Issue 124 April 2019 Lite by Asian Private Banker

www.asianprivatebanker.com www.asianprivatebanker.com

Issue 124 Issue 124

ASIA PRIVATE 2018 AUMB A &N K I N G ASIA R MMHE ADCO UNT AU GROWTH STALLS L E AG UE TABLES Asia private banking AUM growth stalls Front office hiring but growth continues Private banks rampslows, up equity DPM product development in Asia P 2 2

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INSIDE INSIDE Industry Industry Credit Suisse’s Cavalli and Credit and MonnetSuisse’s expectCavalli new leadership Monnet new PB leadership structureexpect to increase potency structure to increase PB potency P9 P9

Investments Investments PBs flock towards bond PBs towards bondover ETFsflock despite concerns ETFs despite concerns over cap-weighted construction cap-weighted construction P39 P39

Technology Technology At the vanguard: PB’s women At the vanguard: PB’s and women in tech talk inclusivity in tech talk inclusivity and innovation innovation

P45 P45

Regulations Regulations China Regulatory Round-up: China Regulatory Round-up: Reforms impact HNW client Reforms impact HNW client product preference product preference P62 P62

ISSUE 124

CONTENTS

CEO Andrew Shale Editor Sebastian Enberg Editorial Benjamin Yang Charlene Cong Alice So Tin Tin Sze Rebecca Isjwara Tiffany Hopkins Gigi Lam Managing Director Paris Shepherd Research Stratos Pourzitakis Lisa Cheng Shunta Kamba Business Development Sonia Lam Sam Chan Olaide Ogungbesan Charis Tse

Digital Alice Wong Sanya Amin Design Jacqueline Kwok Evy Cheung Jordan Yim Events & Marketing Koye Sun Aleck Kwok Patricia Jover Beatrice Li Finance & Operations Karman Wu Martina Ngai Yuki Chan Xenia So Director Europe Madhuri Chatterjee (Actaea Consultants) Production DG3

Published by Key Positioning Limited 13 Greatmany Centre 111 Queen’s Road East Wanchai, Hong Kong Tel: Fax: Email:

+852 2529 1777 +852 3013 9984 info@asianprivatebanker.com

ISSN NO. 2076-5320

Letter from the Editor

Echo Chamber Industry PWMA’s apprenticeship scheme broadens PBs’ access to local talent

Regulations SFC extends deadline for revised suitability rules

Industry Credit Suisse’s Cavalli and Monnet expect new leadership structure to increase PB potency

Advertorial Human touch guides investors in an era of economic uncertainty

Industry Candidates prioritise client requirements and platform capabilities: Huddleston Jones

PB network is vital to Lombard Odier’s Asia ambitions: Magnenat

Advertorial A history lesson for turbulent times: ‘Stay calm and stay invested’

Industry Does DBS’s latest India play open the door for an eventual PB rollout?

Asia 2018 AUM & RM Headcount League Tables

Awards Asset Management Awards for Excellence 2019

Regulations Establishing FOs in haste can result in misaligned expectations: Lombard Odier

Investments PBs in Asia at an “inflection point” in approach to alternatives: J.P. Morgan AM

DPM gains traction with domestic Chinese investors: Noah’s Ma

Awards China Wealth Awards 2018 | 亚洲私人银行家中国财富奖

Investments PBs flock towards bond ETFs despite concerns over cap-weighted construction

Industry Close to the heart: Women’s wealth matters in private banking

Technology At the vanguard: Private banking’s women in tech talk inclusivity and innovation

PBs in Asia shift tech focus from client-centricity to RM productivity

AppMap: The 2019 update

Awards Technology Awards 2018

Regulations Industry-wide participation necessary to tap WM opportunities in GBA: KPMG

