Pictet Wealth Management Asia and Citibank Singapore on the Changing Nature of Wealth in Asia

Tee Fong Seng, Chief Executive Officer, Pictet Wealth Management Asia and Ashmita Acharya, Retail Banking Head, Citibank Singapore discuss the future of wealth in Asia and share wealth management strategies with Bloomberg’s Mark Cudmore at the Asia Wealth Summit.

I’m going to dive straight in and i’m going to ask to you first fonsen about how can you give some kind of perspective in your 30-year career how wealth management is changing in asia and what are the big changes right now thanks mark yes well management business in asia has changed a lot in the past 15 years 15 20 years and is still evolving i will describe

The changes in a few key words i’m sure everyone will understand first in the past is all about relationship if i trust you if i like you you can be my best private banker today i think it’s all about competency yes i need to like you i need to trust you before you can be my private banker but the overriding question is what can you do for me what can your

Bank do for me so i think there’s a shift from relationship to competency based banking and that is good secondly it’s about trading in the past how can we win on this trade and the next trade today is all about portfolio construction and asset management how can we beat inflation in the long run through compounding returns through your portfolio so there

Is a shift from trading to portfolio management in my business thirdly is about pricing in the past every trade you do every product you buy you probably get one all-in price maybe plus a commission you don’t know what is embedded in that one price today is about price transparency tell me exactly how much you are making from me for each trade each product

Structure product or mandates that i’m doing with you and i think it’s good for the industry when we move from embedded pricing to a total price transparency and last but not least in the past don’t ask me where i got my money the less you know the better a theory of don’t ask don’t tell it’s all about secretive and secrecy i think today has changed we want to

Know exactly where your source of value is derived and we also want documents to prove your source of wealth before i can even do business with you but i will keep all banking relationship between you and the bank totally private and confidential so we are moving from secrecy to private and confidentiality i think these are all good for the industry ultimately

I think it leveled the playing field it allowed us as proud banker to do more business uh real business create value for the clients look into cessation things like this so i think it has changed a lot and schmidt i can ask you the same question what’s your perspective and how it’s changing and i think what’s fascinating is i think fonsen’s view is very from the

Private bank centric and our mine would be more consumer bank and i think from my perspective uh what i really see is really like three ds as i call it the first is the demographic shift and i think we heard nuno mention that there is a tremendous demographic shift which is happening asian wealth is obviously growing very fast at 11 compared to global wealth which

Has grown at five percent and i think it’s coming from wealth creation in china and all over the world but really in the middle class expansion which is taking place we are also seeing a a very clear need for the next gen wealth transfer so that’s becoming another very important thing which will happen and the next generation looks at wealth very differently they’re

Much more digitally attuned and savvy they are looking at risk-taking in a very different manner as well and of course in between there is um the idea of the entrepreneurial mindset which is kept in asia which is leading to a much more global perspective on wealth management they’re looking at global capital markets non-traditional asset classes alternatives uh

Private assets so therefore that entire demographic shift is a big one for us which we’re all contending with the second is digital i think the advent of digital and the embedding of digital is going to be extremely critical for us that doesn’t take away from the human aspect of wealth management but the more we incorporate digital into everything we do we will get

Ready for wealth management in the future the reason is this is happening across the wealth continuum this is not just a next-gen gen z millennial phenomena this is happening across you know seniors you know if you go to japan and south korea by 20 30 90 of japanese and south korean consumers will be online so that is the shift which is happening and i think any

Wealth provider now needs to be able to have digital solutions completely embedded in the entire experience and last but not least from my perspective is data the agent consumer is extremely data oriented they’re very open to sharing data they’re very open to look at themselves as a segment of one it’s very unique i am who i am i’m ashmita acharya and i want to

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Have wealth management tailored to me hyper-personalized to what my needs preferences are so the ability to weave in data and digital to everyday experiences is going to be extremely critical for us to succeed in the future okay brilliant i’m glad you used those three ds of demographics digital data i was worried you’re going down the deaf divorce route um so in

This changing environment i’m going to go to you again fong seng first about what are the big opportunities then of these changes where do you see the real opportunities right now today i think the whole market dynamics have changed right so i think the way the business is was done 15 20 years ago and today you know we used to travel to offshore markets to bring

In private banking business uh today i think we need to be compliant compliant at where we are domicile singapore and if we travel to malaysia to taiwan to indonesia we need to be compliant at the country we visit so the things have changed i think evolution where the big family officers coming to singapore and hong kong i think the two financial centers will

