranteed.”

This, he adds, explains why they prefer bank-offered instruments, since this gives them protection of the principal, despite the low returns.

A NEW APPROACHThe obstacles for asset managers have convinced Berba that the biggest prior-ity for PAMI is to be different.

That’s the only way to grow, he believes, and he says he is planning to achieve his goals by ramping up distribution as well as spearheading investment educa-tion and awareness. “That’s the reason why we are saying that we need to

“The objective of this, is to ensure that more people can afford to invest,” ex-plains Berba.

The firm is looking for non-traditional and non-bank partners who can reach people in the lower to middle income levels.

“We want to tap a wider market given that competition at the HNW individual level is already quite saturated,” he adds.

Thinking out-of-the-box like this gives him optimism about what the future holds for asset management in the Phil-ippines, as well as for local investors to

“Two big challenges in the Philippines stem from the fact that investors have traditionally been risk-averse... plus, tough regulators

with strict rules make it difficult to invest in anything new.”

expand our private client business from local to global,” explains Berba.

One of the steps it has taken to date is to go digital by tying up with an online distribution channel such as COL (Citisec Online).

At the same time, PAMI is moving towards setting up its own digital plat-form, so that in 10 years from now, Berba estimates that 20% of its total business will be done digitally.

PAMI is also expanding its distribution network and working on lowering the cost of investing.

move beyond what is known to be a conservative stance.

Given that economic growth in the country has been at a pace of about 6% over roughly the last decade, this helps fuel such sentiment.

“That’s a tremendous change from where it used to be, and this is the reason why we think that [with] more people getting affluent [and] looking for how to make their money grow, we can create more funds to cater to what they want,” explains Berba. “This augurs well for the asset management sector [in the Philippines].”


Finding the way forward in Malaysian wealth managementPerhaps most pressing in the country is the need to overhaul the business model, in large part to kick-start the revenue engine by increasing the penetration of wealth management products and services – as long as this is more focused on the right type of (longer term) revenue.

Hubbis’ 6th annual event in Kuala Lumpur for the Malaysian wealth man-agement community, in mid-July, came at a time when the industry is facing one of its toughest-ever years. Markets are clearly tough for everyone, and chal-lenges are mounting across all aspects of the service and product offering.

There is little doubt that the dynamics, regulatory intent and demographics are all on Malaysia’s side when it comes to developing a healthy and sustainable wealth management market. The ques-tion-mark is over the pace it is moving.

There are several key ways in which Malaysian wealth management can move to the next level. First, there is a need to embrace change, given the inevitable emergence of fintech, the next generation of investors, new com-

petitors and regulatory reform, among various changes underway. Secondly, players must focus on building the right culture; this needs to come via innova-tion and human capital. But this is not just about product innovation; rather, new ways to engage consumers and leverage relationships. Thirdly, it must be easier for clients to do business, by giving them multiple points of contact through greater collaboration. Tied to this is the need for clearer and more targeted communication for clients. Fourthly, there should be more investor education and awareness generally, with all industry stakeholders required to play a role in ensuring this.

Asset managers, meanwhile, need to extend their global offering to the local market, providing professional money management in non-retail structures. Solution-based versus product-based

offerings will also enable stronger manufacturer-gatekeeper relationships.

For Islamic wealth management, in par-ticular, there is an opportunity for the Islamic banks to also focus on HNW business in addition to the retail market.

In insurance, providers can play a much bigger role in the wealth management sector if they can embed advice into dis-tribution and offer more protection.


Allocated Bullion Solutions Intellect Design Arena Henley & Partners Heritage Trust Group IRESS Sun Life Malaysia Vermilion Software Franklin Templeton

Investments Mercer Morningstar Rosemont Swiss Asia Temenos Iyer Practice Advisers Thomson Reuters

EVENT HIGHLIGHTS - MALAYSIAN WEALTH MANAGEMENT FORUM 2016 - JULY


Ng Chze HowAIA Pension & Asset Management

Robert FooMyFP Services

Anthony J. Harper Managed Accounts Partners

Ai Mei ChanAffin Hwang Asset Management

Carolyn LengCIMB Private Banking


Alex TanAmInvest

Kin Onn KeeWIN Group

K R RajuBlueprint Group of Companies

Puan Sharizad Binti Juma’atRHB Islamic International Asset Management

Shan SaeedIQI Group

Alvin LeeMaybank

Datin Maznah MahbobAmInvest

Mahdzir Othmani-VCAP Management

Raj GanesarajahIntellect Design Arena

Steven SeowMercer

Alvin TanStandard Financial Adviser

Dr Mohar YusofBlueprint Planning

Munirah KhairuddinCIMB-Principal Asset Management

Raymond LewSun Life Malaysia

Yap Ming Hui Whitman Independent Advisors

Philip SmithZurich Insurance

Gerald AmbroseAberdeen Islamic Asset Management

Nazaruddin OthmanFIMM

Alistair J. Macdonald, CFAFranklin Templeton Investments



Hans DiederenHeritage Trust Group


“This is a very engaging forum, with interesting topics and good questions [being asked]. I am privileged to be a part of this [event], which is very useful.”Danny Chang, Head of Managed Investments & Product Management, Standard Chartered Bank

David MacDonaldHubbis

Danny ChangStandard Chartered Bank

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FIRM PROFILE


A wealth of opportunity for RHB BankThe Malaysian bank has its sights on building a wealth management offering for the South-east Asian region that U Chen Hock believes can more-than-adequately compete head-on with any of its peers.

It’s never too late, it seems, for banks in Asia to realise that they need to do more with the generally vast number of afflu-ent customers on their books.

Having under-penetrated and therefore under-serviced this segment until now, RHB Bank is confident about what it can do for these individuals. “We think there is a lot of room for us to play more to our strengths and build these out over time to meet the needs of this segment,” says U Chen Hock, RHB’s head of group retail banking.

CLEAR SEGMENTATIONWhat RHB means when it defines its ‘affluent’ segment are individuals with a minimum AUM of RM200,000 (USD49,000), or those customers with a home property valued at more than RM1 million, or people with a salary or income of at least RM20,000.

From the bank’s existing base of affluent customers, it knows that anyone who

falls into one or more of these categories has a much broader range of financial needs that can be serviced.

“We therefore see a lot of opportunity to do more with them,” says U.

In practice, these customers have money put aside for investments and are gener-ally looking for wealth management products, including unit trusts, dual-currency instruments, insurance solu-tions, structured products, FX trades and other types of deposits. And RHB doesn’t want to miss out.

On the Islamic side of the offering, U says the bank is very much in line with the aspiration of the central bank to grow the Shariah-compliant share of the busi-ness to 40% by 2020; it currently repre-sents around 24.1% of all assets.

“We want to help these affluent custom-ers make their money work harder for them, so that we generate a much better

U CHEN HOCKRHB Bank

return from their investments,” explains U. This involves how they diversify their assets, to give them more choice in terms of asset classes.


PLAYING TO ITS STRENGTHSTo date in Malaysia, foreign banks have enjoyed a significantly higher penetra-tion of products such as funds than their local counterparts.

U has been watching this closely as he looks to make the RHB offering more compelling than average, especially since many customers are multi-banked.

This involves developing a greater un-derstanding in the first place of what its customers are actually looking for, and then using these insights to build its capability to match that.

“What RHB can also bring to the table is our regional expertise,” says U.

This plays to the appetite of many of Malaysia’s wealthy and aspiring wealthy to diversify outside of the country.

“We have a regional asset management business out of Singapore, giving us access to more products than some of the domestic players in Malaysia, and we can help clients manage their cross-border investments,” he explains. “This is where we are trying to differentiate.”

The overall customer experience, driven by the service, is another key way that U believes the bank can stand out.

To be able to achieve all this, he knows there is an urgency around developing talent to support the areas of growth he has earmarked. “We have always been very strong in the mass segment, for example, but not as much in the mass affluent and affluent segments. So, naturally, if we want to swing our focus, strategy-wise, to these two segments, we have to make sure we have the kind of talent to manage these customers.”

INVESTING IN THE VISIONWhile still in its early days, U says the RHB wealth management proposition is built on some solid foundations.

“We have put in a lot of effort over the last 12 to 18 months in creating the key pillars to support the people, processes, products and technology, to help us to deliver the services that meet the demands of this segment, as well as satisfy the expectations in terms of cus-tomer experience,” he explains.

At the same time, to ensure the sustain-ability of the model as well as client re-lationships, RHB is looking to create more fee-based income streams.

Much of this will be driven by the investment on the IT front, starting with enhancing our loan origination system, plus implementing a new CRM system along with a portfolio management tool. “We are also going to invest in a brand new digital platform to provide us with the kind of flexibility to develop apps as frequently as possible,” adds U.

This should also set the bank up well to service the next generation. “We are recalibrating the way we deal with these

clients,” he says. This means engaging millennials with tools to reach out to them in more relevant ways, for example via mobile apps, to make banking con-venient. This also caters to their prefer-ence to transact online.

In line with this, the bank launched its ‘RHB Now Mobile Banking Application’ in May 2016 – to offer customers simple, fast and seamless banking experiences using smartphones.

It also includes a first-in-the-market feature that enables customers to send money to family members, friends and any individual using mobile numbers, email or Facebook, without the need for a bank account number. Recipients can then accept the transacted amount through an RHB account or any other Malaysian bank account. “This is part of our digital strategy to meet the needs of the new generation,” adds U.

RHB’s priorities

Over the next few years, U says the bank has its sights set on three key objectives.

First, is to continue with its current strategy to manage its business by priority segments, especially its affluent and mass affluent customer groups, given that it is yet to fully tap into the opportunities these both present.

Secondly, is to focus on building out its digital capabilities.

And thirdly, is to ensure it has the right type of people to win and service the business it wants to, by growing, training and retaining its talent pool.

Re-launch

In line with its business strategy, RHB is undergoing a re-launch of its premier proposition, meaning its top segment of wealth.

This involves a refresh of the brand – some elements of which will reinforce the way it reaches out to these customers; others will provide added value, such as a new premier card that comes with exclusive benefits.

EXPERT INSIGHTS


Can Malaysia create a real culture of ‘advice’?A combination of consumer pressure and regulatory reform are needed to enhance the credibility of the country’s wealth management industry so that it can deliver more value and genuine advice to investors, says Robert Foo of MyFP Services.

While product-pushing continues to be prevalent in many developing wealth management centres, Malaysia faces a particular challenge around this issue – which is largely due to a lack of regulatory action and limited investor activism.

This is according to Robert Foo, co-founder and managing director of MyFP Services, who says despite some recent new initiatives, the regulators haven’t fixed the root of the problem.

planning profession as a strong advo-cate and voice for an independent and unbiased fee-only advisory model, it has been difficult for the industry to move forward.

But there is some scope for optimism.

“There is definitely more acknowl-edgement about a need for advice,” says Foo, “just not at the pace I am happy with, because we have been talking about it for years.”

ROBERT FOOMyFP Services

model really caught the attention of the country’s central bank, Bank Negara Malaysia.

“There is definitely more acknowledgement about a need for advice, just not at the pace I am happy with,

because we have been talking about it for years.”

As a result, explains Foo, who is well-known within the Malaysian financial

Only recently, for example, has the concept of the fee-based advisory


It has provided some guidelines for the insurance industry, for instance, by introducing a scorecard system and enabling product providers to place non-commissioned products either online or through bank branches.

This means instead of buying insurance products through tied agents, therefore incurring commissions, individual cus-tomers now have more flexibility.

Meanwhile, the Employees Provident Fund (EPF) is trying to build its own fi-nancial planning arm, to employ advisers within its payroll to give advice to people on how to invest their EPF money.

there is pressure from the regulator, explains Foo.

“What needs to happen is more com-petition, whether in the form of local or overseas institutions,” adds Foo. “Then there will be more emphasis by the regulators in terms of advice.”

He points to the examples set by the regulators in markets like the UK and the US, which has been intent on driving changes in the industry.

Where there is more activity from the Malaysian regulators more recently is in the fintech space, as the authorities

“When the public is more educated, then they will start to demand it, as they can see the

various options and things that are happening all over the world.”

RELUCTANT TO CHANGEReforms have not happened in any notable way at the moment, mainly due to the fact that the market is made up of a few dominant institutions and their tied distributors, with a lack of competition to change the status quo, explains Foo.

Further, it is unrealistic to expect any-thing far-reaching in terms of an en-tirely new approach from the banks and the dominant institutional product manufacturers in this area.

This will most likely only come about when the public demands it, or when

want the financial services industry to be prepared for the threat from potential disruptors.

A CREDIBILITY ISSUEIt is also not very practical to rely on the various industry groups and rep-resentative associations across the country to lead the necessary changes, based on what Foo describes as a conflict of interest issue.

While the Financial Planning Associa-tion of Malaysia (FPAM) might seem a natural vehicle to drive reforms, Foo says that many of the incumbent in-dustry representives dominate the

FPAM Board’s policy making body, so he expects little change from FPAM.

The Association of Financial Advisors (AFA), meanwhile, claims to represent the intermediaries and stand between the customers and the product provid-ing institutions.

“There might be a credibility issue here,” explains Foo, “because AFA was started by long-time life insur-ance agents. So their perspective could be more skewed towards life insurance than the whole financial planning profession.”

At the same time, however, he ex-plains that some of these advisers are starting to see the importance of in-dependent advice.

TAKING A BOTTOM-UP APPROACHIf a top-down approach seems to be unlikely for the time being in Malay-sian wealth management, a bottom-up effort based on educating the public seems to be more feasible.

Indeed, there is a pressing need for practitioners at all types of institutions to help investors understand and ap-preciate what choices are available to them to buy.

And this is not just from a Malaysian perspective; they should be looking at opportunities globally.

“When the public is more educated, then they will start to demand it, as they can see the various options and things that are happening all over the world,” explains Foo.

“Then I think the regulators will prob-ably move a bit faster.”


FEATURE ARTICLE

Re-igniting the revenue engine

Wealth managers have found it tougher than ever to make money in the first half of 2016. But beyond just proposing new investment strategies for clients, they need to drive needs-based conversations to adapt and provide a more relevant offering.

Amid stagnant transaction volumes and low risk appetite, more than ever wealth managers need to approach the conver-sations with clients with much more of a longer term and diversified mind-set.

Their focus should be to develop a better understanding of client needs and expectations to adapt the offering and recommended asset allocation.

“Risk appetite is much lower than last year. Advisers should adapt to that en-vironment and not try to sell risky prod-ucts that clients do not want,” suggests Arnaud Tellier, head of investment services for BNP Paribas Wealth Man-agement in Asia Pacific.

EVOLUTIONAgainst this backdrop, banks need to enhance the offering for their clients.

This can be done in various ways – both in terms of the assets and solutions they make available, as well as via the types

of conversations and approaches to portfolio management taken.

At UBS Wealth Management, Paul Ste-fansson, head of IPS portfolio specialists

“Many clients appreciate fee-based pricing as it is simple, transparent and aligns interests.”

PAUL STEFANSSON UBS Wealth Management

“Risk appetite is much lower than last year. Advisers should adapt to that environment.”

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FEATURE ARTICLE

in Singapore, says the focus this year has increasingly been on giving clients greater access to all kinds of alternative investments, such as private equity.

“UHNW individuals need more than just traditional banking services,” he explains. “It is important that we can provide them with a mix of investment banking, asset management and wealth management.”

At the same time, UBS will soon offer mandate portfolios that utilise higher weights in illiquid asset classes. This is a common strategy for certain well-known endowment funds and inves-tors with longer time horizons, ex-plains Stefansson.

The right investment strategy must inevitably take into account the fact that asset allocation and diversification are key to ensuring stable positive returns, adds Tellier. “Expected returns have to be adjusted to current market environment.” Plus, he explains, more frequent portfolio reviews are advisable.

OUTCOMES AND NEEDSTo really be able to determine which investment solutions are best suited to today’s environment also depends on the ability of advisers to have more needs-based conversations with clients, and create outcome-focused portfolios.

This is starting to happen in some seg-ments. “The wealth management indus-try in Asia is going through a profound change in terms of how we will charge for our services,” says Stefansson. “At UBS, we see increasing client interest in fee-based, as opposed to commis-sion-based, pricing models.” In his view, many clients appreciate fee-based pricing as it is simple, transparent and aligns interests.

According to Jean Chia, head of equities advisory and sales at Bank of Singapore, creating a structured investment process, with ater-sales delivery is one of the ways to make the engagement with investment solutions more ‘sticky’.

“The wealth management industry in Asia is going through a profound change in terms of

how we will charge for our services.”

Challenging markets inevitably put the spotlight on the service and product proposition. From a distributors’ per-spective, this is where it is important for them to ensure that product provid-ers can deliver on what they need.

“Risk appetite is much lower than last year. Advisers should adapt to that environment and not try to sell risky products that clients do not want.”

ARNAUD TELLIERBNP Paribas Wealth Management

Source: Hubbis Investment Solutions Forum 2016

WHAT WILL FINALLY DRIVE CONVERSATIONS WITH CLIENTS TO BE MORE NEEDS�BASED?

RMs being be�er educated to sell these solu�ons

Regulatory-led reforms

Changes in incen�ve structures

Be�er pla�orms and infrastructure

More client educa�on

13%

21%16%

29%

21%

Source: Citywire, Morningstar, Lipper, Asia Asset Management. Morningstar Awards 2016 © Morningstar, Inc, All Rights Reserved. Thomson Reuters Lipper Awards © 2016 Thomson Reuters. All Rights Reserved. This publication is for information only. All applications must be made on the application form accompanying the prospectus, which can be obtained from Fullerton Fund Management Company Ltd (“Fullerton”) [UEN: 200312672W] or its approved distributors. Investors should read the prospectus for details before investing. The value of units or shares in the Fund and the income accruing to the units or shares, if any may fall or rise. Past performance is not necessarily indicative of future performance. This publication was, prepared without regard to the specific investment objectives, financial situation or needs of any investor. Investors may wish to seek advice from a financial adviser before making a commitment to invest in any Fund. In the event that investors choose not to seek advice from a financial adviser, investors should consider whether the Fund is suitable for them.

DELIVERING EXCELLENCE IN ASIAN INVESTMENT

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At Fullerton, our understanding of the region comes from more than just analysis and statistics: we embrace the dynamism and energy of Asia. As committed long-term investors, we see quality beyond the trends. Our recent awards demonstrate the results.

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Source: Citywire, Morningstar, Lipper, Asia Asset Management. Morningstar Awards 2016 © Morningstar, Inc, All Rights Reserved. Thomson Reuters Lipper Awards © 2016 Thomson Reuters. All Rights Reserved. This publication is for information only. All applications must be made on the application form accompanying the prospectus, which can be obtained from Fullerton Fund Management Company Ltd (“Fullerton”) [UEN: 200312672W] or its approved distributors. Investors should read the prospectus for details before investing. The value of units or shares in the Fund and the income accruing to the units or shares, if any may fall or rise. Past performance is not necessarily indicative of future performance. This publication was, prepared without regard to the specific investment objectives, financial situation or needs of any investor. Investors may wish to seek advice from a financial adviser before making a commitment to invest in any Fund. In the event that investors choose not to seek advice from a financial adviser, investors should consider whether the Fund is suitable for them.

DELIVERING EXCELLENCE IN ASIAN INVESTMENT

Best Fixed Income House2016 Morningstar Singapore

Fund Awards

Best Fund Manager, Singapore Hard Currency Bonds, Asia Pacific

Citywire Asia Awards 2016

Best SGD Bond FundThe Edge-Lipper Singapore

Fund Awards 2016

Best RMB Bonds, OffshoreAsia Asset Management

Best of the Best Awards 2015

fullertonfund.com [email protected] | +65 6828 6100

At Fullerton, our understanding of the region comes from more than just analysis and statistics: we embrace the dynamism and energy of Asia. As committed long-term investors, we see quality beyond the trends. Our recent awards demonstrate the results.

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FEATURE ARTICLE

According to Marc Lansonneur, manag-ing director and head of the Singapore wealth investment & treasury business at DBS Bank, ater-sales service is a key component.

“It is easy to price a transaction and book a trade, but as soon as something happens to the underlying, we need useful information to pass on to our RMs as well as clients,” he explains. “We do some of this ourselves, but we also look to our operators to advise on

whether clients should for example take profit or switch.”

He adds that the bank will increasingly assess partners on such services.

While product innovation isn’t top of the list for all distributors, this can be important in helping to improve inves-tor returns. This is especially the case if it leads to greater access to unique products, adds Stefansson, in particular in terms of alternative investments.