China Regulatory Round-up: Reforms impact HNW client product preference

People Moves Movers & Shakers

LETTER FROM THE EDITOR

he data published in this magazine paints a telling — if incomplete — picture of how Asia’s private banks fared in 2018. Most banks are sparing in terms of the performance data they disclose in quarterly reports, which means the picture will always be incomplete. That’s a shame, because a greater level of transparency would benefit the industry as a whole. I know there is a tendency for some to view the league tables through a purely competitive lens and there are fair reasons for doing so. However, my ambition is to increase the scope and rigour of this dataset so that it may be viewed as the definitive benchmark for private banks in Asia. To this end, we have made some changes. We have taken a tougher stance with regards to the ‘purity’ of client assets included in the table. We have endeavoured to indicate if and when loans are included. And we have provided some aggregate data on revenue growth and revenue contribution by geography (i.e. North Asia vs South Asia). Small but meaningful steps. Again, the overarching goal for this year and beyond is to provide the industry with a useful — dare I say, indispensable — set of benchmarks that can be relied upon and planned against. This dataset always attracts its fair share of questions and criticisms. Reach out to me directly at editor@asianprivatebanker.com if need be, and please read the accompanying footnotes before you do.

Sebastian Enberg Editor Asian Private Banker

INDUSTRY

e ch o cham be r "In Asia, the greater longevity of women is a key reason why women need to focus on longer-term financial planning. Indeed, according to our latest UBS Investor Watch, more than 70% of Hong Kong women believe they will outlive their spouse. We should acknowledge their financial challenges and turn longevity into an opportunity." Marina Lui, head of wealth management China, UBS GWM "Organisations should be mindful of their female representation, and hiring numbers are a good start, but inclusion goes beyond that. It entails ensuring both men and women have equal chances to lead, and a say in key decisions vital to the organisation's well-being and future." Evy Theunis, head of digital wealth, DBS Bank "We’re the biggest private banking alliance in Asia. This network is one of the key objectives of these strategic alliances. When banks join us in a strategic alliance, they gain access to a global network in Asia. Twice a year, we invite bankers from each of our partners to join us at an offsite event, bringing together bankers from different banks and countries who then exchange ideas and learn from one another." Vincent Magnenat, limited partner and CEO Asia Pacific, Lombard Odier "The private bank's bottom line performance in Asia Pacific has multiplied almost ten times in the past seven years, so we have needed to beef up management capacity and the depth and breadth of our talent, while accomodating the concomitant complexities mainly via a segregation of duty and management attention." François Monnet, head of private banking, North Asia, Credit Suisse "Private banks will continue to struggle making the money they used to make without the right investments in technology. We will probably see more technology solutions that can improve advisor performance, to trickle down best practices from top profit-generating RMs to the rest of the team." Nicole Bodack, MD and APAC head of wealth and asset management, Accenture

PWMA’s apprenticeship scheme broadens PBs’ access to local talent

he Private Wealth Management Association’s (PWMA) apprenticeship programme has received positive feedback from all key stakeholders, including private banks which say the scheme has provided unique access to top talent from local universities. The Pilot Apprenticeship Programme for Private Wealth Management was founded by the PWMA and the Hong Kong Monetary Authority (HKMA) in 2017, with an initial intake of 29 students, followed by 50 in 2018. This year, after sifting through 840 applications, the PWMA selected 55 apprentices to intern across the 15 PWMA member firms. According to the association’s managing director, Peter Stein, offers were recently made to the successful applicants, who hold the programme in high regard. “We have received very good feedback from the students and the participating firms. Now that we are in the third year of the Pilot Apprenticeship Programme for Private Wealth Management, university students are reflecting that this programme is gaining a reputation among them and it is popular,” Stein told Asian Private Banker. “We are happy to see that this programme provides local university students the option of entering the private banking industry as a choice for their future career.” UBS Global Wealth Management — one of the 15 PWMA member banks — is looking

to house around 20 summer interns this year, according to Angel Ng, head of UBS GWM’s Business Academy in APAC, who in January told Asian Private Banker the programme is an opportunity to attract top talent and build Hong Kong’s wealth management talent pool. Stein also said that banks also regard the PWMA’s programme as a source of diverse talent, adding to the existing pool of American and European apprentices who successfully apply for banks’ global internship programmes. “Our member banks are satisfied with the quality of student interns and say that the programme has opened a new source of recruitment, as they can get access to the toptiered students of local universities via this structured programme,” he added. Meanwhile, the Hong Kong Securities and Investment Institute (HKSI) runs a similar scheme — the WAM Pilot Programme. Beginning in 2016, the three-year-long programme offers 450 candidates — comprising undergraduates from eight local government-funded universities and inservice institutions — internships in the local wealth and asset management industry. Although differences exist between the pilot programmes — including the scope, structure, and talent source — stakeholders such as the PWMA and banks such as UBS and Citibank participate in both.

