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Asian Wealth Management HOW TO PROSPER in the new world of ASIAN WEALTH MANAGEMENT A best practice guide Andrew Crooke “Understanding the backdrop of wealth management in Asia is critical to understanding how the industry can move forward from here. This book helps experienced practitioners and aspiring advisers alike to do that.” – Sutat Chew, Executive Vice President & Head of Market Development, Singapore Exchange Limited “The Asian wealth management industry is likely to enter a period of significant change as a result of the global financial crisis. Widely expected to grow substantially, anyone involved in the business would do well to consider the best practice perspectives described in this book that include a unique approach with illustrative case study examples.” – Mark Konyn, Chief Executive Officer, RCM Asia Pacific “It’s clear that the wealth management market in Asia will play an increasingly important part of any global firm’s franchise. But it’s proven to be challenging to engage clients in a profitable and sustainable way. This book provides helpful guidance into potential ways to improve the business.” – Rahul Malhotra, Former Head of Asia Advisory, Merrill Lynch Global Wealth Management “This book provides timely and useful insight into how Asia's wealth management industry can and should be reshaped to create sustainable value for Asia-based wealthy individuals and families.” – Eli Lenyoun, JD, CFP(USA), TEP, Director, Family Wealth Solutions Pte Ltd “This book is a good assessment of where the private banking industry is right now, and the crossroads it now finds itself at in deciding the course of action. It provides some good ideas of what challenges are faced and what needs to be considered moving forward.” – Justin Ong, Partner, Financial Services Industry Practice, PricewaterhouseCoopers LLP “This book poses key questions and offers practical advice and direction for the future of Asian private banking.” – Gary Tiernan, Global Head, Investment Advisory & Fiduciary, The Standard Chartered Private Bank “The various checklists and suggestions in this book provide important reference material for tackling the many challenges that Asia’s wealth management industry faces today.” – Andrew Fung, Head of Treasury & Investment, Hang Seng Bank Limited “Anybody interested in a long-term career in wealth management in Asia will learn important lessons from this book.” – Eric Aubin, Deputy Chief Executive Officer - Hong Kong & North Asia, BNP Paribas Wealth Management In Asia’s rapidly changing wealth management landscape, Hubbis is shaping the future of the industry by providing financial profession- als with tools that enable them to offer suitable and trusted advice to clients. Hubbis has identified the need for targeted, independent, strategic and up-to-date online training; a low-cost, pro-active solution that focuses on soft skills, investment and product knowledge, and the relationship between adviser and client. This will help individuals and their organisations meet tougher regu- latory requirements as well as rebuild trust with clients – leading to long-term sustainable relationships and an alignment of interests. This will ultimately make a positive contribution to the wealth man- agement industry in Asia by helping advisers do their job better and by enhancing the ability of end-investors to make more informed and better-guided investment decisions to ensure their financial health over the long term. To find out more about Hubbis, visit www.hubbis.com, or contact: Michael Stanhope Andrew Crooke Chief Executive Officer Director T 852 2792 7707 T 852 2792 7757 E [email protected] E [email protected] HOW TO PROSPER in the new world of ASIAN WEALTH MANAGEMENT A best practice guide Andrew Crooke First edition printed in June 2009 in Hong Kong. All rights reserved. No portion of this book may be reproduced, duplicat- ed or copied by any means without the prior written consent of the pub- lisher. No legal responsibility can be accepted by the author or publisher for the content which appears in this publication. ISBN 978-988-18362-1-2 For further information, please contact the publisher: Hubbis Level 30 Bank of China Tower 1 Garden Road Central Hong Kong T 852 2792 7707 E [email protected] W www.hubbis.com Design and production by Simon Kay Contents Acknowledgements . .iv The context . .v What’s covered in this book and how to use it Chapter 1: Introduction . .1 Rebuilding trust and creating a business that works for clients and advisers • The backdrop for this book, and why it is being written now. • Big-picture issues and challenges confronting Asia’s wealth management industry. • Highlights of the costs of the global downturn for wealth managers and their clients. • Critical questions the industry must address before it can shape its future. • A sneak preview of some of the options available for senior management. Chapter 2: Perspective . .11 The unique personality of Asian wealth management • An introductory look at why banks, regulators and