STRATEGIES FOR UNCERTAIN TIMESFrom an investment perspective more specifically, given the nature of markets today, many clients are increasingly taking a wait-and-watch, more tactical approach.

This includes investments which are non-correlated.

In addition, with so many over-crowd-ed trades in the market – across fixed income, developed equities and emerg-


WHICH OF THE FOLLOWING SHOULD BE THE MOST IMPORTANT THING DISTRIBUTORS LOOK FOR FROM PRODUCT MANUFACTURERS?

Lower prices

Product innova�on

A�er sales-service Informa�on and educa�on

32%

5%

42%

21%

“As something happens to the underlying, we need useful information to pass on to our RMs as well as clients.”

“Creating a structured investment process, with after-

sales delivery is one of the ways to make the engagement

with investment solutions more ‘sticky’.”

JEAN CHIABank of Singapore

For Stefansson, meanwhile, it is impor-tant to understand the value-add that comes from doing thorough due dili-gence on products.

More specifically, adds Tellier, the dif-ferentiator stems from a particular bank’s capacity to the source the right product, using the right due diligence, to understand where and how the product is being packaged. The bank’s advisers must also ensure clients un-derstand this as well.

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FEATURE ARTICLE

ing market equities – some contrarian trades can offer good opportunities.

An uplit in returns is also possible through alternatives such as private equity and real estate, to take advantage of dislocation in the markets or dis-counted assets.

To be able to get through this uncer-tain period, buying some simple put options can also make sense, as do hedging strategies.

More broadly, structured solutions should continue to play an integral role in client portfolios – not really for speculative purposes, but rather to protect portfolios and get access to markets which investors might not oth-erwise be able to reach.

GOING PASSIVEThere is also increasing scope for Asian

clients to use more passive instruments in their portfolios.

The region still trails the US and Europe in this way, given that Asian investors still believe they can do stock-picking and out-perform the markets without too much difficulty.

By contrast, pension funds, for example, have for a long time had a core alloca-tion to passive investments.

This is due to the benefits of such instru-ments: they can help portfolio construc-tion and management in various ways such as transition management, liquid-ity management, managing portfolio risk and managing portfolio costs.

In reality, it is possible to construct a very good portfolio with passive invest-ments – so, in fact, this part of the process is active.

MAKING DISCRETIONARY OFFERINGS WORKToday’s market landscape also highlights the importance of managed accounts and DPM.

This is because the relationship between bankers and end-clients is one where

Building robust portfolios

One of the key ways to build a robust portfolio for clients is based on the recognition that the world is a lot more complex and volatile than before.

So having a very dynamic risk management strategy in place is essential; this means that as risk changes, the portfolio adjusts so that it is still optimal for the investor. This is a big departure from traditional portfolio management theory.

For example, a robust portfolio refers to one that can take into account current zero and negative interest rates. It must also be able to deal with unexpected potential events, such as how QE will end.

There are also new approaches for managers to consider as part of portfolio construction.

These include factor-based strategies, to build a more diversified portfolio which is not as sensitive to one or two specific underlying factors.

Another important trend relates to the importance of cost as part of the process. This is being driven by regulation around the world

“Having a very dynamic risk management strategy in place is essential; this means that as risk changes, the portfolio

adjusts so that it is still optimal for the investor.”


WHAT IS THE MOST IMPORTANT INVESTMENT THAT BANKS NEED TO MAKE TO ENSURE A MORE SUCCESSFUL DPM OFFERING?

Educa�on of RMs

Educa�on of clients

Por�lio / investment specialists

28%

16%56%


FEATURE ARTICLE

there must be fiduciary oversight and an ongoing relationship. For example, during the financial crisis in 2008, many advisers realised it presented an op-portunity to talk regularly to clients about the re-allocations in their port-folios as re-balancing took place.

And since 75% of the performance of average advisory portfolios in a private bank under-perform discretionary port-folios, it is during such challenging times that clients can see the value of DPM – especially in terms of the diversifica-tion and risk monitoring, says Juan Aronna, managing director and head of investment and products for RBC Wealth Management in Asia.

“DPM becomes more relevant in chal-lenging and volatile times and in the case of black swans,” he adds.

So in line with this, and the fall in trans-action revenues, banks need to look at the way they address the challenges in technology along with due diligence and oversight, to present their infra-structure and train their bankers, to make DPM a more fulfilling and trans-parent experience for clients.

But the most expensive component of the production chain is sales. Portfolio specialists, director/executive/senior director level individuals must be avail-able to support the front-line adviser to sell this more complex solution. To make it work, it is key for banks to build the right tools and have the frameworks in place.

At the same time, adds Lansonneur, to speed up the penetration of DPM re-quires a move towards performance-based fees.

“To speed up the penetration of DPM

requires a move towards performance-based fees.”

MARC LANSONNEURDBS Bank


WITH SO MUCH VOLATILITY AND UNCERTAINTY WHAT SHOULD ADVISERS FOCUS ON WHEN DISCUSSING INVESTMENTS WITH CLIENTS?

Performance and track record

Diversifica on benefits to the porolio

Ease of explaining the strategy to clients

7%

36%

57%

“DPM becomes more relevant in challenging and volatile times and in the case of black swans.”

JUAN ARONNARBC Wealth Management

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CM

MY

CY

CMY

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omgi_ad_hubbis_210x297_2016_FinalOP.pdf 1 28/7/16 11:41 am


Physical gold: are you ready?

A low-yield environment should remind investors of gold’s role as a safe-haven investment. But wealth managers and investors should also consider physical gold, says Seamus Donoghue of Allocated Bullion Solutions.

Gold has always been a favourite asset class for many Asians, particularly among the Chinese and Indians, serving as a safe heaven.

Data from the World Gold Council shows that since the 1970s, precious metals have had an average of 63 months’ worth of bull markets, with an average cumulative return of 385%.

This compares with 42 months’ worth of bear markets, with a negative return of 44%, says Seamus Donoghue, chief executive officer of Allocated Bullion Solutions.

Meanwhile, among many asset classes, only gold has experienced more than a 15% return in the first quarter of 2016.

The demand for gold as a safe-haven investment is also growing in China, for example, happening against the backdrop of the uncertainties over

the domestic economy, capital out-flows and the depreciating currency, explains Donoghue.

STICKY BUSINESSDespite these market signals, not many banks do much business in physical gold, given its relatively complicated trading process.

Yet Donoghue believes that these in-stitutions would find that it pays off in the long run.

For instance, he says that physical gold custody has no capital or leverage impact on the banks; this is because the physical gold does not sit on the banks’ balance sheet.

Meanwhile, banks can enjoy a stickier AUM, adds Donoghue, explaining that the majority of the gold that gets bought sits with the banks. What this leads to for the banks, he explains, are recurring

SEAMUS DONOGHUEAllocated Bullion Solutions

EXPERT INSIGHTS

custody fees and high transaction fees. Plus, it is a differentiated offering to show clients.

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Giving clients the product proposition they wantLavanya Chari of Deutsche Bank Wealth Management is a staunch believer in working with clients to meet their shorter and longer term needs – not fitting everyone into the same bucket.

With the potential to access the relevant suite of products from the investment banking side of its business and various counterparties across the street, Deutsche Bank’s wealth management business is confident that it has weath-ered the storm over the last 12 months better than many of its peers.

“We have focused on a few different things,” says Lavanya Chari, head of global products and solutions at Deutsche Bank Wealth Management in Asia Pacific. “One is capital markets, which is our bread-and-butter business. And we have made a concerted effort to grow the accruals business, both from a funds perspective and from a discretionary portfolio man-agement standpoint.”

At the same time, she adds that in terms of structured products, credit-linked notes have been a big success story for the private bank. But the bank has much more to offer. And going forward, Chari explains that continuing to try to diver-

sify the product offering is high on the agenda. It all stems from an approach which is about having conversations with clients to help them meet their needs – whether these are short-term or long-term in focus.

REFRESHEDThe goal for the more forward-looking private banks is to continuously enhance the value proposition and suitability framework for their product offering.

There is no question in Chari’s mind that this involves refining the mix.

“This is what we are in the process of doing,” she says. “For example, we are focusing more on discretionary portfo-lios. We are also making a concerted effort to expand our alternatives offering to clients to give them access to oppor-tunities they otherwise wouldn’t get.”

This is based on the banks’ relationships with pretty much all the fund houses on

LAVANYA CHARIDeutsche Bank Wealth Management

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EXPERT INSIGHTS


the ability to invest smaller amounts into funds that would not be accessible to them otherwise. Private market op-portunities are also in focus, involving sourcing opportunities for clients.

A further change is likely to come in terms of the bank doing more on the digital front. “This is a significant focus area for us,” explains Chari. “The way clients look at their money has changed because the world has changed, so we are working on several initiatives to try and take this business to the next level, including portfolio analysis plus our internal straight-through processing to bring down costs.”

More specifically, the bank is building a tool which looks at a client’s portfolio and the extent to which it deviates from the model portfolio based on the client’s agreed risk appetite and requirements. RMs can then discuss this with each client on a regular basis, to determine if that’s what they want in the short term, or if they want to move back to their ideal, or model, portfolio.

THE RIGHT CONVERSATIONSA lot of the time and energy the bank is spending to evolve in these ways is also for the purpose of facilitating more needs-based conversations between front-office advisers and their clients.

“We need to offer clients more of what they need,” acknowledges Chari. Some clients will definitely want funds, so those are the individuals to whom the bank will offer managed products and discretionary portfolios, she says.

Then there are other clients, such as the young entrepreneurs in some countries in Asia, for instance, who are unlikely to cede supposed control over their portfo-

lio to a private bank, so the ability to trade FX, equities and other products they have a view on becomes the priority.

Even though the bank might give them its house views and access to its product suite, they simply won’t relinquish control. To Chari, this highlights the stark difference between what happens in Germany and in Asia. “These are the two extremes, and I have several con-versations with my counterpart in Germany where he wants to make his business more like mine, yet I want to make mine more like his.”

Yet while the goal is to take the best-in-class from both sides and try to combine them, the reality is that the penetration of discretionary mandates in Asia, for example, will continue to be limited relative to Germany for the foreseeable future.

The fundamental difference in attitudes and needs of Asian clients is exactly why Chari believes relationship managers (RMs) must have bespoke conversations with the client – rather than try to squeeze them into a mind-set which just doesn’t seem to fit.

“Many Asian clients want returns. They do not want returns only in 20 years’ time; they want them annually.”

As a result, she believes that, in addition to a long-term portfolio, it is equally the fiduciary responsibility of the adviser to try and meet all client needs. It may not be possible every single year to achieve the desired returns, based on market conditions.

And even where there is a short-term focus by clients for a specific investment or part of their portfolio, this doesn’t – or

shouldn’t – impact the long-term rela-tionship with the RM.

“Our top RMs have known their clients, and oten their families, for 15 years or longer, and they do will not do anything that would negatively impact the client,” she explains.

According to Chari, the need for broader and more open conversations with clients is also a key way for private banks to provide more value.

“Clearly we speak to them about the markets and the product offering across different asset classes, but we also have conversations with clients around their personal situations,” she says.

This ranges from discussing setting up trusts, to children getting married, to the possibility of divorce, to insurance. “We work on every aspect of the client’s fi-nances and business dealings,” she adds. “We have a wealth planning team whole focus is on the clients’ best interests.”

BROADENING THE OFFERINGUHNW clients have been one of Deutsche Bank’s key focus areas over the last several years.

This is driven by its capabilities across different products and asset classes.

“We have every single aspect of the product suite, across the spectrum, which very few other banks do,” ex-plains Chari.

In addition, the bank is now targeting the broader HNW client segment in Asia. In line with this, the bank is working now on improving its systems as well as its processes, to service this larger group of clients.

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How Citi is enhancing its advisory offeringPaul Hodes explains how Citi is enhancing its advisory offering to clients in the region, as well as improving the education of staff to drive more needs-based conversations.

A huge amount of work has been under-way within Citi to raise the level of advice it provides for its clients, says Paul Hodes, head of consumer bank, wealth management in Asia Pacific, in an interview.

For the bank’s HNW segment, for example, they now get in-depth and analytical tools to review their portfo-lios. This aims to help them to deepen their understanding, not only their hold-ings, but also of the extent of the diver-sification of their portfolios. The Citi advisory process has led to strong sales and earnings, says Hodes, along with positive client feedback. “Advice can lead relationships in terms of deepening understanding, and ulti-mately driving the company’s business.”

For the bank’s affluent customer base, the Citigold Diversification Index (CDI) is a simple tool to help clients better understand their portfolios.

The CDI measures portfolios in terms of how they are placed versus the rec-ommended model portfolio and the underlying holdings, says Hodes.

It also tests potential concentration risk – in terms of the extent to which clients’ portfolios are diversified across geog-raphies and sectors, for instance,

EDUCATING STAFFTo better educate its front-line staff, Hodes says Citi works exclusively with the Wharton School of the University of Pennsylvania, in terms of training. The goal is to deepen the understanding of wealth management and relationship managers (RMs).

So when recommending a product, this should help the RMs understand what the academic research is behind it. “When we talk about portfolio or manager selection, about diversifica-tion, or about risk versus returns, try to think about what they really mean.”

PAUL HODES Citi

RMs need to get into a more sophisti-cated level of conversations with clients to provide ideas to them, and the tools for them will help to educate clients too.


Finding investment solutions for challenging marketsAmid highly-challenging markets, product manufacturers and distributors urgently need to get clients to use a broader range of portfolio and investment solutions. In particular, diversification and risk management are critical.

In today’s uncertain investment envi-ronment, listening to clients to under-stand their needs and present diversi-fied portfolio solutions to them will differentiate the winners and losers.

Indeed, against the backdrop of what seems to be the toughest year for a long time for wealth managers to make revenue – product manufacturers and distributors must guide clients to use a broader range of investments which are more suitable and relevant.

In line with this, we designed and hosted our new-format, investment-focused event in Singapore in June 2016.

This brought together 275 senior indi-viduals – including leading product & fund gatekeepers from the top interna-tional and local private banks, retail

banks, multi-family offices and IFAs, as well as relationship managers and in-vestment advisers from the industry.

There are clearly many uncertainties in today’s investment markets. For example: Brexit discussions, oil prices, US Fed interest rate hikes, China’s growth issues, and more.

As a result, the focus needs to be on diversification of risk and also the re-balancing of portfolios.

At the same time, it seems that what-ever assumptions that investors might have about the past might not be rel-evant for the future.

Advisers therefore need to question their assumptions before building port-folios for their clients.

An important consideration when managing portfolios today is also to continue to move in the direction of removing the responsibility for making investment decisions from the end-clients to the investment specialists – whether via a discretionary portfo-lio management (DPM) model or another format.

Advisers, as part of more outcome-oriented and needs-based conversa-tions with cleints, also need to re-align client expectations in terms of returns and performance with what the market is actually offering.

There is, in general, a need to think longer term – which, ultimately, should mean the longest time period which the individual client can stomach.


Franklin Templeton Investments

iShares Leonteq Securities STRATEGY Consulting Commerzbank Morningstar

EVENT HIGHLIGHTS - INVESTMENT SOLUTIONS FORUM 2016 - JUNE


Marc LansonneurDBS Bank

Roger MeierBank Julius Baer

Christophe AbaJPMorgan Private Bank

Akshay PrasadDeutsche Bank Wealth Management

Conrad HuberCredit Suisse Private Banking

Anthony J. HarperManaged Accounts Partners

Dr Ekkehard J. WiekStraits Invest

Jean ChiaBank of Singapore

Hrishikesh UnniTaurus Family Office

Pankaj NagrathBarclays

Simon IpIndosuez Wealth Management

Stanley SiaStandard Chartered Bank

Arnaud TellierBNP Paribas Wealth Management

Emmanuel GuillaumeUnion Bancaire Privee

Juan AronnaRBC Wealth Management

Paul StefanssonUBS Wealth Management

Arthur WuMorningstar

Franck FayardCommerzbank

Juerg KienerSwiss Asia Capital

Prashant BhayaniBNP Paribas Wealth Management

Tuan HuynhDeutsche Bank Wealth Management

Nicolas RigoisStandard Chartered

Harold Y. Kim, Ph.DNeo Risk Investment Advisors

Leonardo DragoAL Wealth Partners

Steven MoellerBlackRock


Scott CollinsonFranklin Templeton Investments

Chinmay PatilLeonteq Securities

Christian ObristBlackRock


Sally KwokBlackRock

“The event attracted a very good turnout, and with a good cross-section of speakers. So with a large number of people from diverse streams attending and sharing their views, this is a great experience for everyone.”Rohit Jaisingh, Head, Equity and Commodities Investment Products, DBS Bank

Rohit JaisinghDBS Bank


Getting onto a bank’s funds distribution platformGiven the dominance of banks in Asia in distributing mutual funds, Stewart Aldcroft of Citi reveals what asset managers must do to get approved onto a bank’s platform, and how to avoid getting kicked off.

Banks have a dominant position in terms of distribution of funds in Asia.

In Hong Kong, Singapore and Taiwan, for example, banks represent more than 80% of all mutual funds sales.

According to Stewart Aldcrot, manag-ing director of Citi Markets & Securities Services, and a senior advisor in the Asian fund management industry, fund houses must adhere to some specific criteria in line with the distributor’s clearly-defined processes to get their product on the platform.

THE ‘4P’sProduct is oten the most important one, explains Aldcrot.

Some key features include being de-nominated in US dollars, although RMB is increasingly sought ater by mainland investors. Further, UCITS (Luxembourg or Dublin) is preferred, and an AUM of USD500 million-plus is ideal.

Performance is also critical, given the desire among banks for best-of-breed.

Consistency of returns over three and five years is key, as is having the same manager for these time periods, follow-ing a repeatable and definable invest-ment process. This should create dif-ferentiated alpha to appeal to the bank.

For pricing, standard funds have a front-end load – but oten 5% is fully rebated/discountable. They also need annual management fees with trail commission to create annuity fees for the banks.

When it comes to people, local represen-tation is necessary, as is responsiveness in terms of any follow-up on enquiries.

Once on a platform, Aldcrot says funds must be careful not to get de-selected.

This might happen due to: the departure of the fund/portfolio manager; style drit; poor risk controls; under-performance

STEWART ALDCROFT Citi

against the benchmark index and peer group; corporate risk; capacity constraints; and transparency of fund, manager or firm in providing information.

EXPERT INSIGHTS

EXPERT INSIGHTS


Making the switch from products to portfoliosBank distributors are working hard to align their models with the goal of having needs-based conversations with customers. But matching intention with the reality of delivering longer term portfolio advice is a challenge that requires support from their funds partners, says Damien Mooney of BlackRock.

Many of the larger bank distributors in Hong Kong and Singapore have made a concerted effort over the past couple of years to head in the direction of more of a portfolio advisory approach. Their goal is to genuinely focus on a custom-er’s needs as the basis for the invest-ment conversation.

The efforts to move in this direction are particularly noticeable within those private banks which are determined to try and increase their discretionary busi-ness, beyond the mainly single-digit AUM in such mandates today.

“If you talk to the senior management in these organisations, they say they have changed their models, that their RMs are no longer incentivised on revenue per se, that they have got a bal-anced scorecard among a mix of KPIs, and that every part of the advice process is centred on a needs-based conversa-tion,” says Damien Mooney, head of BlackRock’s retail and wealth advisory

business in Asia Pacific. “But it is very much early days.”

Ultimately, he adds, there is some dynamic tension between what the banks are trying to achieve versus their ability to execute it.

HARD TO DO IN PRACTICEOne of the biggest impediments to these banks moving from being product-led sales organisations to being able to offer a portfolio advisory proposition, is the client base itself. “Not all of them want to actually be advised,” says Mooney. “Many of them prefer to have a trans-actional relationship with their RMs.”

Time is also not on the banks’ side. Changing the nature and focus of the conversation is also difficult amid an environment where regulation on giving advice is so onerous.

As a result, rather than an adviser spending up to two hours on this

DAMIEN MOONEY BlackRock

process, they default to talking to the customer about something they can buy in less time and without as much paperwork required.


Another hurdle for the banks in making a portfolio, needs-based approach work is the dependency on having skilled RMs and portfolio account managers.

This is where some banks have been found wanting.

“RM turnover remains high, so the banks’ ability to develop more of a portfolio service at a cost they can maintain is a challenge,” says Mooney.

AGAINST THE TIDENone of these factors are deterring Asia’s wealth management industry from trying to effect change.

