From all reports, Asia is one of the largest, fastest-growing wealth markets in the world. Wealth managers looking to capture a larger share of this market should adapt their strategies and practices to reflect a few key principles:
- Don’t confine your marketing to high net worth (HNW) individuals only and include the mass affluent market.
- Don’t neglect institutional investors.
- Be cognizant of China’s role in the Asian wealth market.
- Be adaptable to changing regulations and their impact on clients and your practice.
- Embrace technology.
- Don’t neglect the fundamentals.
From the HNWs and Mass Affluent to Institutional Investors
Wealth managers serving the Asian market should know that opportunities exist beyond HNW and ultra high net worth (UHNW) individuals. Specifically, there is a growing mass affluent market to be captured which, according to Kepler Cannon, holds an estimated $27.1 trillion in assets and reflects a compound annual growth rate (CAGR) of 9.8%. It is projected that, by 2020, this market will reach $43.3 trillion in assets. When targeting Asia’s mass affluent, it is important to realize that these investors are not replicates of the HNW/UHNW investors. Most do not have financial advisors and many maintain their assets in the form of cash. To help rid them of their financial insecurities and belief in retaining cash on hand, wealth managers will need to educate these investors on how to balance their liquidity needs with investment goals.
Regarding institutional investors, keep in mind where the greatest growth opportunities exist, which include: China, Hong Kong, Singapore, South Korea and Taiwan. On a related note, be aware of the announcement by Singapore’s central bank, the Monetary Authority of Singapore, that it had finalized a new regulatory framework allowing payment of service providers licensed there to support certain crypto currencies in the provision of their services. For the growing number of institutional investors gravitating toward crypto currencies and wealth managers looking to serve them, this announcement of a more regulated framework is an important development.
China’s Role and Regulations
There is little doubt that China is influencing Asia’s wealth industry. For instance, many Chinese clients who previously had their investments with Hong Kong are now transitioning to Singapore due to evolving banking practices, tax transparency agreements and internal systems between China and Hong Kong. As a result of this influx of Chinese investors to its nation, Singapore is becoming a more prominent investment capital supported by recently enacted regulations, pro-business policies and its stable government. Additionally, the Singapore Variable Capital Company (S-VACC) introduced in 2016 and enacted last year is already proving to be a game-changer for the asset management industry in the Asia Pacific market enabling S-VACCs to be used for all types of investment funds in Singapore.
New models such as the hybrid model of wealth management, facilitated by advanced financial technologies, is one that will continue to be a significant factor within the Asian wealth market. To succeed, it will be essential that all wealth managers shore up their technology in order to both meet heightened regulations and the needs of the next generation of investors. In particular, it will be essential for wealth managers marketing to the millennials – digital natives who expect their advisors to be tech-savvy. This will require that they learn how to adapt their practices to encompass a digital strategy that leverages data, as well as secure online and mobile platforms for information exchange and communications with their clients.
Client Service Matters Most
In the Asian wealth management market as in other markets, while there are opportunities to capture and various developments to address, one thing still reigns above all in successful wealth management practices. It is providing the highest level of client service. All the technology, strategic marketing and ability to adapt to regulatory changes won’t matter without a firm culture that places the clients’ needs above all. Personalized service, professional integrity, sound portfolio management and effective client communications are still the most important tools a wealth manager has to capture and retain clients whether in Asia or elsewhere.