Benefit a lot with the opportunities to opening up and you can see that with the introduction of bcc uh encouraged by the regulators there are more family offices coming to singapore i think the last i read is about 700 single-family offices in singapore and maybe about 50 registered in hong kong but in hong kong you don’t have the incentive so there are a lot of

Family offices in hong kong which are not registered so uh that is the evolution and that will be the opportunity for private bankers okay so they are trading up i think you know use the phrase before you talk to me about suitcase banker and that used to be what it used to be and now that probably has bad connotations you don’t want to be called a suitcase banker

Nowadays so ashmita where do you see the opportunities um i think wealth is becoming commoditized and digitized so we talk about the democratization of wealth it’s a reality so when you look at retail investors they want access to what a high net worth ultra high net worth investor gets i think that and that’s really coming from the technological enablement of

Wealth management technology is making and i think so fong sang talked about you know pricing transparency technology is going to change the pricing mechanics behind wealth management we’re going to have self-directed platforms i know robo advisors are just picking up but we’re going to have self-directed low commission platforms which allow access to wealth

Management across the board so there’ll be a lot of broad basing on the wealth segment which is going to drive uh investor adoption and enhance client engagement and user experience this will also happen in the advisory space so the entire thing what will happen to consumers is you will get better products you will get better research you will get it at a lower

Cost so efficiency simplicity and transparency are going to be the core enablers of wealth management very similar to private bank on the consumer side as well this is going to take place the other is i think that doesn’t take away from the trust factor i think relationship and trust is going to always be important yes competency will matter but there needs to be a

Long-term trust aspect for the wealth advisor you need to differentiate yourself by bringing that element of trust which at times and and function are talking about it sometimes becomes a little transactional i don’t think transactional will be appreciated competency yes but you need to be trustworthy you need to kind of build on trust and of course finally i think

There’s a huge opportunity again i’m going to bring back that factor of the next generation you know our advisors are aging the next generation is a very different generation altogether they think differently they look at global asset classes differently they look at global markets their global mindset is different we need to be able to cater to that and sort of

Anticipate their needs and have the right solutions for them because otherwise 90 percent of next generation end up changing their advisors at the time of the transfer of wealth and i think that is going to be something which is going to be top of mind for us across the world sectors that’s a great step actually quite impressive i guess kind of as a follow-on from

That um you know you talked a little bit about this what are the what are the challenges today and what does it take to be a successful kind of wealth manager in this world or you know what skills do you need you know mark like you know i was thinking back you know i joined city 20 years ago as a relationship manager frankly speaking i don’t think i would survive a

Day today um if i started off with rm i think uh it’s becoming very tough to be a wealth manager now unique i don’t think any of us would have jobs in today’s world it’s much harder generally correct exactly i’m so lucky that i’m old now but i really feel like it’s very important number one for a wealth manager is you need to be nimble you need to keep up to date

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On what’s happening in the market in the industry things will change things will continue to evolve so keeping pace with that is going to be very important number two is build on trust build on relationships it’s very very very important move away and i say this to consumer bankers move away from the transactional look at the long term the client is here with you

For the long term number three is data i think i talked about it there is a plethora of data out there i think we are inundated with information i think the wealth manager of tomorrow and today has to be able to synthesize that data distill it and make it you know provide some credible information to our clients you cannot inundate them with like 20 articles 20

Different you know themes which are happening and i think people are skimming information you need to kind of make that very digestible and relevant to your client digital technology you need to leverage digital and technology to make smarter decisions it’s extremely important you cannot live in the analog world that i’ve lived in as a wealth manager i think it’s

Very important to move with the times digital and technology and data is really going to make you empower your clients and empower yourself and finally i think uh risk and controls i think it’s extremely important uh the risk and control aspect because that is becoming more and more relevant you are no longer the banker of yesterday where these things were not

Important you need to keep yourself safe your clients save your bank safe so these are the elements that i feel is going to be even more critical for wealth managers going forward so of your three ds it sounds like digital and data are even more important than demographics on that side i guess i i feel so i think i think if you know wealth managers don’t you know

Live with digital and data i think uh you really won’t be successful in the future okay i think technology will be here to stay it will help you will continue to help improve the service quality to all segment of clients from the biggest to the smallest but i think for private banking the high net and ultra high network the family office i think the human touch

Is important where i think how you relate to the clients the relationship i said before i mean the eq is important in the business at all time with integrity trust i think knowledge competency iq will come into play more important going forward and i’ll just say one thing here you’re absolutely spot on i think that’s equally important in the consumer side as