The pressure to create more sustain-ability in the advisory model is increas-ing. This is coming not just from the need to make the economics of the business work better, but also from the spotlight on fee transparency – which Mooney believes is only going to get brighter.

“There is definitely more connectivity among regulators around the cost of an advice-based conversation,” he says, “and there is much more focus by inves-tors in today’s low interest rate, low return environment on what they are getting for their money.”

He also foresees the next five to 10 years as going to be arduous.

“The cost pressures are not abating within the industry, with revenues coming under significant pressure. The squeeze is certainly on,” he explains.

It is those incumbents in the industry which can migrate to a model where they will be able to offer the services that scale, and at a lower cost, which will win in the long run.

“I would imagine that 10 years from now, everything will be much more transpar-ent,” says Mooney.

“In addition, portfolio-wise, services will essentially be standardised using tech-nology, and, in some instances, product-based commissions will have disap-peared.” he adds.

TRUE PARTNERSHIPIn bank distributors trying to move towards a more sustainable model, fund houses can help them.

One of the things that BlackRock aims to do in line with this, is have a genu-inely differentiated relationship with its distribution partners.

“We don’t want to be regarded as just another product provider,” says Mooney.

“Three or four years ago, our main rela-tionship with these firms was mutual funds based. Today, we have a very differ-ent relationship as a result of the breadth of our product and advisory capabilities,” he explains.

For example, BlackRock is making its ETFs available inside the banks’ discre-tionary portfolio teams, plus the firm is doing much more model portfolio busi-ness – in some cases providing asset allocation services.

On top of this product proposition, the value-add comes from the firm helping with education, training and also, po-tentially, with distribution.

More specifically, this might involve conversations about how these dis-tributors can evolve their business using various technologies to make it more focused on portfolio advice.

Looking onshore

For fund houses looking to capitalise on the opportunities in Asia, and not get caught up doing the same as everyone else, they need to look onshore.

“That’s where the growth potential is,” says Mooney. “For international asset managers with any medium to long-term ambition in this region, and which want to build scale, they can’t be a foreign company. They can be international, but they can’t be foreign.”

This means they need to put down roots in markets where they see growth. To do this successfully requires them to determine how they can make themselves relevant.

And that won’t only be through selling offshore funds.

As a result, the historical approach of importing an offshore fund range from Dublin or, predominantly, Luxembourg, into Asia, is no longer enough.

For Mooney, two simple facts say it all about the potential from the vast amount of untapped wealth onshore: an average cash balance among Asian investors of four or five times that in the West, yet a much lower percentage of their investments being in managed funds.

“Over time, I think we will see a greater move into managed investments, mutual funds and ETFs,” he predicts. “That’s going to come from cash and from wealth accumulation. And just having offshore funds won’t be enough.”

EXPERT INSIGHTS


Why bank distributors must re-tune product platforms Intermediaries in Asia are grappling with how they adapt their product offering and position investment strategies to end-clients in today’s environment. June Wong of State Street Global Advisors explains the role that fund houses can play.

The influences of challenging invest-ment markets, relatively low fund penetration and regulation such as fee disclosure are driving a much-needed transformation in product platforms at private banks in Asia.

Over the past 20 years, the dominant model of client engagement has been to use thematic and active strategies, generally via stand-alone products.

But the limited success that many banks have had in selling funds cannot be ignored.

As a result, a growing number of these distributors are adapting and refining their approach, including leaning towards more of a discretionary offering.

“More and more intermediaries need to prepare and re-invent themselves for today’s world,” says June Wong, head of Asia ex-Japan for State Street Global Advisors (SSGA).

“The old model of engagement cannot continue. There should be a better way of serving clients.”

To do this in practice involves them increasingly looking at passive instru-ments, such as ETFs, smart beta strat-egies, and outcome-oriented invest-ment solutions.

A FULL MENUThe move towards a broader and more holistic product offering is inevitably a positive development for a firm like SSGA, given its focus on active and passive strategies.

On the one hand, it has a comprehen-sive range of passive and smart beta strategies, whether in the form of ETFs or UCITS structures. This is comple-mented by the more outcome-focused solutions, explains Wong.

At the same time, the firm’s active funds and alternatives offerings give it more

JUNE WONGState Street Global Advisors

options in how it can support distribu-tors, depending on their preferences. Plus, SSGA’s offering is global, so Wong says it can work with intermediary


partners wherever they make their buying decisions.

Further, it can either act simply as a provider of individual products and solutions, or work in a more consulta-tive way with a bank if they are looking for advice and guidance on how they formulate their asset allocation and populate the product platform.

For example, she says they need to be more technical, to be able to better understand the needs of intermediary partners. Their role must develop beyond that of just a relationship manager, so that they can work with them to create more relevant solutions.

“Modern dialogue needs to go beyond just performance and talking about

New approaches to investment models

The results of a recent survey by SSGA, entitled “Building Bridges”, highlights how retail and institutional intermediaries can access new approaches, such as Smart Beta and objective- or needs-based investing, to have any chance of meeting their long-term return goals.

Some of the key findings include:

High return expectations – institutional investors are expecting a 10.9% return over the next five years and are pressed to find them in today’s lower-for-longer environment

Need for change – 97% of respondents expect moderate to significant change in the industry. New approaches are required in today’s lower-for-longer return environment to meet these objectives.

New investment approaches – investors confronting performance shortfalls are re-assessing their overall investing approach to better target drivers of performance and to ultimately adapt to what is believed to be the new norm

Historically driven by asset classes, the survey results show that many investors are looking to objective- and factor-based investing to meet performance shortfalls.

As a result, the investment paradigm is shifting from the top-level asset portfolio construction perspective to specific implementation of these new approaches using the efficient ETF vehicle.

“The old model of engagement cannot continue. There should be a better way of serving clients.”

In line with the stage of development of the industry, the current discretion-ary-focused phase requires a good supply of underlying products to serve as building blocks.

“In today’s low-yielding environment, characterised by volatile markets where the outlook for individual asset classes is unpredictable, asset manag-ers and investors alike have to work much harder to generate returns in terms of asset allocation and being more efficient,” says Wong.

PROACTIVEBut the help that fund houses like SSGA can give distributors goes beyond the products themselves.

As part of the evolution that private banks need to go through, asset man-agement companies need to think about the types of individuals who they put in-front of fund gatekeepers.

“We need to hire differently in terms of front-line staff,” says Wong.

different campaigns to launch togeth-er,” she adds.

This is also essential given clients now have access to more information, and new ways of sourcing it, via a greater variety of communication channels.

BETTER SOLUTIONSWong believes that more transparency driven by regulation and a portfolio-led approach is a good thing for Asia, to ultimately serve end-clients better. “This will steer the industry towards more cost-effective solutions,” she explains. “But it is all part of an evolu-tion which will take time.”

In particular, she sees this as having an impact in servicing the growing mass affluent and emerging HNW segments.

“There is genuine growth in Greater China as well as South-east Asia in terms of the middle class and mass af-fluent,” adds Wong. “They need more assistance in their investment decisions and portfolios.”

EXPERT INSIGHTS


Driving a needs-based conversationShikha Gaur of Aon Hewitt explains the role of advice in guiding expat clients in Singapore, and explores how the role of robots in the process must push professionals to up their game.

For many investors, the investment world seems daunting and perhaps overwhelm-ing when they first start to learn about it. Then, when they consider investing outside of their comfort zone, perhaps in a country whose system is unfamiliar, yet more uncertainty creeps in.

This is exactly the type of anxiety that Shikha Gaur, executive director of wealth management at Aon Hewitt, is in the business to quell. Her clients include expatriates in Singapore, and it’s her job to make sure they’re guided through the investment process.

So, what’s the first step? According to Gaur, it shouldn’t start with anything to do with an investment. And with her 12-strong team, she focuses on getting the basics right first – a lesson that more advisers in the market need to heed.

“Our conversation doesn’t typically begin with investments,” she explains. “It starts with something broader in terms of what

[the client] is trying to do from a longer term perspective.”

With expats in Singapore, therefore, that means digging into what has brought them to move to another country in the first place. There is then a place for dis-cussing how investments, in the context of that individual’s financial history, can help in meeting those goals.

“A client doesn’t usually have an invest-ment need,” explains Gaur. “They have a purpose that they are trying to [achieve].”

ADVICE FIRSTAon Hewitt, headquartered in London, provides HR consulting services, cover-ing talent, performance, rewards and retirement solutions.

Specific to the investment business, it deals both with individuals and corpo-rate clients that pay for advice. From there, it can place funds, manage invest-ment portfolios, or help with clients’

SHIKHA GAURAon Hewitt

insurance requirements. “We are not pushing a product,” urges Gaur. “We will give clients the advice and they could walk away and do it themselves.”


In this way, the firm has a clear long-term focus. It can be challenging ‘selling’ fee-for-advice over a commission-based model associated with the sale of product, which is commonplace in this market.

However, Aon Hewitt is convinced that the value of advice will start to count sooner rather than later, despite the digital disruptors.

One of the reasons for this belief, says Gaur, is the need for education. This has become even more important given the complexity of the industry and oten limited transparency in Asia.

LONGER TERM PLANNING Working with an expat client base brings with it specific requirements in terms of the advice that Gaur and her team need to offer.

Their other needs are simply dictated by the times.

“We are finding that there is an increas-ing need [in Singapore] for corporates to put in retirement plans for their em-ployees,” says Gaur.

As a hot topic, corporates now need to review any existing schemes they might have for their employees. “They are looking to provide equitable benefits for their employees,” she explains.

Gaur also believes there is a pressing need to include women in retirement discussions. “[Women] are out of the workforce for reasonable amounts of time due to other commitments,” she says. “They typically don’t earn as much as men in similar roles, but they have longer lifespans.”

“There is a need to start teaching about money at a younger age,” she says. “In schools, it could be mandatory to have subjects related to money.”

FINTECH IN THE MIX The reach and accessibility of financial education is increasing all the time in a market like Singapore, which has a well-populated fintech start-up scene.

But when it comes to the broader goal of providing advice, robots are a bit of a way from doing the job of firms like Aon Hewitt at this stage.

Saying this, Gaur does see digital-led disruption as being a distinct possibil-ity going forward.

“I think [the industry] will rapidly change because, if done correctly, it will create awareness [of the need for advice] and people will be more savvy. They will know what to look for, and they will know what to ask for when looking for the next level of advice.”

As a result, professionals in the wealth management business must make sure they stay relevant for their customers.

“As an industry, we could have mentor-ing programmes in place,” she says.

That means apprenticing up-and-coming individuals with those who have good, old-fashioned experience, and factoring in that a good portion of customers are in the younger generations.

“In terms of making it exciting, I think it is important to represent the diver-sity that the industry has,” adds Gaur.

In other words, there is a need to balance out greying bankers with some younger blood.

“I think [the industry] will rapidly change because, if [digital is] done correctly, it will create awareness [of the

need for advice] and people will be more savvy.”

As citizens of at least one other country and living in another, she says they have fairly complicated tax needs. It is critical that these taxation needs, along with other financial needs, are captured in an individual’s investment portfolio.

Now, there appears to be an increasing expectation for companies to provide more holistic wellness benefits - a com-bination of health, fitness and insurance features, to their workforce. This is no different for the expatriate population in organisations.

Research in 2015 conducted by Fidel-ity Investments, for example, suggests that women save more money than men; and some other studies which have been done point to women being slightly better at investing than men.

Gaur stresses that retirement education needs to be universal; even someone who puts aside 10% to 20% of their income for retirement – assuming they start this early enough – can make a huge positive impact on their future down the road.

EXPERT INSIGHTS


No room for complacency in distributionIn the face of volatility stemming from China’s markets, Brexit and global economic headwinds, Alison Brown explains how HSBC’s funds division is positioning itself for growth across the entire landscape of wealth management distributors.

Expanding and diversifying its universe of distributors in Hong Kong and China has been a key goal for HSBC Global Asset Management – and the strategy has had an increased focus since Alison Brown came on board in mid-2015 to run sales for the wholesale business in Hong Kong and China.

The aim has been to expand beyond HSBC’s retail banking and wealth man-agement business – albeit this remains the foundation distributor and integral to the business. “We understand the benefits of broader distribution via third parties,” explains Brown.

Today, it is about working with more of a cross-section of firms within retail banking, with an eye to insurance com-panies as well as third-party platforms.

Plus, to capitalise on China’s opening, developing the cross-border business is another key goal. Last but not least is servicing the private banks. “We work

with HSBC’s private bank, which is also important to us, and we are slowly ex-panding our presence in this segment,” says Brown.

BEING RELEVANT Despite the access that Brown’s busi-ness has to HSBC’s retail banking and wealth management, she knows never to become complacent.

In line with this, the past 12 months have been dedicated to servicing the bank in a way that can add more value to it.

This goes beyond simply rationalising the product range, which is common-place at the moment among her com-petitors. The funds also need to be competitive, and give the distributor what it – and its customers – want at a particular point in time, in order to fill gaps they have identified.

China has been an obvious example. For example, becoming one of the top

ALISON BROWN HSBC Global Asset Management

three foreign providers of funds to service the inbound and outbound flow of wealth is an important ambition for HSBC in the coming years.


“We have an established network and an advantageous position with HSBC’s presence in the retail space in both Hong Kong and China, and work very collaboratively with our joint venture partner HSBC Jintrust in China,” says Brown. “This plays to HSBC’s strengths because China has a high awareness of the bank’s brand, particularly in the Pearl River Delta.”

This objective was given a boost in December 2015 when HSBC Global Asset Management announced its first Mainland fund in Hong Kong under the Mutual Recognition of Funds between the Mainland and Hong Kong. It subse-quently launched its second fund in late June 2016.

The first offering, HSBC Jintrust Large Cap Equity Fund, invests in Mainland China large-cap blue chips; the second fund, HSBC Jintrust Dynamic Strategy Mixed Securities Fund, is a multi-asset fund which invests in mainland assets including stocks and bonds through dynamic asset allocation.

SERVICE UPGRADEIn addition to product development, Brown and her team have been working on enhancing key components of the service offering. These include: speed-ing up the fund house’s response time to client enquiries, the quality of the documentation, providing timely and targeted updates, and giving clients access to product specialists and port-folio managers.

These features, combined with the flex-ibility and willingness to provide alterna-tive strategies, has created momentum with third-party distributors especially.

Brown says this is important since there is a time and a place for different funds

and fund managers, and as the firm wants to be well-positioned irrespective of the market environment. “If we can do a decent job in explaining our invest-ment strategies and positioning our funds in comparison to competitors, we have got more chance of being consid-ered in a portfolio.”

For example, HSBC’s capabilities on the fixed income side have enabled the asset manager to buck the trend of many com-petitors finding it difficult to attract net inflow in today’s volatile environment. The flagship HSBC Asian Bond fund cel-ebrated its 20th birthday in July 2016.

RELATIONSHIP DRIVENBrown is very aware of the need to win over fund gatekeepers as well as rela-tionship managers within HSBC’s target distributors.

“If you have good information and are positioned well, they understand the value we can add,” she explains.

This requires her to maintain a sharp focus on continuing to up-skill her sales people, and ensure that what they give gatekeepers is relevant and consistent.

It has also been important for Brown to re-arrange the structure of the sales team, to ensure that business develop-ment people are trained in all aspects.

So even if one of them leaves the or-ganisation, the team structure enables others to have a clear understanding of existing relationships with a par-ticular distributor.

They can, therefore, ensure that gate-keepers aren’t subject to being ap-proached by yet another individual and then having to start a conversation from scratch.

“The team’s objective is to expand dis-tribution across retail banks, insurance companies and also on platforms that are emerging,” explains Brown.

“We already have the advantage to be able to leverage HSBC’s extensive network in Hong Kong and China, and are looking to develop other distribution channels to maximise our reach to cus-tomers,” she adds.

The firm’s investment in its recent mar-keting campaign, ‘Let Dreams Fly’, also helps in Brown’s distribution of funds in Hong Kong.

People can understand more who HSBC is as an asset manager – a disciplined, dependable, international and sustain-able manager which is committed to investing clients’ money with care, and in line with their needs and expectations.

With an objective to build awareness of HSBC Global Asset Management, the campaign positions the firm as stewards of imagination, where the asset manager inspires people to imagine their future and invest to make it possible – whether the future imag-ined is their own, that of their business or of their clients.

“Our greatest strength is our client focus: our first objective is to meet our clients’ expectations,” says Brown.

“To do this, return is obviously impor-tant, but just as important is how we manage our clients’ money. We are one of the few global managers with the ability to understand and support ambi-tions of individuals, corporations and institutions with a full range of financial services products, services and advice that encompass today’s needs as well as future plans.”


Changing the rules of the advisory gameBetter advice in Asia can only come with the willingness – and ability – of wealth managers to position products as solutions, drive simplicity and transparency, and enhance client service. A focus on long-term portfolio value must replace the (continued) tendency towards short-term conversations.

There is broad consensus among practi-tioners in Asian wealth management that the industry lags the US and Europe when it comes to providing advice to clients.

Yet there is some level of belief that wealth managers are increasingly posi-tioning themselves as trusted advisers – or at least realise the urgency now of doing so.

But to achieve this requires firms and advisers to engage clients in strategic conversations around what trusted advice means. This needs to lead with asset allocation and risk management, rather than bottom-up implementation according to Roger Bacon, head of managed investments and advisory Asia Pacific ex-Japan at Citi Private Bank.

Meanwhile, Anthonia Hui, chief execu-tive officer AL Wealth Partners, sug-gested that rather than advice, clients are oten looking for someone to offer an alternative to their view of how their

money should be managed. “They are looking to share their thoughts and see what the reaction is to verify whether they are on the right track or not,” she explained at a Hubbis event in Hong Kong earlier in 2016.

Hui also questioned the view that in-vestment professionals are automati-cally best placed to offer advice. “If you

are able to create wealth for the client, maybe you have qualified yourself to be in a position to give advice, but you shouldn’t forget that the client is the one who has created the wealth.”

MORE TOWARDS THE LONG TERMAnother challenge is the short-term mentality of clients. And in line with this, the industry needs to work on identify-

“If you incentivise on short-term objectives you will always have the mind-set of short-term product push and instant gratification from a revenue stand-point.”

ROGER BACONCiti Private Bank

FEATURE ARTICLE


ing the single most important change to make relationship managers (RMs) less focused on ‘pushing products’.

“I think we have got to the stage where we need to start forcing this issue,” says Bacon. “To an extent, all industry par-ticipants have been trying to go down this route over the last several years and the results are not compelling in terms of how much we have transi-tioned to this mind-set.”

He adds that changing the incentive structure would be the most useful change. “If you incentivise on short-term objectives you will always have the mind-set of short-term product push and instant gratification from a revenue stand-point,” he explains.

“You need to say to people that you are going to change your scorecard to be about long-term client satisfaction and asset growth – not measured on a month-to-month basis, but rather on a year-to-year basis.”

Perhaps the industry should look to tie down RMs for longer periods? If an RM joins a firm with the idea that they are going to spend the next 20 years of

they advise their clients. This approach demands courage on the part of senior management, adds Malik Sarwar, global head of sales management, group wealth management at HSBC.

“Transactional RMs are not likely to be happy, but that is fine because it is part of a strategic plan,” he said. “Those clients who feel that they were being pushed products will be happier and if the institution is getting more new money coming in than flowing out, the formula is working.”

their professional career there, for example, rather than focusing on build-ing a book, getting their bonus every year and then moving on, that will po-tentially have a profound effect on how

“Transactional RMs are not likely to be happy, but that is fine because it is part of a strategic plan.”

MORE EDUCATIONSarwar suggests that the industry has become too complicated and that client education is paramount. “Each asset class goes up and down every year, but

“Clients are looking to share their thoughts and

see what the reaction is to verify whether they are on

the right track or not.”

ANTHONIA HUIAL Wealth Partners

Source: Hubbis - Asian Wealth Management Forum 2016, Hong Kong

WHAT IS THE MOST IMPORTANT CHANGE TO MAKE THE CUSTOMER�RM INTERACTION BECOME LESS FOCUSED ON PRODUCT PUSHING?

RMs need to be�er understand client goals and risk appe�te

Change incen�ve structures

Diversify the product offering 10%

75%

15%


if you take a 10-year average return and risk, clients can relate to that,” he says. “If you take some of those things and explain them to clients without being condescending, you are building a re-lationship to make sure that the client understands how markets behave.”

However, to get to the point of creat-ing better conversations between advisers and clients, again fee models need to change.

