showed Asia-Pacific wealth managers are expecting increasing
oversight from regulators and higher costs as the new financial
services landscape starts to take shape. But this burden can be
offset by growing organically in a market in which only 20 percent
of HNW clients have a private bank.
Go deeper with GlobalData
Regulatory and compliance requirements,
winning client confidence and managing risks are the three top
priorities for private bankers in the Asia-Pacific region,
according to a Private Banker International poll.
At the PBI Forum held in Hong Kong,
delegates, made up of private bankers from Hong Kong and China,
said they expected increased pressure on wealth managers to fulfil
regulatory requirements, which would push up operating costs.
“There is a sea change in the way regulators
and government officers are starting to look at the financial
services industry,” said Alan Ewins, partner at Allen & Overy
and a speaker at the forum.
But pressure will not only be felt by the
institutions but also the regulators themselves. Delegates felt the
quality of the regulatory body will have to be in sync with market
developments.
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By GlobalDataDelegates expected the economic downturn to
last for one to two years, although the majority were optimistic
that there is scope for growth in Asia once the market recovers.
Private banks have yet to fully penetrate the potential high net
worth market in the region, they said, meaning there were still
opportunities to expand assets under management organically.
This was echoed in a presentation made by Hans
Diederen, regional head of private banking North Asia for ABN AMRO
Bank.
Diederen expected a “faster recovery (in GDP
growth) in North Asia than the rest of the world due to a strong
domestic demand and support from governments’ policy stimulus in
the region.”
However, there is a “growing customer revolt
against the industrial sales model and structured products”, said
Roman Scott, managing director of Calamander Capital, which still
needs to be addressed by the industry.
The flight to quality and safe haven
institutions have seen big-brand banks, embroiled deeply in the
crisis, lose private banking business to smaller rivals. Two-thirds
of the delegates polled expect this move to be permanent with
smaller firms and boutiques gaining market share in a much more
fragmented wealth industry.
“In this age of information overload, it is
almost impossible for investors to separate fact from fiction and
steer clear of noise to find the right investments,” said Anthonia
Hui, chairman and chief executive officer of AL Wealth
Partners.
Independent asset managers, Hui asserted,
address the existing gap in the relationship between private banks
and high net-worth individuals.
Hui advocated a partnership approach between
independent asset managers and banks, especially in the current
economic climate where “clients are looking for a trusted adviser
and bankers might not want to deal with the emotional duress from
difficult clients”.
However, some bankers were sceptical and
pointed out that it is difficult for independent asset managers to
familiarise themselves with all of a bank’s products.
What is clear from the forum’s discussions
both on and off the record is that the industry is in the midst of
big changes. Below par relationship managers are being shown the
door, while under-performing hedge fund managers are being given
the cold shoulder from private banks. A few speakers also
highlighted the possibility of more competitive pricing within the
industry.
According to John Evans, chairman of the forum
and editor-in-chief for Private Banker International, “Although
pricing has never been a competitive differentiator within the
sector, it may start to do so during 2009. There is anecdotal
evidence that some firms have started to reduce fees and this could
become increasingly widespread. Fee reductions may also mollify
clients annoyed about the poor 2008 returns.”