clients must share responsibility for some of the flaws in Asia’s wealth management model. • A timeline of the trends and growth in global wealth from the mid-1990s to the end of 2007. • Why Asian investors want a private banking account. • The 10 main characteristics of Asia’s wealth management industry, showing how the rapid accumulation of wealth and subsequent race for client assets have created the framework for the way it developed, in particular how advisers and clients operate and interact. CASE STUDY . .29 Mystery shopper: putting wealth managers to the test Chapter 3: Challenges . .37 The barriers to a new future • A checklist of 12 key challenges confronting Asia’s wealth management industry as it looks to learn from the past and develop new models for the future. • Analysis of each obstacle, to put it in context and understand how and why removing it would benefit market participants. • The importance of being able to better understand investor traits through the application of behavioural finance techniques. Chapter 4: Regulation . .53 A new era of compliance and controls • Why regulation will be central to the look and style of Asia’s wealth management industry going forward. • The dangers for offshore private banking models in Asia, and what senior man- agement can do to prepare for the global scrutiny on cross-border practices. • The potential for private banks to set up domestic operations across the region. • Details of some of the financial reforms underway in Hong Kong and Singapore, revealing the types of processes that wealth providers must put in place to sell retail investment products. CASE STUDY . .63 HSBC’s best-practice approach to the wealth management process Chapter 5: Rebuilding trust . .73 How to win back client confidence • How the needs of clients are changing – and what they are now looking for from their wealth managers. • Examples of the types of questions wealth managers should be expecting from clients in this new environment. • Analysis of 7 key ways for the industry to try to restore client confidence and faith. CASE STUDY . .89 Making transparency and long-term relationships pay Chapter 6: Sales framework . .95 How to become a trusted adviser • The 6 key questions advisers must constantly ask themselves. • 23 success tips to help advisers build long-term, sustainable relationships with clients. • The sales cycle: a step-by-step guide for advisers before, during and after a meeting with existing and potential clients. CASE STUDY . .103 A 9-step brand strategy for Asia Chapter 7: Training & education . .109 A race to raise standards • Why improving the current standards of training and education is vital for a sus- tainable wealth management industry in Asia. • Some of the training initiatives to date, highlighting areas where talent develop- ment, skills enhancement and competency assessment have been lacking. • Suggestions for how training and education for wealth managers can be improved. CASE STUDY . .119 Customising Singapore’s training commitment Chapter 8: Business models . .125 Creating a sustainable future for wealth managers • A recap of how the dynamics and key features of Asia’s wealth management industry are already changing. • The potential for banks to introduce new, flexible fee structures for different client services. • How banks can create more varied, and meritocratic, compensation structures for frontline staff, to weed out underperformers and reward the development of longer-term relationships. • The benefits for long-term profitability of providing services such as tactical asset allocation, estate planning and inter-generational wealth transfer for clients. • The rise of self-directed investors. CASE STUDY . .139 A new slant on segmenting private clients CASE STUDY . .143 Behavioural finance: staying rational when clients aren’t Appendix . .153 Best practice reference tools iv Acknowledgements My sincere gratitude goes to the long list of knowledgeable and experi- enced practitioners in the wealth management industry in Asia-Pacific, as well as the many senior professionals in other parts of the region’s financial services sector, who kindly gave me their time and shared their thoughts for this book. They did this despite it being a period when they, their organ- isations and the wider market lack clarity over what the future holds. Without their contribution this book would not have been possible. I am also indebted to those market players, colleagues and family members who provided guidance and constructive criticism during the book’s final preparation. Let me take this opportunity to acknowledge Michael Stanhope for his sup- port, as well as for sharing in the planning, research and editing processes. Finally, I’d like to thank you, the reader, for taking the time to read the con- tent in this book. Continued open dialogue and debate over the way for- ward for Asia’s wealth management industry is needed to ensure it can develop in a sustainable way that benefits all participants and clients alike.
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