If they don’t, how can senior manage-ment incentivise or motivate the RM to have that discussion without having the pressure that he needs to do some sort of transaction?

If the client is getting the wrong message from the RM at the start of the conver-

sation, the opportunity has been lost, adds Bacon.

“I don’t think it starts with the client necessarily. The client is hugely im-

portant, but I think we have a sub-set of our relationship management uni-verse that needs to ‘go back to school’,” he says.

“You have to start with RMs being better educated to sell the solutions; if they are leading the right sort of strategic conversation you have a better chance of getting the client to be thinking more long term and more strategically.”

TOWARDS NEEDS-BASED CONVERSATIONS WITH CLIENTSThe desire to develop more needs-based solutions for clients in Asia clearly seems to be a process which will take time – perhaps another five to 10 years according to some estimates.

It is happening in the US and Europe, but for Asia it is unlikely to be one thing that drives change.

Instead, says Harmen Overdijk, manag-ing partner of Caidao Wealth, it will be a combination of the regulatory envi-ronment, the willingness of the banks and asset managers to embrace a dif-ferent approach, and the acceptance among clients.

JUAN ARONNARBC Wealth Management

“Transactional RMs are not likely to be happy [with changes in incentive structures], but that is fine because it is part of a strategic plan.”

MALIK SARWARHSBC


WHAT WILL FINALLY DRIVE CONVERSATIONS TO BE MORE NEEDS BASED?

RMs being be�er educated to sell these solu�ons

Changing fee models

Be�er pla�orms and infrastructure

Client educa�on

6%

35%18%

41%

“[Asset managers] should not focus on short-term themes and hype but bring good for clients.”

FEATURE ARTICLE


There also needs to be an education process to initiate discussions about such needs-based solutions. Many clients, for instance, don’t really know what to expect from their portfolios in terms of investment returns.

In practice, in the current environment, advisers need to focus on clients’ exist-ing portfolios, rather than continue to try to engage clients with new ideas.

Though these might be part of the solution for replacing or reinventing

positions within the portfolios, advis-ers need to go back to doing proper portfolio analysis first, position by position, to be able to deliver very targeted advice that is, by definition, needs based.

Documentation of advice is clearly critical, as is the provision of materials to help clients fully understand every investment before it is made, and then how that investment is likely to perform under the very broad range of circum-stances through the life of the product.

“[Banks] need to ensure that the interest of the

clients, as well as those of the asset managers and

themselves, are aligned in this way.”

HARMEN OVERDIJKCaidao Wealth

The development of digital advice platforms

When it comes to digital advice platforms, there is big potential for relationship managers to use technology to help them get quicker access to more information – and more relevant data – than if they had to do the research themselves.

In particular, wealth management institutions are increasingly focusing on a few key areas where digital advice can help them.

This is aimed at supporting their bankers in having better communication with their clients, and giving them more personalised advice which is also more consistent.

Probably the most important benefit is that they can be a lot more productive in terms of being able to speak with more clients, and more frequently, to give them the right advice at the right time.


WITH SO MUCH VOLATILITY AND UNCERTAINTY - WHAT SHOULD BE THE MAIN TALKING POINT FOR ADVISERS TO FOCUS ON TODAY?

Performance and track record

Diversifica on benefits to the porolio

The service levels offered by the manager

Ease of explaining the strategy to clients13%

38%

13%

36%

At the same time, the banks must also adapt their incentive structures, to think longer term, adds Overdijk.

“They need to ensure that the interest of the clients, as well as those of the asset managers and themselves, are aligned in this way,” he explains.

That will finally drive the change in thinking needed to lead to a new busi-ness model for wealth management in Asia.

EXPERT INSIGHTS


Facilitating a more conducive investment landscapeKevin Talbot of Aviva Investors explains how the firm’s outcome-focused philosophy is also a positive way to encourage investors to think, in a world where longer term and needs-based conversations are necessary.

There is no doubt in the minds of many industry practitioners that the wealth management market needs to move as quickly as possible towards being more advice-focused and longer term in mind-set.

“I can only hope this happens sooner rather than later,” says Kevin Talbot, chief executive officer of for Aviva In-vestors in Asia Pacific, and alsochief investment officer for Asia.

He cites Japan as a positive example, where some brokers are being encour-aged to bring to market just one or two key products a year, rather than per month. “We think that type of approach will gather steam more throughout Asia,” adds Talbot, a 38-year veteran of the financial markets.

Inevitably, this would be a good thing from a client’s perspective, to remove the temptation from wealth managers and advisers to try to churn portfolios

as oten as they can. But it would also be good for fund houses like Aviva In-vestors. “Our multi-strategy funds are based on a three-year view, so we are looking to the future in terms of where returns are going to come from,” ex-plains Talbot.

This is most likely going to be where there is a mis-pricing in the market – areas where he says there is potential, therefore, to generate excess returns over the three-year period.

“As long as clients take the view that they are willing to now look at the product over this timeframe, then these type of funds will have a lot of appeal,” he explains.

THE RIGHT OUTCOMESEver since Euan Munro took the helm globally at the firm in January 2014, the asset manager has been striving to be a global leader in outcome-fo-cused solutions.

KEVIN TALBOTAviva Investors

In line with this, its multi-strategy funds proposition, which is outcome-orient-ed rather than focused on a benchmark, is a cornerstone of the overall strategy.


Talbot says the firm’s breadth across assets classes – via real estate, fixed income, equity, multi-asset and alter-native investments – combined with more than USD427 billion invested on behalf of its customers, gives it the size and scale to successfully see out opportunities that will deliver spe-cific investor outcomes.

The investment aspirations and con-cerns that the outcomes try to deliver on might range from individuals saving for retirement through to the largest institutional investors.

On the Aviva Investors website, Munro’s message defines the approach: “At Aviva Investors we believe it is time

Research the firm has done has shown that over 20 years, the risk premia in-vestors can expect from global equities is around 5%. “Our rationale, therefore, is to try to achieve this via a portfolio which does that, but with one-third to one-half the volatility of investing in global equities,” he explains.

This is a key selling point, believes Talbot, given the combination of volatile markets over the last 12 months, plus the expectations about continued uncertainty as a result of geo-political events like the US elec-tions, Brexit and others.

Among another key value-add of these strategies for clients is that, unlike the

A range of outcomes at Aviva Investors

Sustainable income – low bond yields and high

equity valuations mean that outcome-focused approaches could secure the regular investment income today’s investor is looking for.

Capital growth – as the risks of a market

correction grow, switching to investments designed to provide steady capital appreciation makes sense.

Beating inflation – despite a recent sharp fall in inflation rates, unprecedented monetary stimulus still poses a threat. Inflation-proofed funds continue to represent an attractive investment.

Meeting liabilities – the natural extension

of an outcome-oriented investment approach is to help institutional investors, such as pension schemes and insurance companies, to meet their long-term liabilities.

“I can only hope this [focus on advice and longer-term investing] happens

sooner rather than later.”

to think differently. That’s why our entire organisation is united behind one common goal: to deliver the spe-cific investor outcomes that matter most to today’s investor.”

MEETING INVESTOR GOALSThe multi-strategy target return funds Talbot markets out of Singapore targets cash-plus 5%.

The target income fund, meanwhile, is focused on cash-plus 4%. The aim is to achieve these returns with significant-ly less volatility compared to global equity markets.

dynamic asset allocation approach – which is dependent on being in the right sector at the right time – “we believe that because nobody can predict the future, our outcome-orientated solu-tions approach will produce superior risk-adjusted returns over any type of business cycle,” says Talbot.

NEW MIND-SETSThe more that the market in the region moves towards more of a longer-term approach to investment portfolios, then the greater the likelihood that the multi-strategy concept will start to flourish.

And for Talbot, whose main role at Aviva Investors is externalising the business and its capabilities via third parties, he sees a lot of growth poten-tial in the region.

“We manage about USD5 billion in fixed income out of Singapore at the moment, and I would like to think this can double, or more, over the few years,” he says.

EXPERT INSIGHTS


The changing landscape of overseas property: China factorThe already-large wave of wealthy Chinese buying residential and commercial property around the world is only expected to gather momentum, despite government measures to temper demand, says Piers Brunner of Knight Frank.

According to the Knight Frank definition of ‘upper middle class’, there are 63 million Chinese who fit into this catego-ry. And they are active in the interna-tional real estate market, despite the country’s USD50,000 capital control per person per year.

They are motivated to buy offshore by factors such as education, immigration, diversification of portfolios and curren-cies, and lifestyle changes are all key drivers for wealthy Chinese to look outside their own country, explains Piers Brunner, chief executive officer for Knight Frank in Greater China.

Plus, the sales process is very much driven by relationships and education.

FEELING THE IMPACTThe effect of the mass of money finding its way into certain property markets has led to rapid price movements in these locations. For example, says Brunner, Vancouver was up 24% last

year, Sydney 11% and Melbourne 11%. Yet this can also have a social impact, he adds. For instance, some investors buy up units and then leave them vacant, which has a knock-on effect in terms of rising rental prices in local areas.

At the same time, some governments have taken action.

For example, the UK, has increased stamp duty; Australia has reviewed foreign investment policy, and immigra-tion barriers are rising.

GATHERING PACEAccording to Brunner, this trend is just starting and has a long way to run in terms of more Chinese money heading to overseas property markets.

In addition to the US and various gateway markets, one of the next waves he predicts will be investment into secondary cities, such as Manchester in the UK, or Seattle in the US.

PIERS BRUNNER Knight Frank

But he also foresees governments trying to defend their markets against such price rises, via measures to at least try to temper demand.

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FIRM PROFILE


How Credit Suisse is leading an Asian asset management chargeWith a mandate to capitalise on the opportunity that Asia’s wealth demographics presents, Credit Suisse Asset Management plans to leverage its own private banking strengths across multiple distribution partners and markets, reveals Michael Levin.

Having a clear business strategy should mean that volatile and unpredictable markets are, in fact, an opportunity to provide more value-added services and investment solutions to clients.

“We see a renewed awareness of the inherent risk in markets,” says Michael Levin, head of asset management for Credit Suisse in Asia Pacific.

“You don’t make double-digit returns without potential downside risk or volatility,” he adds.

This has played out in recent years. From 2009 to 2013, and then again in 2014, high correlations and strong di-rectional performance for both equities and fixed income meant that the more risk investors took, in general, the more money they made.

This also meant that passive strategies performed well relative to active strat-egies, since there was little value to

add from the security selection or from risk management.

There is a shit today, however, with volatility heightened and lower correla-tion among securities. In Levin’s view, therefore, active management through fundamental stock and credit selection as well as risk management will make the difference in the performance real-ized by investors. “This gives us an op-portunity to deliver relevant solutions to clients.”

LEVERAGING RELATIONSHIPS FOR NEW GROWTHThis plays to what Levin says are key Credit Suisse strengths – hedge funds, real estate and traditional as well as non-traditional fixed income, such as Asian corporate bonds and senior loans. And it explains why the firm is increasingly focused on broadening its offering and relationships, both across the region and via different institutions in the wholesale distribution space.

MICHAEL LEVINCredit Suisse

Until about two years ago, the firm had a fairly limited asset management en-gagement in Asia in terms of selling its funds through third-party private banks.


How Credit Suisse is leading an Asian asset management charge

“Third-party distribution is one of our major initiatives for 2016 and going forward, and we have invested a tre-mendous amount in terms of commu-nication, relationship building, and making our offering relevant for poten-tial partners,” explains Levin.

At the same time, the firm benefits from being able to leverage the insights that it garners from the direct relationships it has access to via its own wealth man-agement offering.

While Credit Suisse’s private bank oper-ates on an open architecture model, the advantage mainly comes from the prox-imity and closer connectivity that the asset management division has to the bank’s relationship managers, as well as its clients.

“We are able to better articulate the benefits and risks of various invest-ments,” says Levin.

“And I feel that the more informed the view that we share with clients, it makes them more durable investors, in order to stay invested through good and bad periods to get the benefits of a long-term investment approach,” he adds.

Tied to this is the added bonus of being able to get closer to clients in terms of communication during periods of stress.

“We are in the process of determining a select group of the best distribution partners and the products that are most relevant to their clients,” says Levin.

“But looking at Asia generally, with Singapore becoming a leading wealth centre globally, plus the influx of capital from Greater China, it is hard to think of a better opportunity than to take an institutional asset manager with an

established relationship with its own private bank and offer investment solu-tions, products and services to third parties as well.”

ESSENTIAL SUPPORTInevitably, getting traction with third-party private banks is never easy, espe-cially in such a competitive landscape.

A priority for many of these institutions is more support, beyond getting the product approved.

This is especially the case at the outset of the relationship, when they start to promote a fund.

At such times, they need a lot of guid-ance, requiring the fund manager to present to the bank’s front-line advisers as well as portfolio managers, and answer their questions.

They also need regular communication on an ongoing basis, as part of the support they might require for their end-investors.

Another hurdle is the limitation to having conversations with Asia’s wealthy about funds, given the ongoing challenge to raise their penetration as a percentage of AUM overall.

Addressing this, says Levin, requires conversations to be about investment solutions that match client needs.

This calls on the client adviser to have greater awareness of the set of offerings relevant to the client.

“So, I view our first job as being educa-tion,” explains Levin.

“It is not about selling products; it’s about identifying the right products

that are suitable for the right clients to deliver an investment solution that creates a good client experience.”

A SOUND SET-UPLevin certainly doesn’t expect growth in Asia to be plain sailing, especially given the number of established players and platforms.

Yet he is spurred by the fact that, in many cases, existing platforms have too many products.

“Many third-party distributors are ra-tionalising the products available on their platform,” says Levin.

“As they shrink the number of counter-parties they work with, and the number of funds they offer to enable a greater degree of focus on the sales effort, we have to make a strong and credible case of the value-add of our products and solutions to justify replacing someone on the platform.”

As a result, Credit Suisse has been in-vesting in building up its product spe-cialist team as well as its pool of local portfolio managers.

“Offering that access in the Asian time zone is a material differentiator,” ex-plains Levin.

This combines to form a multi-boutique model which is focused on specialised investments and relevant expertise, sitting within a broader governance framework which is the institutional infrastructure of Credit Suisse – from the operational, legal, compliance and regulatory perspectives – to navigate local geographies.

“We think this gives us the best of both worlds,” he adds.

EXPERT INSIGHTS


Facing up to the regulatory reality of transparencyAndri Manatschal of PwC explains the impact of the wake-up call for wealth management firms and clients in the face of global regulatory measures to try to ensure transparency.

In the face of changing regulations and the impact on the types of structures that are now relevant, wealth manage-ment firms need to figure out how to adapt their offering in line with what’s allowed – and what will meet the needs of clients.

“Clients today need to think about ‘what does this transparency mean for me?’” says Andri Manatschal, partner, inter-national private wealth and entrepre-neurs, tax and legal services, at PwC.

“In other words, what do they need to understand first, and then what do they need to do to make sure either them-selves or their organisations can control the flow of information?”

Control in this case, he says, doesn’t mean hiding information.

Instead, it is about ensuring the true and consistent information goes to various authorities and government

agencies which are likely to now be in communication with each other.

“This has to be cleaned up before the transparency initiatives are enacted in 2017 or 2018,” says Manatschal.

As a result, he explains, there is a small – and closing – window of opportu-nity to get this right.

CLARITY NEEDED FOR HNW CLIENTSThe upshot for banks and other wealth management organisations is they need to be clear with clients who are no doubt receiving a lot of different – and conflicting – information from multiple sources.

The ‘Panama Papers’ incident, involv-ing 11.5 million leaked documents detailing attorney-client transactions, highlighted many examples where various parties have side-stepped the reporting required of them.

ANDRI MANATSCHALPwC

There is all the more reason, therefore, for firms to make sure that paperwork is filed properly, and in a timely manner, explains Manatschal. Plus, an indepen-


dent assessment is needed to see if structures set up 10, 15 or 20 years ago, for example, are still up-to-date.

The challenges start, for instance, where clients may have possible tax information that was not documented as there was previously no requirement to do so in a particular jurisdiction.

As a result, filing that taxable informa-tion becomes impossible, says Manatschal, because there is no docu-mentation to back it up.

TAKING A COMMON SENSE APPROACHAmid all of these new developments, Manatschal says it is critical for organ-isations to adopt a common-sense approach. And this is unlikely to entail any ‘easy way out’.

“The first mistake is to believe that nothing has changed that you can simply continue to do now as we did in the past,” he says.

By contrast, changes in regulation and structuring mean major changes – both in terms of the way in which firms do business, and how clients approach their portfolios.

In short, they need to face up to the new realities of lower returns, higher risk and greater volatility.

It’s this type of philosophy which Swit-zerland, where Manatschal is based, has taken to implementing new changes. While this has created a stir, he believes that the ultimate result will be greater longevity and stability for more organisations. And any business which gets lost in the transition is a small price to pay.

TEAM EFFORTPwC’s experience with clients around the world can only be an advantage going forward, says Manatschal.

While Russia is his team’s focus for now, he sees this shiting to Asia in time as well. “An entrepreneur in Russia is not much different from an entrepreneur in South America or China,” he explains.

They all have the same basic ques-tions and share similar concerns about their families, their personal safety and how their business works within the local rules.

This also serves as a reminder that no single person cannot tackle these prob-lems alone; it takes a team.

“That’s simply a reality because it is impossible to have a one-man show and be an expert in everything,” he explains.

For example, many of the structures previously put in place were unregu-lated, so now need a lot of attention given they are coming under the regu-latory spotlight.

Taking a practical, pragmatic attitude helps at times like these, adds Manatschal – which means deciding between what to retain and what to either change or let go to secure one’s future.

His work in Russia has shown him the importance of avoiding complexity. Keeping business methods straightfor-ward not only helps to withstand change but it is also an advantage when it is time to submit paperwork for taxes, he explains.

Yet he believes that for many clients in Asia, where regulation is still in the

works, they may not face the same amount of restructuring.

But they should, however, still listen to such advice, to keep in mind to avoid costly, time-consuming work in the future.

Avoiding common mistakes

In general, many clients don’t seem to understand the full magnitude of the potential problems they face.

One of the common mistakes many clients make when thinking about their tax and reporting situation relates to mind-set.

The first mistake, explains Manatschal, is they believe nothing has changed, and that they can simply act as they did in the past – for example, change their contracts and structures.

But this doesn’t work, as substantive changes are often required, including to their lifestyle.

Or, they might have to accept that they will pay more tax.

Another mistake he sees is when people ignore the requirements. And because they do this, they are not dealing with the situation in the way they need to.

One of the consequences for such clients who aren’t committed to being compliant, is they will find it difficult to find a reputable service provider willing to work with them.

EXPERT INSIGHTS


Plugging a gap for long-term structuring adviceNigel Rivers has been inspired by a lack of real advice in navigating today’s complex regulatory, asset structuring and succession planning landscape. He expects his new firm, Capital Solutions, to fill a hole in finding the right solutions for each client.

Despite the economic challenges and general slowdown globally since 2008, Asia’s wealthy have seen continued growth in their personal wealth. And in turn, they have increasingly sought geographic diversification and a wider array of asset classes.

Yet in the face of these families’ growing needs to manage business and per-sonal wealth, service providers don’t seem to have made as much of this opportunity as they might have – given that they typically operate in silos.

For instance, explains Nigel Rivers, founder of newly-formed Capital Solu-tions, private banks and the new breed of multi-family offices tend to mainly focus on bankable AUM. However, most family wealth resides in less liquid assets, such as the family business or in real estate.

When it comes to tax and legal advisers, while they have increased in number as

well as quality, the roles they play are still very transactional. They charge a fee for a specific service, but have little, if any, ongoing involvement.

Meanwhile, insurance companies tend to provide a product offering related to estate planning, mostly still focused on universal life.

And independent trust companies oten only provide a relatively limited scope of services.

As a result, there is a role for an adviser who is genuinely independent rather than product specific, but who also has sufficient knowledge and experience of all the tools available to families.

“Families need someone who can provide advice and guidance on what is best for them and their specific profile,” he adds, “and can ensure this is properly implemented in a rational, consistent and independent way.”

NIGEL RIVERSCapital Solutions

CATERING TO REAL NEEDSRivers has his sights on opportunities in both North and South Asia. Out of his office in Hong Kong, he will service


local clients, as well as those from main-land China and Taiwan. His Singapore office expects to work with clients from countries like the Philippines, Indonesia, Thailand and Malaysia.