R E G U L AT I O N S

SFC extends deadline for revised suitability rules

he Securities and Futures Commission (SFC) has granted financial institutions a three-month extension to implement the revised online and offline suitability requirements, the regulator announced in March, confirming Asian Private Banker’s report earlier that the watchdog was considering a more lenient deadline. Following extensive discussions with the Private Wealth Management Association (PWMA) and after it had “considered feedback from the industry”, the SFC issued a circular stating that the implementation date for the new Guidelines on Online Distribution and Advisory Platforms (Guidelines) and subsequent changes in paragraph 5.5 of the Code of Conduct relating to offline suitability requirements had been extended from 6 April to 6 July 2019. “From the effective date, additional protection will be provided to investors when they purchase a complex product without a solicitation or recommendation. If an intermediary solicits the sale of or recommends a financial product to a client, it should comply with paragraph 5.2 of the Code of Conduct and ensure that the product is suitable for the client regardless of whether it is complex or noncomplex,” the circular read. Timothy Loh LLP, a Hong Kong-based law firm, said in a client note that the extension comes as “industry participants have expressed the need for more time to comply”. The firm also urged all SFC-licensed or registered firms to consider “whether or not their sales processes

comply with the updated requirements under the Code of Conduct” if they haven’t already done so. Such processes include “determining whether products are complex products, the provision of adequate information on and warning statements for such products and the assessment of suitability”. Since the consultation conclusion was published in October 2018, Hong Kong’s private banking industry has vocalised concerns over the possible effects of the revised offline suitability requirements. Senior executives from private banks, lawyers, and consultants have discussed with Asian Private Banker the impact the new rules could have on private banks and suggested ways in which private banks could manage the costs and maximise efficiency during implementation and onwards. Overall, predominant concerns include financial institutions having to categorise products as complex or non-complex before the deadline, the narrowing of investor choice owing to extensive checks having to be carried out on new products, and the lengthening of time to market due to investor suitability checks having to be completed for each complex product transaction. Although the industry will almost certainly appreciate the extension, some still worry that the revised regulations will negatively impact the execution-only business in the long run and suspect that the rules will be adjusted in future to accommodate the unique challenges faced by private banks.

INDUSTRY

Credit Suisse’s Cavalli and Monnet expect new leadership structure to increase PB potency

hen Benjamin Cavalli and François Monnet took up the reins of Credit Suisse’s Asia Pacific private banking franchise late last year as heads of South Asia and North Asia, respectively, the industry was quick to ask how the bifurcated leadership structure would further promote integration and agility at a bank recognised for its unitary approach to business. At the time of the announcement, Credit Suisse was at pains to point out that this was not a co-head arrangement but something “new” that would sharpen its one-bank proposition. “[It] will enable closer proximity to clients, shorten decision-making lines, increase regional focus, and continue to foster business collaboration across the bank’s integrated Private Banking and Investment Banking platform,” Credit Suisse said in a media release.

We are both client people and we’ve been working together for a long time

What the bank didn’t emphasise was the natural chemistry between Cavalli and Monnet — long-term colleagues who have reputations for staying close to the ground and revelling in detail. And, indeed, both leaders have told Asian Private Banker that this new leadership structure not only plays to their individual strengths but further advances the bank’s mission to execute upon its clients’ needs in a coordinated and nimble fashion. “We are both client people and we’ve been working together for a long time,” Cavalli told Asian Private Banker, pointing out that Helman Sitohang, CEO of the Asia Pacific Division, had appointed them as “practitioners” of private banking. In fact, both report directly to Sitohang — in what amounts to a truncation in the chain of command and a shortening of the distance between clients and top-level decision-making — and they occupy seats on the APAC Division management committee, which reflects the importance and contribution of private banking to the division in terms of P&L, and the complexities of managing a business that has increased in scale and spread in recent years. Since 2012, AUM in the region has just shy of doubled, as have net revenues attributable to the private banking business.

