With European and US markets experiencing a slow and uncertain return to growth, it’s no surprise that the world’s leading wealth managers and private banks continue to look East for better opportunities.
India’s high net worth (HNW) population grew 26% in the last year and HNW wealth by 28%, for example, making it one of the world’s fastest expanding private wealth hotspots. And it’s not alone.
Asia Pacific is now home to more HNWs than any other region, and their numbers and wealth are growing faster than any other continent. In fact, with its wealth growth at 11% in 2014 vs. North America’s 9% and Europe’s 4%, Asia-Pacific is expected to take top spot for HNWI wealth before the end of 2015, according to the latest World Wealth Report. The ultra-wealthy in already hold more in total wealth, with net assets of $5.9tr over North America’s $5.5tr.
We offer 5 strategic challenges to wealth management teams looking to capture a share of Asia’s explosive growth in wealth.
- Re-examine your proposition for a more entrepreneurial emerging wealth class. Not only are Asian billionaires the world’s youngest, they are also particularly entrepreneurial: only 13% have fully inherited their wealth*. This provides an opportunity to serve both entrepreneurs and their companies and move outside a narrow wealth management proposition. They also expect higher returns.
- Adopt a more proactive and product-driven approach to managing wealth. While estimates vary, between 5% and 10% of the region’s assets under management (AuM) are held in discretionary mandates. Although this is beginning to change, emphasizing performance track-record and ensuring reporting clarity are essential to retain the loyalty of the region’s more transaction-driven wealthy.
- Accurately assess the strength of your brand in Asian markets. In many areas, the ‘global’ financial crisis is viewed as a ‘Western’ one and there is still a lingering nervousness in instructing foreign institutions. The most successful foreign-entrant wealth managers will deliver, not just promise, a client-centric proposition – tailored for Asian client segments.
- Make good client service central to your proposition – and act on it. Despite typically being more interested in product performance, more and more HNW and UHNW individuals in Asia Pacific are defecting to competitors because of poor client service. This factor is also becoming more important when selecting a wealth manager. Ask yourself, how do you demonstrate strong, consistent client service and is your digital offering competitive?
- Work on your talent strategy. The war for talented relationship managers and client advisors is just as fierce in Asia Pacific as it is in the Americas and Europe. More so in countries like Singapore where regulatory demands are likely to further heighten demand for a shrinking pool of talented Relationship Managers. The region requires global brands to be flexible as an employer brand in Asian markets and to acknowledge cultural differences. This has implications for reward and remuneration structures and a clear marketing strategy to capture the client development opportunities.