He is confident that the independence of his new firm will mean he can help clients to identify those professional services firms which are best-of-breed technically, and also aligned in the way they work, to the specific needs of each client. “It’s advisory, first and foremost,” he stresses.

This covers a range of services, includ-ing wealth asset structuring, succession planning, family business governance, compliance and reporting, and family office architecture.

For example, broadly across South-east Asia, he sees a big difference in terms of the current wealth owner being older. As a result, they are more likely to be at the point where they are transition-ing the ownership of the family business and their wealth to the next generation.

and decide who should participate in management, while at the same time making sure the family gets a fair dis-tribution of the income the business makes when the patriarch dies.

Further, the solution must also ensure that money is fairly distributed to all family members, regardless of whether they are in the business or not. “You need to be independent to help in these cases,” says Rivers. “It requires knowl-edge and experience of these issues, but also the ability to offer different solutions for discussion, so that the family can decide what suits them best.”

Another reason a truly independent ap-proach is essential in today’s environment is tied to the complex compliance regime. For instance, wealthy families want to invest in assets in other geographies, so must understand how to do this and be compliant, given the financial and repu-tational consequences otherwise. So if a family wants to buy real estate in the US, for example, which structure

“They need to do this before the patri-arch or matriarch dies, or are no longer able to make rational decisions, or before family members get disgruntled and start fighting,” he explains.

NETWORKED MODELA big part of the value that someone like Rivers can provide wealthy families in Asia is to ensure they can access the right professionals. “They shouldn’t rely just on their private banker for this, nor even the advisers to their business. However good their advice has been in relation to their specific field, there are special dynamics to creating and man-aging an infrastructure for legacy wealth. It is important that the family gets the best help,” he adds.

Instead, it is vital that families are able to look at the big picture and explore their options, and ensure they are acting in the most effective and optimised way.

“While we are small, we have the cred-ibility that’s required by the people who recommend us to their clients in the first place,” says Rivers. “Clients are able to tell the difference between someone who can genuinely offer advice in a common sense and independent way.”

By getting this type of offering right, the relationship with the client can also become a bit stickier. In turn, it will enable him to charge for his service. “Historically there has been an aversion in Asia to paying fees for advice. But I think that’s been changing in the last few years, and I believe people are much more prepared to do this if they see the value,” he explains.

The fact that there is growth in family offices around the region, especially in China, is proof for Rivers of this change in mind-set towards advisory.

“You need to be independent to help in these cases.... It requires knowledge and experience of these issues, but also the ability to offer different solutions for discussion.”

In such a situation, the business might have been built up 40 years ago or more, and there are oten a number of chil-dren, some of whom work in the busi-ness, others don’t.

Some of the common issues that need to be addressed, therefore, include how to transition the business ownership

is appropriate, and what reporting they must be aware of (in the US and at home), are essential elements to know.

Helping families avoid making mistakes during these and other situations is also a critical role for Rivers’ new firm to take. These oten happen because families don’t consider the options early enough.


Managing Indian family wealthAt our 2nd annual Indian Family Wealth Forum 2016 in Mumbai in early April – leading practitioners from single- and multi-family offices, private banks and professional services firms explored some of the key themes in this space. This looked at how to give advice on the critical issues they face and need to plan for when it comes to their businesses, personal portfolios, next-generation planning, tax affairs, legacy matters and more.

Wealth managers face a relatively un-tapped market in India when looking to woo families, as wealthy clients looking to increasingly separate their personal and business wealth.

But this requires a certain skill-set to be successful in managing family dy-namics.

One thing that is clear is that products alone will not get Indian wealth manag-ers far enough with wealthy individu-als and families in India who have all the assets and the disposable income to hire the best advisers from around the world.

This means advisers in India are forced to look for new ways to distinguish themselves from others and to add value to their clients.

In determining how to reach these wealthy families, understanding their financial situation and concerns has become an integral part of the sales process today. This gives them insight into what to offer to these clients, and how to offer it.

There is no one-size-fits-all solution to help family businesses transition from one generation to the next. But first identifying the needs and goals of each promoter and the wider family will ensure the right structure for a smooth succession plan.

There are various dynamics that result in conflicts and challenges in creating a smooth succession for family busi-nesses. The relationship between the promoter and the next generations is chief among them.

Anyone advising wealthy Indian busi-ness-owners also need to understand how to guide their clients on how best to invest their personal wealth for the long-run.

For example, there is a mind-set shit under way in India. Increasingly, wealthy families and individuals are becoming more risk-taking and willing to embrace business ideas which they wouldn’t have less than a decade ago.

HNW individuals and families in India are also moving towards sustainable philanthropy, and want to give in a way that makes significant social impact.

This also means that they favour organ-isations that use technology for maximum impact.


IIFL Private Wealth Management

Jersey Finance Motilal Oswal Heritage Trust Group Pafilia BVI House Asia Iyer Practice Advisers

EVENT HIGHLIGHTS - INDIAN FAMILY WEALTH FORUM 2016 - APRIL


Nipun MehtaBlueOcean Capital Advisors

Sunil SharmaSanctum Wealth Management

Anupam GuhaICICI Securities

Abhisek PugliaIIFL Private Wealth Management

Arpita VinayCentrum Wealth Management

Nishant Agarwal ASK Wealth Advisors

Tarun Birani TBNG Capital Advisors

Aditi ShrivastavaIntellecap

Benaifer MalandkarRaay Global Investments

Kanwar VivekYes Bank

Gautami GavankarKotak Mahindra

Poonam MirchandaniBarclays

Vinay BajpaiDeutsche Bank

Ajay AgasheEY

Dhruv MehtaFIFA

Sharad MittalMotilal Oswal Financial Services

Shweta ShahEdelweiss

Aashish SomaiyaaMotilal Oswal Asset Management


Elise DonovanBVI House Asia

Manish SinglaClient Associates

Gaurav AroraReligare Private Wealth

Munish RandevWaterfield Advisors

Himadri ChatterjeeIIFL Private Wealth Management


FIRM PROFILE


Shedding light on the anatomy of a family businessRunning a family business successfully is not just about lineage, creating a need for a range of services that Heritage Trust Group is offering to fill some potentially problematic gaps.

Running a family business is highly-complex, challenging and emotional. Getting it right, therefore, depends on a host of factors that most entrepre-neurs either don’t have time or the ex-perience to focus on.

This is the opportunity which Heritage Trust Group’s new family office ser-vices unit has identified. It is an add-on to the corporate and fiduciary services offering it provides across Asia and the BVI, including incorporation, business services, estate structuring and suc-cession planning.

“Basically, we want to look very holisti-cally into business families,” says Hans Diederen, head of this new division at Heritage, “to increase the success rate of business continuity and, at the same time, family harmony.”

A SOLID STARTING POINTIn line with the dynamics of Asian family businesses, coupled with the overlap-

ping nature of business and personal wealth, there is plenty to be done to align affairs for the future.

In Diederen’s opinion, family offices are best equipped to survive if they have a strong foundation, starting with a shared understanding about why the family is in business together in the first place.

“This is oten under-estimated,” he says. “Advisers such as lawyers, accountants and even philanthropy specialists ap-proach the family from their specific, expert angle, but tend to forget that the family is intra-dependent.”

A strong foundation, however, pre-pares the family for when it’s time for the baton to be passed to younger generations. “Succession is regarded as an event, but this only happens once in a generation,” explains Diederen. “It’s the process and the timely plan-ning of the preparation of this process that is most crucial.”

HANS DIEDERENHeritage Trust Group

Given that family values can quickly become intertwined with corporate ones, such planning must take both sides into account to succeed.

FIRM PROFILE


Shedding light on the anatomy of a family business

Yet in dealing with people who have worked hard to create a successful business and at the same time bring up their family, agreeing on a set of con-sistent values is easier said than done, especially with generational differ-ences to consider.

Angelo Venardos, chief executive officer of Heritage, recalls a recent example of this in Indonesia. “We met with three generations of the family over five hours, discussing all types of matters. At the end of these conversations, one of the brothers quietly said that he didn’t agree with the current shareholding.”

This type of problem needs to be figured out earlier, so that all parties involved can seek the guidance they need.

“This really requires a third party with which the family has a relationship to sit down patiently and work it through with them,” says Venardos.

A GAP TO FILLHeritage’s independent role puts the firm in a good position to do this, be-lieves Diederen, as this means it gets to hear what maybe bankers and financial advisers don’t.

This is especially important amid the particular challenge that families face today in light of the characteristics of the ‘millennials’ generation.

While every generation differs from the one before it, millennials have grown up in a more globalised environment with rapid technological change.

“This generation has studied abroad and worked around the world, so they are developing different values, and this can

them to probe their parents with the right questions to address the succes-sion planning challenges.” This is an issue he commonly refers to as “the elephant in the room”.

But not being prepared can have sig-nificant consequences. “Not having a basic will, let alone a trust structure in place, creates huge challenges which families probably won’t find until they go to the bank, and the bank says that everything has been frozen,” explains Venardos.

THE FAMILY NICHEFor Heritage, family office services rep-resent a significant opportunity – but one which will take time to realise as the firm looks to carve out this niche.

ANGELO VENARDOSHeritage Trust Group

“It’s the process and the timely planning of the preparation of this process that is most crucial.”

alienate them a bit more from the pa-triarchs and matriarchs than has hap-pened in the past,” explains Venardos.

This is one of the ways he and Die-deren are looking to help: offering advice for a fee, in addition to other services and solutions once the needs have been identified.

Diederen’s approach is to tailor the message, depending on which genera-tion he is speaking with. “I think my major task with the second generation [of millennials] is to guide and prepare

This is due, in part, to the fact that dif-ferent countries are at different stages of development and awareness in terms of the need for more formality around managing the family business.

But it is an invaluable component of the advice the firm gives overall. “It accelerates the discussion within the families to do something – to review what has been in place and, by bringing the generations closer together, it forces also the patriarch to not leave the next generation with any legacy issues,” explains Diederen.

EXPERT INSIGHTS


Greater transparency raises privacy and advice red flagsThe aftermath of many data leaks of greater tax compliance around the world also threatens the privacy and confidentiality of the majority of individuals who legitimately use offshore structures, explains Stephanie Jarrett of Baker & McKenzie.

As politicians scramble to further tighten the noose around tax evasion and money laundering through far-reaching measures like the Common Reporting Standard (CRS), Automatic Exchange of Information (AEOI) and FATCA, this sudden urgency to enforce compliance, although desirable, may have gone too far.

And, in their zest to ensure transpar-ency, lawmakers may be ignoring the bad side of transparency; or information going astray.

“I think going forward there is going to be a lot of transparency because of CRS and FATCA, but this has a good and a bad side,” says Baker & McKenzie’s Stephanie Jarrett, a Geneva-based partner who specialises in trusts, estate and international tax planning.

The positive aspect is that many people now realise they must pay their taxes.

On the flipside, however, regulation has arguably gone a step too far.

“There are legitimate reasons for wanting confidentiality of information,” adds Jarrett. “Some of the transparency measures are causing considerable physical danger as well as business disadvantages to many people.”

KEEPING INFORMATION IN THE RIGHT HANDSA real threat that has not been the centre of much attention to date, is the fact that information could be passed to people who use it for personal gain or other questionable purposes.

For example, politicians might mis-use data for arm-twisting; criminals, on the other hand, might be able to access in-formation and use it to threaten some-one’s physical safety. Further, leakage of sensitive materials to business com-petitors could also be damaging.

STEPHANIE JARRETTBaker & McKenzie

At the same time, Jarrett says the prime concern of many wealthy clients, regard-less of their geography, is the security


of their assets because of geo-political uncertainty globally.

As a result, while sharing information with tax authorities is clearly justifiable, there is a pressing need to ensure it is kept confidential, and used solely for tax compliance.

The other major concern for clients, adds Jarrett, is preserving their wealth and passing it on to the next generation.

This, too, is becoming more and more of a challenge given the transparency which is now required of various struc-tures, she explains.

Consider the following: laws today oten allow a claim on family assets to two people living together for a certain amount of time without them being married.

Other areas of complexity could also stem from multiple marriages in a number of different jurisdictions, and due to any children from those mar-riages, including issues of illegitimate, adopted and step-children.

“More attention needs to be paid [by wealth managers] to the overall plan-ning for the preservation of wealth,” explains Jarrett.

Otherwise, she explains, clients are more likely to start to face litigation or tax issues with structures because of greater transparency.

THE RIGHT ADVICEThe consequences of these regulatory initiatives are increasingly impacting the nature of wealth management, which is slated to undergo a significant shit going forward.

More specifically, says Jarrett, they will limit the role for each type of adviser manager - such as private banks, family offices, independent asset managers (IAMs) and lawyers.

“While sharing information with tax authorities is clearly justifiable, there is a pressing need to ensure it is kept

confidential, and used solely for tax compliance.”

For example, she adds, the increasing risk of litigation has already led to many private banks shying away from the concept of actually giving advice.

Another big emerging challenge for banks, trust companies and IAMs alike, is how to manage the presentation of mountains of documentation to clients.

At the end of the day, however, there is no under-estimating the importance of (re)establishing a close working rela-tionship with clients, she advises.

While private bankers typically know their clients well, when it comes to

offshore structures, she cautions about the need for them to be discerning.

“I think some of the offshore centres, like Belize, are going to face a hard time going forward. They risk being shut out of the banking system if they don’t play the [transparency] ‘game’ properly.”

MAKING WISE CHOICESConsequently, there is a need to choose the offshore destination carefully.

This must be based on the tax regime a client lives under, since this will dictate whether or not an offshore company is likely to be a good idea from a tax point of view.

For a resident in Hong Kong or Singa-pore, for instance, Jarrett says it makes sense for them to hold assets outside of those jurisdictions in an offshore company; those markets do not con-sider offshore accounts illegal.

At the same time, it is important not to “tar everybody with the same brush”, since this might lead to some politicians and others in power to take hurried decisions.

The solution, therefore, lies in looking for a middle ground, says Jarrett, rather than crating rash laws that can lead to unfore-seen or undesirable consequences.

“A middle road regarding the ownership of private companies, regarding to whom information could be transferred and what safeguards one could have, needs to be found,” she explains.

This can be done, she adds, if the reasons for using so-called offshore companies and other structures are articulated more clearly.


FEATURE ARTICLE

Making the most of Chinese wealthEstate and inheritance taxes are among the various the risks for Chinese HNW and UHNW clients. Increasingly, they are looking for new options, especially offshore ones, to diversify, protect and grow their wealth in today’s complex world. The potential to offer them advice in this presents significant opportunities for Asia’s wealth managers.

Statistics show that there are two primary needs for China’s HNW and UHNW populations. The first is to di-versify and protect the wealth in an increasingly-complex world; the second is to have proper succession planning for the family businesses and wealth.

This is highlighted by the general a lack of diversification of assets and knowl-

edge of managing risks among many of these individuals.

Specific issues that some clients might face, therefore, include the depreciation of RMB against the US dollar, invest-ment in unfamiliar markets (overseas real estate and financial products), and understanding the implications of in-heritance taxes in mature markets.

Yet as the China market continues to open and the wealthy become more sophisticated, they are increasingly looking to diversify their holdings outside of the Mainland.

They also see overseas investments as a way to achieve higher returns through access to a broader selection of prod-ucts and services than is available do-mestically, explains Jing Zhang Brogle, chief executive officer of Edmond de Rothschild’s Hong Kong branch. “So they are turning to wealth management specialists, both offshore and onshore, to help them achieve their objectives.”

To be profitable in servicing these in-dividuals, therefore, Amanda Chen, deputy head of wealth management for Nomura in Asia ex-Japan, suggests that it is essential to provide Chinese clients with a full suite of wealth man-agement services – including estate and wealth planning, corporate finance and real estate.

“[China’s wealthy] are turning to wealth management

specialists, both offshore and onshore, to help them

achieve their objectives.”

JING ZHANG BROGLEEdmond de Rothschild


This is becoming more of a reality than in the past.

While China’s wealthy prefer to take a predominantly active role in their in-vestments, there are signs that more of them are entrusting a larger share of their wealth to private banks or inde-pendent asset managers.

At the same time, HNW individuals in China tend to prefer to hold less in cash and deposits, and it creates a lot of op-portunities for wealth managers who offer professional advisory and invest-ment services.

“Clients in China have become much more receptive to direct investment opportunities and advice on alternative, non-traditional investments such as hedge funds and private equity,” ex-plains Brogle.

Perhaps most exciting for long-term opportunities is the fact that in the recent volatile environment, demand by HNW Chinese for financial planning and wealth structuring expertise has increased. “Whereas in the past, their main investment objectives were to grow their wealth and improve the

quality of their lifestyle, now they are more focused on the preservation and transfer of wealth to the next genera-tion,” adds Brogle.

MORE STRUCTURING NEEDEDThere are various drivers for Chinese clients to engage wealth structuring.

According to Kevin Lee, partner at Zhong Lun Law Firm, there are also various concerns for Chinese HNW clients to address. Key among them is how to protect wealth. Constantly-changing policies, uncertainty about the future of the country, collateral damage

from the current anti-corruption cam-paign, and potential future PRC estate/git tax will potentially subject their wealth at huge risk, says Lee.

“In China, most of our clients understand the use of a will, but utilisation of other planning ideas such as pre-nuptial agree-ments or trusts or foundations are still in the relatively developmental stage,” he explains. “We have been advising HNW clients on using such estate plan-ning tools, but adapted to the PRC context to the extent possible.”

Another risk is family business succes-sion. “We see examples of children of HNW individuals who are not keen to take on responsibilities of family busi-nesses,” adds Lee. For family gover-nance, some firms have found that advising PRC clients on creating family charters and setting up family councils has been well-received.

Philanthropy is also a concept which is gaining some traction among PRC clients, although domestc laws are not well developed yet in this respect.

When it comes to trusts, most of the planning done to date has been based

“It is essential to provide Chinese clients with a full suite of wealth management services – including estate and wealth planning, corporate finance and real estate.”

AMANDA CHENNomura

“I don’t see demand for wealth planning diminishing – instead,

sophistication is evolving towards structures which are

more secure and transparent.”

MARTIN CRAWFORDVistra Group


FEATURE ARTICLE

on offshore models where offshore trusts own offshore assets. According to Martin Crawford, chief executive officer of Vistra Group, tax is oten around 25% of the driver for a lot of the cross-border structuring out of China. The rest is done for the pur-poses of asset planning, family succes-sion and diversification of wealth.

“Clients accept they will pay certain types of taxes at some point,” he ex-plains. “They are just trying to minimise it legally and use structures which are more dependable.”

Domestic PRC trusts are not being used in any material way for such planning yet, says Lee, and clients still face dif-ficulties to inject onshore assets into offshore trusts.

But subject to currency controls, there should be growth in the offshore trust market at least in the near term pending the anticipated amendment of the In-dividual income tax laws and possible introduction of git/inheritance tax.

Crawford is also optimistic for the op-portunity to service China’s wealthy. “I

don’t see demand for wealth planning diminishing – instead, sophistication is evolving towards structures which are more secure and transparent.”

To play a role as more Chinese wealth moves offshore in search of protection and other wealth solutions, Roger Steel, president, new markets and business development for Sun Life Financial in Asia, says there are some key ways to do this. “Product not an issue; as always, it’s first and foremost about distribu-tion,” he explains.

In addition, firms need to understand the onshore market, which is shiting to protection, and be able to manage within the changing regulatory and enforcement environments. “Regulation is driven by macro-economic consider-ations, not just customer protection.”

GATEWAYDepending on who you talk to will lead to different answers to the question of where the gateway of the future will be in access to China’s wealth.

Broadly, there is a swing among wealthy Chinese individuals from offshore to mid-shore jurisdictions, such as Singa-

Changing tax laws

One of the biggest issues the wealth management industry is likely to be dealing with over the next couple of years stems from the changing tax laws in China.

With the new individual income tax law, it will affect all the offshore structuring that clients in China have done to date. Further, CRS means that governments from 100 countries will be reporting to the Chinese tax authorities the details about all the bank and other accounts that Chinese residents have in those countries.

“This will lead to a new era of tax audits and investigations, requiring compliance with the laws,” predicts Michael Olesnicky, partner and senior adviser at KPMG.

As a result, for advisers with Mainland China-based clients, he says it is time to look at their tax affairs to ensure they will remain compliant and survive detection going forward.

pore and Hong Kong.“They are looking for structures which stand the test of time,” explains Crawford.

According to reports, China’s HNW growth has resulted in a 47% increase in the amount of money flowing into Hong Kong between 2012 and 2014.