Well i think uh you know like when when i look at city global wealth and now that we’ve come under one entire organization looking at the entire continuum from emerging affluent to affluent high net worth ultra high net worth um relationships are important trust is important uh the human element is going to be more and more important so for your simple needs your

Transactional a lot of stuff you can do digitally but for the complex matters is where the human touch will be more and more important so i don’t think we can compromise on that we need to elevate it and we need to differentiate on that okay so it’s not that relationships are becoming less important it’s more that they’re changing in nature of how the relationship

Works fong specifically on the kind of the challenge the biggest challenge you see in wealth management today compared to say 20 30 years ago what what stands out to you i think it’s most unfortunate with the regulatory changes they are good because i think you create a more level playing field i think in terms of client experience you know it takes used to take

A day to open an account today whether you are good clients not so good clients we check on you it takes weeks and even months to open an account the client experience aspect is going to be difficult the other thing is the way we do a trade the way we confirm the trade voice logging this doesn’t help in client experience but i think the the the whole evolution of

The business will get better from here hopefully that you know there is a credit uh bureau in most of the financial centers in singapore we’re talking about maybe we should have a kyc bureau where everybody can share some common information this will help in the industry maybe sort of accelerate account opening and the way that trades are get confirmed i know it

Is regulatory it is controlled cyber rates and things like this but they must be a better way to have a better client experience i think these are the challenges and like what i said cross-border businesses will be will continue to be a big challenge for us in the years to come it’s interesting because i think that you know your kyc onboarding um you know that

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Compliance process that is again another facet of the digital data world of where you know that’s changing quickly in a different way um i want to ask about some of the opportunities in the market and and we’ve had a few questions unsurprisingly the first question on my ipad i think someone had this pre-written was on crypto i’m just going to get it out of the

Way there so we don’t have crypto questions all day so i’m going to ask very quickly what is your view on crypto assets do you think that crypto has to be a part of the investment portfolio from uh my bank take this perspective we are following the development i think the blockchain business uh the crypto uh will be an asset class we cannot ignore but today i

Don’t think there’s a place for private bankers and for proper bank portfolio if you look at the volatility for the last two years you can make a lot of money you can lose a lot of money and that is not my business okay and do you think it has a place in your portfolio i think it’s very similar i think definitely it’s something our clients are active in they’re

Talking about it they want to know more about it i think we are watching the space very closely but at present i think it’s more thing in crypto um so again something we are aware of our clients are as i said asking but we are staying on the sidelines because it has to meet many supervisory guidelines and internal uh you know compliance uh requirements at our end

Before we really actively participate in it i think it’s really interesting because normally most of kind of the wealth management industry is presenting opportunities to your clients that may not be open about and give them access instead this is this is an asset class where the the clients are demanding exposure to it and there’s that little bit like do we hold

Them back and then regret it or do we hold them back and then say look i saved you it’s a bit of a hard one there i think yeah i think it’s a little bit of more comfort is required for us because you know we are again in for the long term yeah um it is and you know just having an asset class which is as volatile as it is i think it requires us to monitor it over

Time before we are comfortable to be able to get into any sort of active advisory in this space i don’t think we are there yet but you’re right you know it’ll continue to be there and i think clients uh you know i mean we were doing a client event the other day and the client said you know this is great love it but what about a crypto event you know i mean so it’s

Okay i mean we say that yeah that’s great like you know good to know but uh we’ll come back to you you know so no i think i think i think maybe similar to most institutions we have a team of people following the development the descriptor the blockchain something that we cannot you know the question is when do we bring the clients into the picture yeah okay um

Question just in there’s been a bunch but i like this one buying the move from transactions will asia wealth managers go towards fixed fees per account and away from aum based fees um yes maybe uh definitely there is yes maybe definitely i mean there is so much happening in the pricing space right like you know i i think uh fonsen mentioned pricing transparency

Is something that we need to look at we are experimenting with different types of accounts where we do have uh you know sort of a annual fee based model rather than uh you know sort of the the transactional uh fee based model so again this is something that we are going to move to i think it’s happening more probably in the private bank space we’re also looking

At relationship based pricing so uh definitely there will be an evolution in the pricing space uh in wealth management across the spectrum all the way from emerging affluent all the way into the high network segment do you have a different perspective or you agree i would say that i think the trend is towards uh first i think transparency as i’ve said it will come

It will stay i think it is i think it’s more moving towards evolving towards portfolio like i said people look at it a bit long term and a flat fee would be something that is talked about but it is not there yet asians still like to trade now even for trading products i think the the pricing transparency is very important

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Pictet Wealth Management Asia and Citibank Singapore on the Changing Nature of Wealth in Asia By Bloomberg Live