INDUSTRY

The private bank’s bottom line performance in Asia Pacific has multiplied almost ten times in the past seven years, so we have needed to beef up management capacity of defensive investment solutions is actually in the best interests of the clients,” Monnet said. François Monnet, head of private banking, North Asia, Credit Suisse

“The private bank’s bottom line performance in Asia Pacific has multiplied almost ten times in the past seven years, so we have needed to beef up management capacity and the depth and breadth of our talent, while accommodating the concomitant complexities mainly via a segregation of duty and management attention,” explained Monnet. To this end, Monnet and Cavalli have assumed responsibility and oversight for key verticals within the organisation in line with their respective skill sets. Monnet is the primary manager for the COO organisation, including the platform, while Cavalli oversees the products and solutions organisation. Their dual presence in the committee is also intended to promote greater organisational agility around execution, insofar as it institutionalises consistent interaction with colleagues across departments and therefore promotes faster problem-solving while warding off siloing. “We don’t have to create bridges between divisions because we don’t have these divisions in Asia,” said Monnet, who described the onebank collaboration as an “obsession of every day”. “We have one APAC division catering for different types of clients using different capabilities from the bank, but the division is being measured on its total performance. So success in Asia Pacific is determined by APAC Division’s bottom line. Everything else, including private banking, is a component of it.”

“Based on each client’s risk profile, we are moving to market a lot of fixed income solutions on the defensive side that we believe could benefit from positive carry.” Meanwhile, both Cavalli and Monnet have strategic objectives for those markets they oversee. For Monnet, China is a fixation, and a market at an inflexion point, although the bank has yet to reveal its hand on how it intends to make a meaningful long-term play for the Mainland wealth pool. “First, the access to control is becoming possible with the evolving regulatory environment,” he said. “Second, the expected return by investors in China has been normalised to levels where we can compete on a more level playing

The plan is a strategic commitment for us and not one in which we reassess — we know what we have to do; we are putting together the pieces this year and beyond, which will give us the means to be relevant in a very different way in China

Accordingly, both leaders have prioritised deeper collaboration for 2019 and have set clear targets including “strong double-digit ambitions” for growing recurrent income, emphasising discretionary and advisory mandate sales. To put this in context, the bank has tripled its CS Invest numbers since its launch in 2017, while net new discretionary assets have grown at a compound annual rate of some 40% over the last four years. The private bank has seen marked success in selling discretionary as a core solution, complemented with a tactical piece orchestrated via a CS Invest or other advisory-related solution, Cavalli noted. “On net interest income, 2018 was a year of deleveraging, so we believe there are opportunities in 2019 in the context where the re-leveraging 10

Benjamin Cavalli, head of private banking, South Asia, Credit Suisse

INDUSTRY

We are a strong believer in onshoring to create that proximity to our clientele. The growth rate of onshore wealth markets is almost twice that of offshore, so where the regulatory environment permits, we go onshore to capitalise on the speed of growth field. Third, the US$4 trillion-5 trillion worth of wealth management products issued in the context of shadow banking with guaranteed returns — this is no longer possible.” “The plan is a strategic commitment for us and not one in which we reassess — we know what we have to do; we are putting together the pieces this year and beyond, which will give us the means to be relevant in a very different way in China,” Monnet continued. At this juncture, however, Credit Suisse will continue to take a “measured approach” on its entry to China, and will leverage Credit Suisse AG’s onshore presence, its securities brokerage and asset management joint ventures, as well as its wealth management hub in Hong Kong to target corporate-minded clients looking for solutions outside of China. In variegated South Asia, India onshore represents a standout opportunity, with the Swiss giant currently punching below its weight in a market dominated by local players. “We will embark on a rollout of a completely revamped infrastructure in Q3 or Q4 this year, which will propel us into a very unique position,”