Similarly, Singapore saw a 32% increase.

For the time being, it seems, Hong Kong is certain to continue to be a key centre for Chinese offshore wealth, alongside Shanghai’s growing importance.

“Product not an issue; as always, it’s first

and foremost about distribution.”

ROGER STEELSun Life Financial


Yet Singapore also has an increasingly role, given that it has become an im-portant, well-regulated and reputable wealth hub internationally.

“Though not as convenient a base as Hong Kong, Singapore remains an at-tractive market for Chinese investors for its reputation as a stable, peaceful and affluent country with a vibrant economy and strong banking sector,” says Jason Lai, founder and chief ex-ecutive officer, Thirdrock Group.

EDUCATED AND PREPAREDThere are various ways that the wealth management industry as a whole can make the most of the offshoring of Chinese wealth.

For many UHNW clients from China, for instance, they need to be educated on how wealth should be managed overseas, properly and professionally, with optimal results. “They also need to be educated to accept not-too-ag-gressive returns relative to the yields they may otherwise receive from the domestic China market,” says Lee.

Further, and more broadly, many clients from China are not fully aware of the implications of FATCA and the Common Reporting Standard (CRS). However, some of them already feel the inconve-nience of dealing with banks where their foreign nationalities might have an impact – such as in cases where they have become US citizens or a perma-nent resident.

“They may be surprised that their off-shore assets will be exposed to the government authorities in China or adopted new countries,” says Lee.

Many practitioners agree that the most pressing issue going forward is

going to be CRS, other exchange of information initiatives and money laundering issues. And for Chinese clients, while they like the idea of setting up trusts, many don’t really understand that this involves the transfer of control to their trustees.

“CRS is going to have an impact because it seems that most Chinese clients are setting up structures which are either not compliant with Chinese tax laws, or will not be compliant as the tax and reporting laws inevitably change,” says Howard Bilton, chairman of Sovereign Group.

He sees many wealthy Chinese still seemingly working on the assumption that money held offshore in an offshore structure can be hidden from the tax authorities. “It is going to be increas-ingly important that any structure set up by a Chinese client (or any client anywhere in the world) works because it is legal and compliant rather than because relevant tax authorities do not find out that it exists,” he says.

Such clients need professional advice on how to properly structure wealth

holdings in an increasingly transparent and compliance-driven world.

At the same time, however, advisers need to be cautious about exposing themselves to offences or charges under relevant CRS or other regimes by taking too proactive a role in struc-turing advice.

More broadly, insurance, pensions and other more sophisticated planning tech-niques will become increasingly impor-tant and plain vanilla offshore structures will be useless.

To be well-positioned in this way, there are several things that insurers can do to capture and be successful in the Chinese market.

According to Steel, these include: getting an onshore licence; keeping up with the pace of digital innovation and online sales; being creative when it comes to social media promotions, such as on WeChat; selling through banks and their brokers, and looking at new and alternative distribution channels, for example real estate buyers or soccer club members.

“[Chinese clients] may be surprised that their offshore assets will be exposed to the government authorities in China or adopted new countries.”

KEVIN LEEZhong Lun Law Firm

FIRM PROFILE


A generational mind-set to servicing family wealthPlanning for the future requires a sense of the past. Now, more than ever, it also needs expert knowledge of the constantly-changing regulations. This is the approach that Shanker Iyer takes in spearheading Iyer Practice Advisers.

There has always been a tension between tradition and innovation. The challenge for advisory firms today is understanding how to deliver a service that can respond to what clients want and what regulators demand.

In the past few years, increasing atten-tion has been paid to what tax really is, and how it should be paid and where.

But tax should not be the sole or even primary factor driving family wealth structures. Advisers should first under-stand the specific circumstances of the family, and how to effectively cater for both the current and future generations. Only once this is determined, can the structure (and the tax, regulatory and fiduciary aspects) be effectively planned.

Shanker Iyer is in a unique position to appreciate the past and invest in the future. He is the Founder and Chairman of Iyer Practice Advisers, a specialist advisory firm, and has been grooming

his two sons, Sunil and Sanjay, to see things in a similar way.

EVOLVING PROPOSITIONShanker initially qualified as a Chartered Accountant in London and was a partner of a leading accounting firm in the UK for more than 10 years before he came to Singapore.

The accountancy background is impor-tant because it provides the fundamen-tal tools for any business model.

“I came to Singapore in the 1980s with my UK firm,” says Shanker, “and I went back to the UK in 1992. But then the UK economy wasn’t very good at that time and so we came back to Singapore and I set up my own practice in 1993.”

Initially he ran a traditional accounting practice. “We are chartered accountants by qualification and that’s been my ex-perience, so it continued to be the case for the initial period.”

SHANKER IYERIyer Practice Advisers

But accounting and audit were not the ways into the future. “The audit business in Singapore was expected to decline because of the impending law abolishing

FIRM PROFILE


A generational mind-set to servicing family wealth

audit for many companies in the future, and so we decided to exit that business.”

There was personal and professional logic in deciding to move into advisory.

“We felt professionally that we pre-ferred to do advisory work,” he explains. “Audit was becoming over regulated and stopped us providing many other ser-vices to clients which other-wise we wanted to.”

That was the game changer. “We divested our audit business at that time and we switched our focus to the advisory busi-ness,” says Shanker. “We suddenly became a very different firm in town.”

Today, Iyer Practice Advisers is quite unlike any other accounting practice, and also quite unlike any traditional trust company which typically does not give advice (particularly with regards to tax).

“The trust companies tend to do fidu-ciary work and most of the accounting firms are largely audit focused,” he adds.

FINDING A NICHEThat evolution has given Iyer Practice Advisers the unusual position that it now holds with fruitful relationships across financial services, including in the wealth management industry.

“We became something in the middle,” explains Shanker.

“Accounting firms don’t seem to regard us a competitor, and, in fact, a number of them consult us on specialist tax matters which are quite complex and beyond their normal experience.”

The same business model applies to trust companies. “They play a more volume game and we are more advisory; that’s the way we focus the firm.”

That focus is emphatically towards clients. Many of Iyer Practice Advisers’ clients are in the private client space. They may come through corporate structures but, behind these companies, even public listed companies, there are usually families, entrepreneurs and high net worth individuals who want a more personalised service.

“They are very demanding in the quality of work and depth of knowledge that they require from us,” says Sunil Iyer, director, who oversees private client services and regulatory compliance.

NEW LANDSCAPEKnowledge and understanding of trends are becoming ever-more important in advisory work. With the changing land-scape, good advice is imperative to ensure clients keep up.

The three most impactful developments in the tax world where advisers must be up-to-date on their knowledge and analysis are: Base Erosion and Profit Shiting (BEPS – an OECD project), a new view of defining where sales and profits and tax liabilities are declared; FATCA and the Common Reporting Standard (CRS), the use of automatic exchange of tax information(AEOI).

Sanjay Iyer, who leads the firm’s tax practice, takes a common sense view of all these matters.

He thinks BEPS will affect business, but less with regards to private clients. He is also sanguine about FATCA. “It primar-ily affects those involved with the US.” CRS, meanwhile, is different and will be much more widespread, he explains, because it affects everybody. Whether all countries that have signed up to CRS will implement it at the same time will be interesting to see.

KEEPING IT SIMPLEIn general, Iyer Practice Advisers prefers to stick to basics.

Businessmen can make multi-million dollar decisions very quickly, but when it comes to their personal lives (family succession planning, wealth planning) they oten take a long time to decide because they must think of all the things that can go wrong – and which oten do.

“It can sound like a cliché , but I strong-ly feel there is no one formula that works for everybody,” says Shanker.

“Each family is different, the way they do things is different, and the solutions are different, so we try case-by-case to work with them and give our inputs to their decisions. The final decision is

SUNIL IYERIyer Practice Advisers

FIRM PROFILE


always reflective of the client’s per-sonal preference.”

Inevitably, he and his family have a big influence on the culture of Iyer Practice Advisers. “I guess being a family busi-ness we don’t have the type of turnover at the senior level that other firms might have,” he says.

A four-generation family of chartered accountants does have a certain flavour.

“There are firms who have much more resources than we would ever have, so

SANJAY IYERIyer Practice Advisers

There is still more to do and to contem-plate. For example, one recent develop-ment at the firm was its relationship with WTS, the fith largest German tax consulting firm ater the big four, with an international network. The upshot was dealing with some high-level tax issues of German multi-nationals that are doing business in Asia, in turn helping Shanker and his team to grow the firm because it had to bring in ex-pertise that was in need.

“The relationship was a start but it also gave a further impetus to the culture

“We want to be focused on our strategy. So we don’t see much change. The type of

work could change, it might become more complex, but I think the better we get

the better we can advise our clients.”

we have to know our place in the market and not try and compete head-on with the big players - it doesn’t make sense. So we have a niche play and we are very happy in it.”

NO STANDING STILLIyer Practice Advisers now has offices in Singapore, where it has close to 70 staff, and in Hong Kong, with around 15 employees. But Shanker is still looking for growth.

“Areas where we currently are seeing most demand and find the most inter-esting now are international tax and regulatory compliance services.”

and growth of the business,” he explains. “It actually forced us to build up our team (for instance in transfer pricing) much sooner than we ever would have done. So we are happy about that.”

At the same time, Shanker is a strong believer in tradition as well as in rela-tionships.

He has been President of the British Chamber of Commerce and the Euro-pean Chamber of Commerce in Singa-pore as well as Chairman of Singapore the International Chamber of Com-merce. He is currently Chairman of the Singapore branch of the International

Fiscal Association, and Chairman of the Tax Policy Committee of the Singapore International Chamber of Commerce.

This doesn’t equate to cronyism. “I do not mean that they do favours to us, but the fact is we know how the system works and we know the people person-ally,” he explains.

“We think people get a certain comfort when they come to us because we are not new in town and experimenting. We are established here.”

Concludes Shanker: “We want to be focused on our strategy. So we don’t see much change. The type of work could change, it might become more complex, but I think the better we get the better we can advise our clients.”

Iyer Practice Advisers has clearly evolved into an advisory firm in response to client needs and changing times.


Knocking on Asia’s onshore opportunityEmerging trends in Asia in terms of how and where clients have their wealth managed, give private banks with the resources and expertise an enticing source of work onshore, especially in China, says Jonathan Hubbard of UBS Wealth Management.

One of the biggest opportunities thatUBS Wealth Management foresees forits business in Asia over the next 15 to20 years is providing onshore wealth planning services for domestic clients for certain markets.

As in the past, an increasing amount of wealth continues to be created at home rather than overseas.

“The vast majority of the growth of wealth [in Asia] is going to be onshore,” predicts Jonathan Hubbard, head of wealth planning for UBS Wealth Man-agement in Asia Pacific.

International banks are unlikely to get too close to the entrepreneur’s busi-nesses, due to the individual’s ties to their commercial banking provider.

However, the need for services like suc-cession planning, lifecycle planning and more is a big enough draw card.

CHINA FOCUSChina clearly presents the biggest appeal, particularly as it emerges as a market for such onshore services. And this trend is only expected to continue in line with the changing dynamics of the economy over the next 10 years.

For example, it will start depending more on domestic consumption ratherthan exports, and a lot of wealth will increasingly be generated from within.

The discussion Hubbard is engaging in at the moment to gauge the potential in China is about what can really be done today around structures such as a familytrusts and insurance for succession plan-ning onshore.

“There has been a developing theme towards this over the last two or three years, as some of the Chinese trust companies move away from just being deposit takers,” he adds.

JONATHAN HUBBARDUBS Wealth Management

This highlights the possibility of an estate planning business developing in China, explains Hubbard.

EXPERT INSIGHTS

FIRM PROFILE


Sun Life embarks on path to tap the wealth pipelineWith a new chief executive in Hong Kong, Sun Life finds itself at the start of a strategic journey which will reposition the firm to be able to deliver needs-based, holistic financial planning.

Ater 124 years established itself as one of the leading players in Hong Kong’s insurance and MPF markets, Sun Life Financial is ready to embark on a new journey again.

Assuming its new chief executive officer, Jason Dehni, can achieve all the goals he has set out, he will have transformed the business to deliver a broader prop-osition – with a finger in every slice of the wealth management pie.

Further, Sun Life as an organisation wants to be best-placed to work with a wider variety of organisations going forward, given that the traditional agency model looks to have run its course as the distribution channel of choice in Hong Kong.

The vision reflects an evolution under way across the region, explains Dehni, who joined the firm from Manulife in May 2016. With the next generation of young and savvy clients demanding

more from their wealth managers, insur-ance companies have been rethinking their business.

It is more than evident than ever to Dehni that clients no longer want to deal with multiple advisers.

“Our clients want one relationship manager, not one for their investment, one for their pension and another for insurance,” he emphasises. “The writing is on the wall in Hong Kong.”

At the same time, Asia is now a more important region for Sun Life’s global business than ever before.

So the push to grow market share in the region, and match the scale of its busi-ness globally, gives the new strategic direction further fuel.

REDEFINING THE OFFERINGDehni is no stranger to the kind of stra-tegic shit he envisages in his new role.

JASON DEHNISun Life Hong Kong

In his role as chief marketing and distri-bution officer for Manulife in Asia, he helped transform the end-to-end advi-sory sales model, which included a com-


plete redesign of its recruiting, training, technology and product offering plat-form, including wealth management.

He now plans to lean on this experience to repeat that with Sun Life.

In line with this, his goal is to stretch the boundaries of the firm’s offerings to complement its life insurance and pension services with a spectrum of wealth plan-ning and investment expertise.

He can then say with conviction that the firm can meet the different financial and protection needs during the different stages of the client’s lives, under one roof. “It is part of our DNA,” he adds.

STEP-BY-STEPThese changes, though, are not going to come about quickly.

“This requires a certain mind-set, com-bined with a lot of training, support, technology, back office infrastructure, adding mutual funds to our own plat-form, governance and, obviously, licens-ing,” explains Dehni. “So it is a journey we will be taking over the years to come.”

Top of his agenda to move up the ladder as a fuller-service wealth manager is to drive needs-based financial planning as Sun Life’s core offering.

The firm’s asset management division plays an important role too – enabling it to offer a multi-manager platform. “This is a point of differentiation for us,” says Dehni. “Our clients value it, the agents value it, and the market values it. We want to extend this platform to our agents and clients.”

And for the HNW population, Sun Life is currently developing a premium uni-

versal life proposition, which is set to make its debut in the third quarter.

“It will be our signature product for HNWs,” explains Dehni. “Clients have a choice, but when they come to a Sun Life adviser, we are going to offer them solutions that we believe meet their financial needs.”

But the overall goal goes beyond just the products individually; it requires integration so that each solution creates complementary value to a client’s overall financial plan.

Geographically, Dehni’s immediate focus is to serve the needs of people across various income spectrums in

based on “trust, advice and delivery of service”, he explains.

His commitment to this involves taking on board as much client feedback as he can get, in order to continually ensure he and his staff provide the desired consistent experience.

This will also involve reviewing internal processes and policies to identify areas for improvement.

However, the biggest challenge he faces is how to get Asian clients to look beyond their short-term, tactical ap-proach towards focusing on longer-term goals such as retirement planning and saving for the future.

“Our clients want one relationship manager, not one for their investment, one for their pension and another for

insurance. The writing is on the wall in Hong Kong.”

Hong Kong. Saying this, China will obvi-ously remain important as the firm continues to focus on the needs of PRC clients in Hong Kong.

QUALITY NOT QUANTITYYet, while products are inevitably im-portant, they offer relatively limited scope for differentiation.

Instead, Dehni is looking to find a niche for the wealth management offering by focusing on the quality of advice. And he wants to create a value proposition

But he doesn’t subscribe to the notion of expecting clients to change overnight, without helping them to change. Instead, Sun Life plans to leverage tech-nology to give investors a glimpse into the future.

“This mind-set can be changed through education and by using technology in a way that it can help them envision their life after retirement,” says Dehni. “Engaging clients through such tools will encourage them to continue saving.”

EXPERT INSIGHTS


Broadening the insurance focus on Hong Kong’s wealthyGenerali is bringing a range of new life insurance solutions to meet growing appetite among the city’s HNW and affluent populations, explains Thomas Young.

The increasing awareness and open-ness among affluent HNW individuals in Hong Kong about the need for pro-tection in various formats is creating new opportunities for some of the more proactive life insurers.

Generali counts itself among them.

It has set up a new life insurance busi-ness in the market to target these customers with a product range that includes a range of traditional life, unit-linked and universal life (UL) insurance targeted at the wealthier segments of the population.

For Thomas Young, in particular, as head of the firm’s HNW business, the new UL offering in Hong Kong is espe-cially exciting.

“This is a new proposition of Generali. We have never done this before any-where globally.”

The product itself has been around in Asia for a long time in Hong Kong, and has been offered to date by insurance companies such as AIA, Transamerica Life Bermuda, Sun Life Financial, Manulife, HSBC, Met Life, AXA (more recently) and others. For Generali, meanwhile, the focus is to build on relationships with brokers.

COMPETING AT THE TOP ENDAccording to Young, there is a lot more to doing these products successfully than just the price.

He is referring to various aspects around the support and services clients get. “Everyone is trying to get into the HNW space because it’s the least crowded compared with retail.”

Yet standing out amid those insurers competing in the HNW space is obvi-ously key. And Young believes that Generali has a few unique selling points.

THOMAS YOUNGGenerali

First, he says the firm currently offers most competitive UL product in terms of price. Secondly, a novel element he


highlights is an underwriting class which is currently not being offered by anyone else: an underwriting class for extremely healthy clients.

“We reward customers who are healthy with lower premium,” explains Young, “so we pass the savings to the customers.”

At the same time, he cites innovation in terms of Generali being the first insurer of its type to offer the product to Chinese residents of 51 cities in China, with the same rating as in Hong Kong.

The multi-dimensional nature to UL is an important aspect of the market that Young says needs to be better highlighted to clients.

The current challenge that providers face in this segment, for example, is the fact that clients and potential clients are focusing on one particular product offering.

“I think that’s just because clients are not aware of the many different options available,” he adds.

Expanding the Generali life insurance offering to HNW

Generali’s Sigillo Universal Life Plan reflects the inspiration behind the firm’s solution for its most valued clients.

It enables them to pass on their unique heritage and legacy to future generations.

Key product features include: lifelong protection, adjustable death benefit, guaranteed crediting interest rate lock options, guaranteed minimum crediting interest rate, highly-flexible premium options, product transparency, easy access to liquidity, and free partial withdrawal.

Meanwhile, La Vita Critical Illness & Savings Plan is designed to cater for clients’ different needs through their life stages – such as planning for retirement or a child’s education – with guaranteed income feature and multiple risks coverage.

Key product features include: wealth accumulation with life and waiver of premiums protection, comprehensive coverage for 100 illness protection until the age of 100, guaranteed monthly income options, guaranteed crediting interest rate lock options, guaranteed minimum crediting interest rate, highly-flexible premium options, product transparency, and easy access to liquidity.

“The current challenge that providers face in this segment... is the fact that clients and potential clients

are focusing on one particular product offering. That’s just because clients are not aware of the many different options available.”

Indeed, the business out of Hong Kong services clients from around the region, dominated by individuals from main-land China and Taiwan, in addition to the population in Hong Kong.

A MULTI-DIMENSIONAL OFFERINGThe focus for many of the clients that Young sees buying UL should start with a growing understanding of the prod-uct’s large cover.

This enables them to do much more than just protection.

“They can use it for wealth transfer, legacy planning, estate equalisation and even key-man protection,” he says.

For example, critical illness is another area where clients can look at getting protection on a living benefit cover. This is where Generali’s new offering, called La Vita, comes into play (see adjacent box).

“The living benefit segment is under-served at the moment,” says Young, “and the annuity gives clients the option to have a regular income stream for the future.”

He is a strong proponent of the idea of giving clients more options.

“Banks also need to look at how they can service a client’s more comprehen-sive needs, including the protection

side,” he explains. “And that protection is much more than just life.”

FIRM PROFILE


Tokio Marine carves life insurance niche in SingaporeJames Tan of Tokio Marine Life Insurance Singapore Ltd. explains to Hubbis how the firm is leveraging its first-mover advantage to establish a new niche in developing solutions for the insurance needs of Japanese corporates.

Tokio Marine Life Insurance Singapore Ltd. (TMLS) has been recently named a Tier-1 Significant Insurer by the Mon-etary Authority of Singapore, recognis-ing its status as a direct life insurer with at least SGD5 billion in assets.

