WM Market Reports

Wealth Managers Have A Distance To Travel In Standing Apart From Rivals In Asia - Study

Tom Burroughes Londo 7 May 2013

Wealth Managers Have A Distance To Travel In Standing Apart From Rivals In Asia - Study

Wealth management firms have been only “partially successful” in differentiating themselves from rivals in the hunt for high net worth individuals’ custom, a new study shows.

The stakes are high for businesses aiming to win a slice of the Asian wealth pie. Asia’s 3.3 million high net worth individuals will triple to nearly 15.8 million by 2015.

The Asian wealth management sector is still evolving, with limited resources, a lack of experience, and regulatory restrictions meaning that no single institution can currently meet the increasingly complex needs of HNW individuals, according to WealthInsight, a research firm.

A number of Western firms – such as UBS, BNP Paribas, Coutts, Credit Suisse and JP Morgan – have targeted the fast-growing Asian middle class as a vital market segment, coming up against competition from indigenous players such as DBS and OCBC (based in Singapore) or Australasian firms such as ANZ and Macquarie, among others.

“Coupled with the extreme sensitivity to competitive product offerings and brands amongst the Asian population, this places branding and segmentation very high on Asian wealth management organisations’ agenda as they seek to capitalise on the burgeoning success of the region,” it said.

“In general, Asia-Pacific HNW individuals prefer liquid investment products and structured products such as hedge funds or derivatives, together with investments of passion and other conventional investments; in terms of portfolio structuring, there is an increased preference for self-directed or discretionary portfolio management supported by transparency and investment input,” it said.

Among the branding offerings and specialist areas, shariah-compliant wealth management products are becoming increasingly prevalent to cater to Islamic HNWIs, with major players such as Standard Chartered, Lotus Capital and Crescent Wealth hoping to capture this growing niche, the firm said.

Another feature of the market is the increasing interest towards investments of passion, such as art, jewellery, wine and collectibles, after such assets delivered higher returns than equities. Investments of Asia-Pacific investors in the arts alone comprises nearly a third of the global $750 million industry. Similarly, the Singapore Diamond Exchange Private Limited offers diamond portfolios that range between $250,000 and $1 million, it said.

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