With this, TMLS has not only maintained a leading position in Singapore’s fierce-

This is an incredible accomplishment for the first and only Japanese life insurer to have established a successful foothold on local shores.

Behind the story of TMLS’ strong growth trajectory is a core focus on its group insurance in-force business, which has reaped excellent results for the firm.

JAMES TANTMLS

This performance has been driven by the J-Business segment – TMLS’ new niche in the firm’s group insurance busi-ness, which was first started in 2015

“We see great potential in the J-Business segment, and our long-term objective is for TMLS to become the

choice insurer for Japanese companies in Singapore.”

ly competitive life insurance landscape, but also expanded one of the areas of growth – the Japanese group business segment (J-business).

From Q1 2015 to Q1 2016, group insur-ance business at TMLS outstripped the industry’s growth by nearly six times (Source: LIA Singapore).


and now attaining a year-on-year growth of 20%.

According to James Tan, chief executive officer at TMLS, J-Business is specifi-cally tailored to the insurance needs of Japanese corporates, leveraging the insurer’s expertise in holistic, compre-hensive and customised group insur-ance solutions.

At present, J-Business is the fastest-growing among TMLS group business segments and accounts for approxi-mately 10% of the group insurance business. Tan, an industry veteran with decades of experience across Asia, Middle East and the US, intends to further develop this niche.

first-mover advantage and unique areas of expertise at TMLS.”

THE J-BUSINESS OPPORTUNITYAs at end-2014, nearly half of the Japa-nese companies in Singapore hosted regional headquarter functions, accord-ing to a survey conducted by the Japan External Trade Organisation (JETRO) Singapore, a Japanese government-re-lated organisation promoting external trade and investment.

The trend of Japanese companies setting up regional headquarter operations in Singapore looks set to continue, with another 30% noted as considering similar moves in the same survey. It is easy to understand Singapore’s appeal to the

looking to gain inroads into the South-east Asian market, one of the largest in the world.

As Japanese companies continue to in-crease their investments in Singapore, notes Tan, insurance will naturally emerge as an important consideration for them.

“Japanese companies will be looking for a partner whom they can trust and work effectively with,” he adds. “This poses a critical gap in the local life insurance landscape that can only be filled by an insurer who is already familiar with the ubiquitous workings of Japanese busi-nesses, and can adapt their offerings to anticipate and address the specific needs of these companies in a new foreign market.”

TMLS’ UNIQUE POSITIONINGAt the heart of its strategy to capture and grow business relationships with Japanese companies in Singapore is TMLS’ expertise in developing tailored solutions, along with its heritage as part of the Tokio Marine Group, one of the largest insurance groups in the world and a household name in Japan.

“As an insurer and adviser to our clients, our business at TMLS is founded on trust and understanding,” explains Tan.

“Japanese companies who are venturing into Singapore need a partner whom they can trust to understand their busi-ness priorities and concerns, and develop solutions in anticipation of their needs in this new market.”

Adds Tan: “As a Japanese company which has also embarked on our own expansion into Singapore, we are naturally able to understand the intri-

“Japanese companies who are venturing into Singapore need a partner whom they can trust to understand their business priorities and concerns, and develop solutions

in anticipation of their needs in this new market.”

“We see great potential in the J-Busi-ness segment, and our long-term objec-tive is for TMLS to become the choice insurer for Japanese companies in Sin-gapore,” he says.

“As the pioneer in the J-Business niche, we are already working with nearly 200 Japanese corporate clients across a wide range of industry sectors including con-struction, retail and logistics. In the year ahead, we will be exploring new avenues to engage the Japanese business com-munity in Singapore, leveraging our

many Japanese companies keen on setting up regional headquarter func-tions in the country.

The city-state has established a formi-dable reputation as one of the most business-friendly countries in the world, with a comprehensive financial services infrastructure, strong risk management ecosystem and pro-business laws.

Its strategic position in the region also means that Singapore is seen as an ideal starting point for Japanese companies

FIRM PROFILE


cate concerns of our Japanese corpo-rate clients, especially in relation to the market entry process. Our solu-tions at TMLS are therefore informed by our expertise in bespoke offerings, and our first-hand understanding of Japanese corporate culture and the market entry process.”

In staying true to the “Good Company” philosophy of the Tokio Marine Group and the distinctly Japanese concept of omotenashi (‘to entertain guests whole-heartedly’), TMLS is constantly on a quest to perfect its J-Business approach – right down to the smallest detail.

It speaks volumes about the insurer’s standards in client servicing that for instance – to ensure the effectiveness of the J-Business team in developing solutions for Japanese corporates, some of whose key decision-makers may be more comfortable conversing in Japanese, TMLS has ensured the J-Business team comprises fluent Japa-nese-speaking product experts.

In Tan’s eyes, these efforts in sincerity go a long way. “Our track record bears testament to the TMLS team’s efforts in ensuring long-term, sustainable client relationships based on trust and satisfaction,” he says.

“Our current overall persistency in renewal ratios stands at above 95%, and this gives us confidence that we are heading in the right direction with our dedicated efforts in strengthening our J-Business approach,” he adds.

FORWARD VISIONAs the insurer for nearly 200 Japanese corporates in Singapore, TMLS is on track to choice-insurer status for the Japanese business community.

The firm is already an established member of the Japanese Chamber of Commerce and Industry (JCCI), and Tan believes that key to further expan-sion of the J-Business is continued engagement within the community.

This year, TMLS’ J-Business team has embarked on a series of initiatives to reach out to the community.

These include worksite events in infor-mal and intimate settings, such as lunch-time talks and seminars, where TMLS experts can share their knowledge with employees at Japanese companies.

saving towards a pre-determined sum, individual plans should be developed based on lifestyles and spending habits.”

Adds Tan: “The worksite sessions allow us the time and flexibility to explain this advice at length, and to better under-stand our customers’ thinking and ap-proach to retirement planning. This in turn helps us to come up with retirement solutions that are more suited to their lifestyle preferences.”

Other initiatives that TMLS has adopted to establish its Japanese iden-tity and build camaraderie among the

“Our current overall persistency in renewal ratios stands at above 95%, and this

gives us confidence that we are heading in the right direction.”

“These worksite events enable our experts to engage employees on a per-sonal level,” says Tan.

“We make it a priority to cover financial planning topics that they are genuinely interested in, such as writing wills, re-tirement planning or MediShield Life.”

He shares that the most frequently-voiced concern is retirement adequacy.

“The most common question we en-counter in discussing retirement plan-ning with employees is the ‘magic number’ that they need to save towards,” he explains. “Our counsel, is that beyond

Japanese business community include sponsorship of outreach events.

These include Japan Hour, a popular Channel NewsAsia programme that spotlights Japanese culture.

“Our commitment to the Good Company principles of integrity and stakeholder trust will continue to be the cornerstone of our work in the decades to come,” he explains.

“Being an international organisation allows us the opportunity to expand our business prospects, while keeping our Japanese heritage close at heart.”

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EXPERT INSIGHTS


Eyeing healthy profits from a more mobile ChinaThe rapid growth in China’s insurance sector is fueling Bupa Global’s desire to craft medical plans tailored to the country’s affluent population. Rainbow Pan reveals the vision behind the strategy.

According to data from the China Insur-ance Regulatory Commission (CIRC), the mainland became the world’s third-largest insurance market in 2015 with an annual growth rate of 13.4%. And from 2010 to 2015, the market saw an increase in insurance premiums from RMB1.3 trillion (USD196 billion) to RMB2.4 trillion.

The Chinese government has also ini-tiated major reforms to provide cus-tomers with access to improved medical services.

Eyeing these trends, Bupa Global aims to play a big role in the market – and even see potential for its portfolio in mainland China to overtake that of Hong Kong within three years in terms of international private medical cover.

“Despite a relatively low base at the moment in China, Bupa Global has been investing a lot in Asia and we see this part of the world as a growth region,”

says Rainbow Pan, the firm’s general manager for the Greater China region.

And with more of China’s wealthier population becoming not just globally minded, but also internationally mobile, there is good reason for optimism.

Further, the firm already works with a local partner, Alltrust Insurance, which has over 200 offices across the main-land, licensed to write medical insurance business and is the local insurer for products issued under another agree-ment Bupa has with Hang Seng Bank.

So ater tapping into the key initial op-portunities in Beijing, Shanghai, Guang-zhou and Shenzhen, a host of other cities are on the radar, adds Pan.

CONSISTENT OFFERINGPan says she sees first-hand evidence of the significant rise of international mind-set of Chinese nationals during her visits overseas, including a recent

RAINBOW PAN Bupa Global

trip to the US West coast. “One can see them where ever you go travelling in the world these days. So they need good cover just in case. And it doesn’t


matter where they go. That’s the op-portunity I see,” she explains.

Service-wise, what Bupa offers in main-land China is comparable with what’s available in Hong Kong.

For instance, it offers the Bupa Global Health Plan range, a new product launched in 2015 as a tiered proposition with pricing to reflect this structure.

“We will be co-branding the Global Health Plan range with Blue Shield Global, as part of the next phase of our partnerships and this will be delivered in a phased approach, starting in Asia with Hong Kong,” explains Pan.

The coming together of the two names means consumers who require global coverage can now have access to the largest network of health care provid-ers worldwide.

“This combined strength, knowledge and expertise means customers can be confident in knowing that they have access to quality health care when and where they need it,” she adds.

More specifically, this involves a range of premium policies for the affluent to HNW audience.

Pan explains that this came about ater some extensive research revealed that customers prefer something which is simple and easy to understand.

Within Bupa’s Global Health Plan range, a product called ‘Ultimate’ has no annual and lifetime limits.

And the level of medical concierge service is akin to customers having their own secretary within the insur-

ance company for their medically-re-lated assistance services.

“Patients get informed about the best doctors available, and if required, Bupa will confirm the appointment at no extra charge,” says Pan.

Yet all plans still come with annual health check-ups and medical con-cierge services, including emergency assistance and evacuation, repatria-tion, second opinion and a round-the-clock helpline.

EXPANDING ITS CHANNELS IN CHINAPartnerships are key to the success of Bupa Global’s strategy in China.

Given its target market of wealthy in-dividuals and families, the firm looks to intermediaries like private banks and wealth management firms to help reach this audience.

“Bupa Global has been investing a lot in Asia and we see this part of the world as a growth region.”

The bancassurance channel is also proving increasingly popular.

A 10-year exclusive partnership with Hang Seng Bank began in Hong Kong in September 2014.

A similar venture got off the ground in China in September 2015, also with Hang Seng Bank.

Through this arrangement, a range of global medical insurance products and services are made available to Hang Seng Bank’s personal and cor-porate customers.

DEMAND DRIVING TRAJECTORYOne of the main reasons for the growth in private medical care in mainland China stems from the desire among the ever-larger numbers of wealthy for higher-quality services.

But concerns among these individuals about the cost of getting access to this in comparison with state-run facilities.

“The hospitals which are empanelled by Bupa Global will seek pre-authori-sation for direct billing of our custom-ers,” explains Pan.

“Our care managers, who have a medical background, will look at the

treatment offered by the doctors, and then help customers better understand their medical condition,” she adds.

“They can then suggest the best pos-sible alternative treatment, doctors and/or hospitals related to the cus-tomer’s medical conditions in order to give the policyholder more options,” explains Pan.


Turning digital into realitySpeaking at Hubbis’ flagship annual Digital Wealth event in Singapore in mid-June 2016, senior industry practitioners highlighted some of the most pressing considerations and objectives to ensure institutions get moving in the right direction along their inevitable digital path.

Financial institutions are re-assessing their strategies and engagement of all kinds of technology.

Amid all the hype and talk among banks about them looking to enhance their digital propositions and offer clients more via these channels, they need to act if they want to address the real challenges they still face. While the demand for digital wealth management is growing among Asian investors, many traditional players are struggling to respond.

For those institutions in search of in-novation and digitisation for their wealth management business, there-fore, they need to carefully consider how they work ever-closer with (the right) fintechs as the former rely on the latter for something interesting and new

to offer to clients to service their wealth management needs.

Yet disruption in any dramatic way looks unlikely. So management need to focus on how to evolve and enhance their businesses to thrive, not wither, in today’s challenging environment.

This is needed in private banking, for example, given the move away from purely face-to-face conversations, to a landscape where clients can interact with an individual adviser as well as the institution through different and mul-tiple channels. Plus, the trend is heading in a direction where it will be possible for customers to transact directly through the bank.

Plus, while a lot of people get most excited and focused in relation to front-

end solutions, some industry leaders think the right approach is to start at the back end– especially given regulations and operations are critical areas of concern for many senior management.

One of the principal premises of robo-advisory, meanwhile, has always been to change the way of thinking about invest-ing towards being more goals based. This resonates with many investors. Institu-tions will increasingly see the advan-tages of going down this route, to ensure their end-customers remain satisfied and can be self-directed.


Allocated Bullion Solutions Appway EY IMTF Intellect Design Arena Pershing IRESS SIX Financial Information Vermilion Software Assentis Technologies Orbium Synpulse Temenos Thomson Reuters

EVENT HIGHLIGHTS - DIGITAL WEALTH - ASIA 2016 - JUNE


Luke JanssenTigerspike

Ned PhillipsBambu

Dirk P SibietABN AMRO Bank

Adrian GostickBondIT Asia

Dr Lee NgMetLife


Andrew KohChina Construction Bank

Eddy TaiBank of Singapore

Antony Lewis Bitsonblocks.net

Gary MellodyEY

Mark NelliganPershing Securities

Pranav SethOCBC Bank

Andy FeitknechtAssentis Technologies

Evy TheunisDBS

Joyce TanJoyce A. Tan & Partners

Mark WightmanEY


Charles WongPrivé Holdings

Frank Henze

Julia WalkerThomson Reuters

Neal CrossDBS Bank

Sandipan RayDeutsche Bank Wealth Management

Mark BuesserIMTF

Frank Troise Leonteq Securities

Ketan SamaniUBS Wealth Management

http://bitsonblocks.net/


Valerie BruceOld Mutual International

Jeroen BuwaldaEY

Sanjoy SenANZ

Alessandro TortelliAppway

Zoe NiuAppway

Stefan ArnUBS

Bhaskar PrabhakaraWeInvest

Steve MonaghanAIA

Urs LichtenbergerCredit Suisse

Jason HoangIRESS

Jaideep BillaIntellect Global Consumer Banking

“This event has been very important in highlighting and re-enforcing the issues the banks face and the challenges in terms of moving forward.”Ravish Khanna, Vice President, Change Management, APAC, BNP Paribas Wealth Management

EXPERT INSIGHTS


A process to digitalisation

Artificial intelligence, machine learning and other digital capabilities make it possible to connect multiple information sources and systems to come up with solutions and views to ensure advisers are more productive, says Peter McMillan of Thomson Reuters.

Digital platforms have gathered a lot of momentum in the US over the past 12 to 36 months, says Peter McMillan, head of wealth management for Thomson Reuters in Asia.

This shows the focus on enhancing digital platforms with the aim of reaching more customers and provide better advice, to provide a better user experience.

In Asia, many banks are involved with accelerators, innovation labs and other initiatives to try to understand the fintech arena and enhance platforms with capabilities that enable them to better service clients, says McMillan.

Private banks, in particular, are looking at ways to address the margin, regula-tory and investment pressures they face.

CREATING DIGITAL PLATFORMSOne of the first steps institutions should take along this digital journey is to connect multiple databases, he advises,

explaining that it isn’t practical for rela-tionship managers (RMs) to join the dots to help them understand what is hap-pening in the market, how it relates to their CRM database and the suitability for their client.

In line with this, creating a smooth com-munication path is also a key compo-nent, adds McMillan.

An RM should have multiple ways to connect with clients, to get the informa-tion they need, on the device preferred, and when they want it. Plus, it should connect to all the other databases if they need that information.

This is essential from a suitability per-spective, for example, explains McMil-lan, to know what investment product is pre-qualified.

By extension, this can integrate model portfolios, to assist in comparisons with client portfolios at different risk levels.

PETER MCMILLAN Thomson Reuters

Ultimately, he says this reduces the time RMs spend on research and processing, to free them up to focus on prospecting and servicing clients.

EXPERT INSIGHTS


Why banks must rely on fintechsRalph Mogicato, a fintech angel investor, explains why banks and fintechs will work ever-closer as the former rely on the latter for something interesting and new to offer to clients to service their wealth management needs. Disruption in any dramatic way looks unlikely.

Because most banks are not innovative by nature, they will increasingly rely on fintechs to drive client interactions and engagement within wealth manage-ment. As a result, they are more eager than ever before to get these companies on board.

This is according to Ralph Mogicato, an entrepreneur and independent senior adviser, who says this explains the hype and potentially large bubble emerging in this space.

This also explains the shit in what fin-techs are focusing on. “The original fintech companies were supposed to be disruptive. However, today every start-up which writes a line of [program-ming] code calls itself a ‘fintech’,” says Mogicato. “There are not many firms which are genuinely disruptive.”

As a result, while some fintechs will inevitably be successful, many won’t survive for long.

But there will be no ‘brave new world’ along the lines of earlier predictions. Instead, Mogicato says banks need to work out how to get the most value for their wealth management businesses from collaborating with fintechs today.

And the consequences for banks which don’t take these developments seri-ously will be severe, he predicts. “In the medium term, they will be less interest-ing and relevant to their clients. And in the long term, they won’t be in business at all if they don’t offer attractive prices, good execution and a quality service.”

A NEW FINTECH FOCUSAgainst this backdrop, now is the moment for more fintechs to enter the limelight – given that their agility and pace provide them with the opportu-nity to implement their ideas without the baggage of legacy systems.

It is in this way which they will be criti-cal in providing a competitive advantage

to those banks shackled by a heavy level of financial regulation and compliance issues. Testament to this trend is the number of innovation labs and accel-

RALPH MOGICATO Angel investor and entrepreneur

EXPERT INSIGHTS


erator programmes which have sprung up around the world – and initiated by some of the world’s largest banks.

Further, a recent study by Accenture of global investment in fintech ventures in the first quarter of 2016 showed that this reached USD5.3 billion, a 67% in-crease over the same period last year. The report also noted that the percent-age of investments going to fintech companies in Europe and Asia Pacific nearly doubled, to 62%.

Perhaps most notable about the report, and backing Mogicato’s observations, is that collaborative fintech ventures – those primarily targeting financial institutions as customers – are gaining ground over so-called ‘disruptive’ players that enter the market to compete against those institutions.

For example, funding for collaborative fintech ventures, which accounted for 38% of all fintech investment in 2010, grew to 44% of funding in 2015, with the remaining investments made in ventures competing with institutions.

Yet, the proportion of competitive fintech ventures in Europe and Asia is much higher than in North America, reflecting the earlier stages of maturity of fintech markets, outside of London. However, while so-called ‘disruptors’ may compete against banks at first, they oten end up aligning with them through investments, acquisitions and alliances, said the report. It highlighted BBVA’s recent stake in Atom, a mobile-only bank in London that launched last week.

DRIVING CHANGEIn the years to come, Mogicato believes that many financial institutions such as banks and insurance companies will still

exist, but they will have been able to use fintechs in ways to help to trans-form their businesses.

To get to this stage, however, more banks need to start focusing on change management. “If they don’t get the basics right, such as the right core plat-form and clean up their application landscape, then they will fail,” explains Mogicato. “They will prove to be too slow and it’s too expensive to survive.”

As a result, he is positive about fintech. “Banks must be more focused on their client and their needs, which means better products and faster execution. Banks can do more with start-ups which can produce sotware for business-to-business applications.”

In particular, the back-end must work and be flexible, and straight-through processing is a crucial component of this. But this is a key area of the business which most banks have ignored. They neither renovated what they have already, nor put in place a new one.

Without this, what most banks have, says Mogicato, is akin to putting a Ferrari engine in an old-timer – it won’t work.

Yet the banks aren’t the only firms in the ecosystem which need to adapt. Core banking providers such as Avaloq and Temenos, for example, are confronted by new technologies such as blockchain.

These firms have responded in other ways, by building their own ‘app stores’ – where banks can plug into their plat-forms new solutions from start-ups.

SET FOR SUCCESSIt has also become clearer which kind of fintech has the biggest potential to create a splash.

Payment-oriented firms, for example, and those at the retail end of the busi-ness with customers as their focus, are going to be big – the most likely among all fintechs to become the future ‘Ubers’.

Robo-advisers will be the other big disruptive force, with the more success-ful ones which get the formula right to be the defining element of wealth man-agement – driving the future of advi-sory and marketing in the near future.

The game-changing firms, therefore, are those which can be unencumbered by the constraints of the traditional way of thinking in wealth management.

Yet banks need to do more in their pursuit of fintech. They need clearly identified long-term goals in collabora-tions with such firms – such as increas-ing the company’s revenue or profit.

For fintechs, they need to ensure what they offer is tangible with valuable output. This will prevent them falling prey to cost-based decisions when pres-sures increase, explains Mogicato.

What to look for when investing in a start-up

It is generally quite easy for fintechs to raise money and get a first meeting. The elements they need to survive over time, however, include:

A good and highly-motivated founder team

A good simple idea – complexity is not good

Fast execution of the idea Find one or two existing

clients using the product or service

EXPERT INSIGHTS


Turning digital into realitySpeaking on the sidelines of Hubbis’ flagship annual Digital Wealth event in Singapore in mid-June 2016, senior industry practitioners highlighted some of the most pressing considerations and objectives to ensure institutions get moving in the right direction along their inevitable digital path.

Financial institutions are re-assessing their strategies and engagement of all kinds of technology.

Amid all the hype and talk among banks about them looking to enhance their digital propositions and offer clients more via these channels, they need to act if they want to address the real challenges they still face. While the demand for digital wealth management is growing among Asian investors, many traditional players are struggling to respond.

For those institutions in search of innovation and digitisation for their wealth management business, therefore, they need to carefully consider how they work ever-closer with (the right) fintechs as the former rely on the latter for something interesting and new to offer to clients to service their wealth management needs.

Yet disruption in any dramatic way looks unlikely. So management need to focus on how to evolve and enhance their businesses in order to thrive, not wither in today’s intensely-challenging environment.

Against this backdrop we designed our flagship annual digital wealth event in Singapore.

DRIVING INNOVATION AND EVOLUTIONDigital disruption is continuing to influence private banking, with a move away from purely relationship manager (RM)-driven, face-to-face conversations, to a landscape where clients can interact with an individual adviser as well as the institution through different and multiple channels. Plus, the trend is heading in a direction where it will be possible for customers to transact directly through the bank.

Delegate, speaker and sponsor summary

More than 35 high-profile speakers and 330 attendees

Delegates included CEOs, COOs, heads of technology / digital, and other senior practitioners attended – from a mix of Private Banks, Retail Banks, Insurance Companies, Independent Firms & Family Offices, and Asset Management Firms

Sponsors: Appway, EY, IMTF, Intellect Design Arena, Pershing Securities, Allocated Bullion Solutions, IRESS, SIX, Vermillion, Assentis, Orbium, Synpulse, Temenos, Thomson Reuters

EXPERT INSIGHTS


In line with this, fintech is having a big impact on this space – as a catalyst to spur innovation at traditional organisations across the industry, and more quickly, than would be the case if these ‘disruptors’ didn’t exist.

As a result, the market will become increasingly fragmented, but complete disruption is unlikely.

Indeed, some practitioners believe the change is coming more from the ‘tech’ aspect rather than the ‘fin’ element.

Further, it is not a process which can happen overnight. It also takes time to convince all stakeholders and staff about the right way to do this.

In addition, while a lot of people get most excited and focused in relation to front-end solutions, some industry leaders think the right approach is to start at the back end– especially given that regulations and operations are critical areas of concern for many senior management.

The proportion of respondents who said technology should play an ‘offensive’ role as part of the strategy – to expand the offering to drive revenue

60%

Key topics and themes

Technology - its role in the future of wealth management

Digital enablement - redefining the client experience

Change management or change the management?

Getting your digital bank ready

Fintech: fantasy or reality? Regulation and compliance -

what can technology really do to help?

What will you be in the future: a platform? A product manufacturer? Or a distributor?

Innovation

Source: Hubbis Digital Wealth - Asia 2016, Singapore

WHICH OF THE FOLLOWING IS THE TOP TECHNOLOGY-RELATED PRIORITY IN ASIAN WEALTH MANAGEMENT?

Enhance the client experience

Create digital advice pla�orms (to lower costs, boost efficiency)

Automate risk / compliance processes

Ensure connec�vity between internal & external systems

23%

55%

14%8%

Pranav Seth, OCBC Bank

EXPERT INSIGHTS


This is key, given that businesses need to be based on how they feed information into their systems and also how it is reconciled – as well as the accuracy of all this.

Getting this right then enables firms to deliver information to clients in as efficient and fast a way as possible.

Saying this, the front end does need to develop in parallel given the role it plays in the customer engagement and experience.

Although Asia is lagging the US and Europe in many areas, those institutions which can catch up fastest will be the firms which can reap the biggest rewards, at least in the short term.


WHICH OF THE BELOW DO INSTITUTIONS MOST NEED TO CHANGE TO ADAPT & THRIVE AGAINST DIGITAL DISRUPTORS AND COMPETITORS?

Culture & mind-set of staff

Leadership

Taking a strategic not silo’d approach to systems

Willingness to collaborate with fintechs

Value proposi�on

33%

24%

24%

9%10%

ROBO-ADVISORY HERE TO STAYOne of the principal premises of robo-advisory, meanwhile, has always been to change the way of thinking about investing towards being more goals based. This resonates with many investors.

Coupled with the greater transparency created, in terms of options, track record, and lower costs and fees, and robo-advisory becomes ever-more compelling for clients.

Jeroen Buwalda, EY and Mark Nelligan, Pershing Securities

EXPERT INSIGHTS


Institutions will also increasingly see the advantages of going down this route, to ensure their end-customers remain satisfied and can be self-directed.

However, despite there being no doubt that this is the right place at the right time, as this new way of investing gathers momentum, the market will need to wait and see which solutions prevail.

TRANSFORMATIONIn terms of the transformation process underway within private banks, it is important that the senior management at these institutions have a clear vision.

Business leaders must drive the change, by picking the right people and choosing the right methodology to execute the plan – which oten requires a bank to be agile.

Although some of the changes to come might not be as drastic as what is happening in the fintech space, the focus must still be on client engagement and delivering solutions to improve the client experience.

Neal Cross, DBS Bank


WHAT WILL MAKE THE DIFFERENCE BETWEEN THOSE FINTECHS WHICH SURVIVE, AND THOSE WHICH WILL DIE OUT?

Commercial viability / demand – including profitability

Quality of management

Commercial rela�onship of the fintech

Strength of technology

81%

7%6%

6%

EXPERT INSIGHTS


What if an Uber wealth was born?Financial institutions face a strategic choice: either be disintermediated or become part of the new reality. Raj Ganesarajah of Intellect Design Arena explains why and how the latter is the only route to survival.

The rise of Uber, which is estimated to have taken about 50% of the share of taxi usage, has convinced a lot of people that digital will – if it hasn’t already – change the world.

These proponents include Raj Gane-sarajah, the Malaysia country head and senior vice president at Intellect Design Arena.

An example in the context of the finan-cial space, he says, is the birth of online peer-to-peer lending companies.

The digital trend is only likely to gather momentum in the industry, believes Ganesarajah.

For instance, he says the emerging af-fluent like to use digital devices, indicat-ing that they are looking for a service that matches such a lifestyle.

In turn, financial institutions must now think much more carefully about

whether they want to be displaced or become part of the evolution, as the wealth management industry strives for greater efficiency.

THE UBER OF WEALTH MANAGEMENTAccording to Ganesarajah, relationship managers (RMs) and IFAs would react in the same way to an equivalent to Uber in this industry.

This is because it can help them find an easier and more efficient way to serve clients.

His firm’s digital platform, he explains, enables investors to manage their port-folios in a self-service style.

This ranges from creating and refin-ing their own portfolios, to tracking and analysing the performance, and even includes back-testing various model portfolios to develop their own model portfolios.

RAJ GANESARAJAHIntellect Design Arena

Yet while this Uber-style approach to wealth management gives investors more control, they can still call on advis-ers for help.

Digital Wealth - Asia 2016

10 November, 2016Island Shangri-La, Hong Kong

REGISTER NOW

At the Registration desk

World-class speakers

www.hubbis.com/mainEvent/

300+ Delegates NetworkingThought-leadership

http://www.hubbis.com/mainEvent/

Hubbis digital learning solution

100+ assessed courses Digital learning modules

Hubbis offers 100+ proprietary training courses covering

core topics relevant to compliance obligations, investment

and product knowledge, advising families on long-term wealth

structuring, and generally building and improving effective

& appropriate advisory skills in an Asian industry context.

Analyse resultsReporting

The Hubbis system allows the recording and reporting of all

online and offline internal and third-party training in order to

provide a complete training record for each individual. The

Hubbis digital learning platform also offers a dedicated report-

ing feature enabling HR and / or compliance managers to gen-

erate customised data sets to match both internal and regula-

tory training reporting requirements.

200+ hours of ‘live’ content Presentations, video Q&As

Hubbis augments formal digital courses with over 200 hours

of live-learning content that ranges from videos to engaging

presentations from Hubbis’ highly-acclaimed Wealth Man-

agement events. Each training course and many of the ad-

ditional materials are in modules of 30 and 60 minutes for

CPT/CPD/OPT. And all Hubbis modules are assessed prior

to completion to assist in demonstrating user’s learning

success for regulatory reporting.

Hubbis eventsAccess to our ForumsAttendance at any of the Hubbis events throughout the

year at no additional cost - including forums in 10 markets

across Asia, plus in Switzerland and Dubai.

We help practitioners at Private Banks, Retail Banks, Insurance Companies, IFAs, Multi-Family Offices and Independent Asset Managers meet their professional education obligations via various digital learning content, event presentations, videos and more.

Why we are different ASIA-SPECIFIC CONTENT - Hubbis is the only

provider of online learning that is solely dedicated to

the Asian wealth management industry

VALUE FOR MONEY - We want to ensure learning is

affordable and accessible to everyone in the wealth

management industry. We never charge any fees for

on-boarding or end-user training

GOVERNANCE - We constantly review & upgrade

the relevance and timeliness of the platform – this

includes adding new courses every week, adapting

functionality to the needs of different markets and

types of institutions, and improving the technology.

We also regularly bring together - via our events

and private thought-leadership discussions - market

experts on all topics. This enables us to check our

existing content and plan new courses

COLLABORATION - We collaborate with more

than 100 existing partners on the learning platform

– getting feedback and incorporating new ideas for

content, functionality and technology. Plus, we work,

across the overall Hubbis business, with more than

375 partners – continually discussing with them their

problems to understand the reality of the market

EDUCATION - The material we produce is USEFUL

and USEABLE. It helps wealth managers and other

practitioners meet their continuing professional

development needs in a practical and robust way

CONTENT DEVELOPMENT - We source content and

insights from the most respected and experienced

practitioners at the leading firms in the market and

package it for our learning platform

REPORTING – We enable users to generate

individual, team and annual training records on

demand. We offer built-in, customised reporting tools

to quickly meet regulatory requirements

Contact us: [email protected]

HR & compliance Administrators The user Live learning

Online courses

Reporting

LEARNING PLAN

Tracking

Our learning platform

Consolidated record

Meeting your critical compliance requirements

Reporting

Not all e-learners are at the same stage

in their professional development or

training lifecycle. The integrated

reporting system allows HR &

compliance managers to monitor

employee progress - highlighting areas

of weakness / strength.

Online

Simple access through an internet

portal that is available 24 hours a day,

365 days a year. You will have access

to 100+ engaging e-learning courses

that enable users to conveniently earn

CPT / CPD / OPT points.

Records

The e-learning reporting function

also allows all offline and 3rd-party

training to be uploaded to give a single,

consolidated history for each user. It

also enables organisations to report

this training to the regulator in a fast,

accurate and consistent format.

Tracking

We give HR & compliance managers

the ability to build learning plans, and

apply those plans to defined groups,

and track and record each individual’s

learning progress.

Contact us: [email protected]

HR & compliance Administrators The user Live learning

Online courses

Reporting

LEARNING PLAN

Tracking

Our learning platform

Consolidated record

Meeting your critical compliance requirements

Reporting

Not all e-learners are at the same stage

in their professional development or

training lifecycle. The integrated

reporting system allows HR &

compliance managers to monitor

employee progress - highlighting areas

of weakness / strength.

Online

Simple access through an internet

portal that is available 24 hours a day,

365 days a year. You will have access

to 100+ engaging e-learning courses

that enable users to conveniently earn

CPT / CPD / OPT points.

Records

The e-learning reporting function

also allows all offline and 3rd-party

training to be uploaded to give a single,

consolidated history for each user. It

also enables organisations to report

this training to the regulator in a fast,

accurate and consistent format.

Tracking

We give HR & compliance managers

the ability to build learning plans, and

apply those plans to defined groups,

and track and record each individual’s

learning progress.



DIRECTORY

People and firms who supported this publicationWe very much appreciate the participation and contribution of key individuals and organisations in the asset and wealth management communities to the content in this publication.

Adriel Loh, Bank of Singapore

Alan Luk, Hang Seng Bank

Albert Chiu, EFG Bank

Alison Brown, HSBC Global Asset Management

Alvin Lee, Maybank

Alvin Ma, EFG Bank

Amanda Chen, Nomura

Andri Manatschal, PwC

Angelo Venardos, Heritage Trust Group

Anshu Kapoor, Edelweiss Global Wealth Management

Anthonia Hui, AL Wealth Partners

Arnaud Tellier, BNP Paribas Wealth Management

Bassam Salem, Citi Private Bank

Benjarong Techamuanvivit, Kasikorn Asset Management

Bernard Renell, HSBC Private Bank

Brian Shegar, Emirates NBD

Catherine Kirchmann, Investec Wealth & Investment

Damien Mooney, BlackRock

Danial Mah Abdullah, Labuan IBFC

Don Charnsupharindr, Citi

Eleanor Wan, BEA Union Investment

Evrard Bordier, Bordier & Cie

Febby Avianto, Falcon Private Bank

Fredrik Lager, SEB Private Banking

Georg Schubiger, Bank Vontobel

Grace Chow, Bank of East Asia

Hans Diederen, Heritage Trust Group

Harmen Overdijk, Caidao Wealth

James Tan, Tokio Marine Life Insurance Singapore

Jason Dehni, Sun Life Hong Kong

Jason Lai, Thirdrock Group

Jing Zhang Brogle, Edmond de Rothschild

Jirawat Supornpaibul, Kasikornbank

Joachim Straehle, EFG International

John Cappetta, Bank Julius Baer

PEOPLE QUOTEDJonathan Hubbard, UBS Wealth Management

Joseph Tam, Wing Lung Bank

Juan Aronna, RBC Wealth Management

June Wong, State Street Global Advisors Karan Bhagat, IIFL Private Wealth Management

Kevin Lee, Zhong Lun Law Firm

Kevin Talbot, Aviva Investors

Kris Chantanotoke, Thai Life Insurance

Lavanya Chari, Deutsche Bank Wealth Management

Lonnie Howell, UCAP Asset Management

Malik Sarwar, HSBC

Marc Lansonneur, DBS Bank

Marc Van de Walle, Bank of Singapore

Martin Crawford, Vistra Group

Michael Blake, UBP

Michael Levin, Credit Suisse

Mignonne Cheng, BNP Paribas Wealth Management

Nanjo Berba, Philam Asset Management

Neil Harvey, Credit Suisse

Nick Pollard, CFA Institute

Nigel Preston, St. James’s Place Wealth Management

Nigel Rivers, Capital Solutions

Paul Gambles, MBMG Group

Paul Hodes, Citi

Paul Stefansson, UBS Wealth Management

Peter McMillan, Thomson Reuters

Philippe Legrand, London and Capital Asia

Piers Brunner, Knight Frank

Rainbow Pan, Bupa Global

Raj Ganesarajah, Intellect Design Arena

Ralph Mogicato, Angel investor and entrepreneur

Robert B Ramos, Union Bank of the Philippines

Robert Foo, MyFP Services

Roger Bacon, Citi Private Bank

Roger Steel, Sun Life Financial


Ron Lee, Goldman Sachs

Sandeep Sharma, HSBC Private Bank

Sanjay Iyer, Iyer Practice Advisers

Seamus Donoghue, Allocated Bullion Solutions

Shanker Iyer, Iyer Practice Advisers

Shikha Gaur, Aon Hewitt

Stephanie Jarrett, Baker & McKenzie

Stewart Aldcroft, Citi

Sunil Iyer, Iyer Practice Advisers

Thomas Young, Generali

U Chen Hock, RHB Bank

Vincent Chui, Morgan Stanley

ADVERTISERSAAM Advisory

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Appway

Asiaciti Trust

Avaloq

Aviva Investors

Bain & Company

Bank of China (HK)

Bank of East Asia

BEA Union Investment

BlackRock

BNP Paribas Wealth Management

Bordier & Cie

British and Malayan Trustees Limited

Bupa Global

BVI House Asia

Caidao Wealth

Capital Solutions

CFA Institute

Citi Private Bank

Credit Suisse

DBS Bank

EFA Group

Enhanced Investment Products

EY

EFG Bank

Falcon Private Bank

Finaport

First Names Group

Franklin Templeton Investments

Friends Provident International

Fullerton Fund Management

Generali

Henley & Partners

Heritage Trust

HP Wealth Management

HSBC Private Bank

IMTF Group

IRESS

Iyer Practice Advisers

J O Hambro Capital Management

JPMorgan

London & Capital Asia

Nordea Bank

Numerix

Old Mutual Global Investors

Orbium

Pershing

Principal Global Investors

RBC Wealth Management

Rosemont

St. James’s Place Wealth Management

Sun Life

Swaen Capital

Swiss Asia

Swiss Life

Synpulse

Temenos

ThirdRock

Thomson Reuters

Tokio Marine

TTG

UBP

Vermilion Software

Vistra

VP Bank

Willis Towers Watson


Residence programmes offer solutions to security risksDr. Juerg Steffen of Henley & Partners explains the value and merits of residency programmes, especially in Singapore and Malaysia.

The quickening pace of globalisation has given rise to a growing demand for greater transparency among financial institutions and tax authorities.

In response to this, the Organization for Economic Co-operation and De-velopment (OECD), with the support and endorsement of various countries and international bodies including the G8, G20 and Central Bank Governors, has called for the global implementa-tion of its Standard for Automatic Exchange of Financial Account Infor-mation (The Standard).

The Standard, which was developed as a proactive measure against tax evasion, outlines how financial account informa-tion of foreign tax residents may be disclosed by financial institutions and governments to relevant authorities in order to locate untaxed wealth.

This would require domestic legisla-tion to be implemented and corre-

sponding country-to-country agree-ments to be executed.

It is a big step towards a globally-coor-dinated approach to disclosure of income earned by wealthy individuals and organisations.

There is potentially however, some risk involved to the security of these indi-viduals and their families once govern-ments begin exchanging sensitive fi-nancial information.

For wealthy families who have concerns regarding their privacy, one option is to consider moving to another country where the overall situation is more fa-vorable with regard to security, tax, lifestyle and education.

Henley & Partners, the global leader in residence and citizenship planning, offers several residence options that are tailor-made to the needs of affluent families, and through providing their

DR. JUERG STEFFENHenley & Partners

children with future options of living, working and studying in several coun-tries, can help them achieve interna-tional success.


Key residence programmes of real inter-est today include Singapore and Malaysia.

Dr. Juerg Steffen, Group Board Member of Henley & Partners and Managing Partner of its Singapore office, says:

“The Singapore Global Investor Program (GIP) and Malaysia’s My Second Home Program (MM2H) both offer significant attractions and benefits to those able to diversify their lives and assets.”

He continues: “Singapore is considered one of the world’s best places to live, and is frequently voted as the top Asian city to live in, because of its excellent infrastructure and public services.”

“It is also one of the wealthiest countries in the world measured by GDP per capita. Its GIP allows investors and en-trepreneurs to apply for a permanent residence permit.”

The MM2H meanwhile, has accepted more than 27,000 applicants since its inception in 2002. Malaysia is one of South-east Asia’s most vibrant econo-

mies, due to its continued industrial growth and political stability over the past few decades.

It is a highly-open, upper-middle income economy and the third largest economy in this region.

Successful applicants and their depen-dents are granted a 10 year multiple-entry visa.

Steffen adds: “Most investors who are searching for alternative permanent residence are motivated beyond money; instead they are oten looking to invest in countries from a family, social and cultural perspective.”

“Residence-by-investment programmes can deliver the quality of life and secu-rity these individuals seek,” concludes Steffen.

Wealth Management in Asia 2016 - Hubbis

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