Cavalli said, recounting significant platform investments over the last couple of months as they drive an expansionary agenda in the country. “We’re taking a very prudent approach in our onshore plans, as we want to get the infrastructure right before we go into the next phase.” In sharp contrast, Credit Suisse’s Thailand activities have witnessed fast and furious growth with the private bank doubling its onshore headcount over the past year in the face of heavy competition. “In 2018, we probably had the highest number of pure private bankers in Bangkok when compared to some of the onshore players,” he said. “We are a strong believer in onshoring to create that proximity to our clientele. The growth rate of onshore wealth markets is almost twice that of offshore, so where the regulatory environment permits, we go onshore to capitalise on the speed of growth.” That extends to the Philippines, where the bank last year established a rep office, taking it one step further to launching a fully-fledged wealth management setup in the vein of its Bangkok presence. Still, Credit Suisse has not ruled out partnerships as a means to penetrate onshore markets even if the historical case for successful partnership arrangements is thin at best. “There are some areas in North Asia where we’re exploring opportunities via partnership, so there is an active business development intent to go beyond what we can do alone,” Monnet said. “We could contribute to anyone in this region who does not have that, but has a clientele, which today do not receive wealth management services.” At this stage, a Chinese bank would appear the most likely candidate. 11

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n uncertain economic times, it helps to talk. Communication and human relationships are the keys to navigating troubled waters and finding strategic solutions that lead to horizons of new opportunity and growth.

Lennie Lim regional head for Asia (excluding Japan) Legg Mason Global Asset Management

Global asset management leader Legg Mason has engaged more closely than ever with clients as continuing market turbulence makes client-centricity and best-in-class services critical to finding new solutions in rapidly evolving market conditions.

Legg Mason’s policy of ‘thoughtful diversification’ — deploying a strategically diversified portfolio of independent investment managers to support clients’ long-term goals — has proved effective in steering a way through the noise and volatility. Its nine affiliates provide a range of expert investment solutions as well as product and vehicle options combined with the agility to respond to clients’ preferences and expand client choice across different investment strategies.

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An engaging partnership “Client service is like contact sport,” explained Lennie Lim, Legg Mason’s regional head for Asia. “The more engagement you have, the better. We see it as a partnership, especially when markets are more volatile and there is more uncertainty. Being closer to our clients is central to our client-first business philosophy.” “These are the times that clients need us to be closer to them in terms of updating them and saying what we are doing, how we see things, how we believe things will pan out, and why the investment strategies they have with us still make sense in this climate.” According to Lim, the general belief that gloomy markets have dented investor sentiment is not necessarily true. “There is a mixed mood of nervousness but at the same time our investors see optimism in terms of certain opportunities that present themselves,” Lim said. “We believe in helping our clients design a very long-term approach in terms of their investment planning, but at the same time we believe that in every adversity there is opportunity — so we look for tactical opportunities but design it at risk levels that are comfortable to them.”

ADVERTORIAL

Broadening Asian investment perspective The landscape and mindsets of Asian investors have broadened considerably in recent years and, accordingly, Legg Mason has introduced alternative investment capabilities to address clients’ increasing need for diversification and risk management. “In all developing markets, people tend to have a home bias in the way they design their investment portfolios but after the Asian crisis and the 2008 Global Financial Crisis, people realised the importance of diversification,” Lim explained. “You need to have asset diversification in terms of asset classes, you need to be diversified globally, and you need to be diversified in terms of investment strategies.” “But when the going is good, investors tend to get complacent and it is natural for most to swing between fear and greed. We have brought many products into Asia because we recognise investors have different needs and want to express them in very different ways.” Asian investors are warming to alternative investments and Legg Mason has devised strategies that address that demand in highly promising areas such as aircraft leasing, buoyed by the regional boom in budget airlines and the inherent mobility of its collateral.

“That all points to the greater need for good investment managers. You must be able to differentiate between certain structural changes in what the markets are moving towards versus things that are a bit more cyclical in Asia and be able to capitalise on that.” Above all, however, it is Legg Mason’s client-centricity that sets it apart at a time when investors have more information at their fingertips than ever but are still greatly dependent on trusted advice and guidance. Legg Mason has deployed technology to introduce a range of services, including thought leadership pieces on investment insights, video briefings, and easy access to the latest investment data. But human interaction remains at the heart of its customer relationships. “No matter how much investment expertise you have at hand, you still need the human touch,” concluded Lim. “Our aim is to be the trusted advisor to our clients. We want to be their first port of call when it comes to investments. To achieve that status, it is all about engagement.”

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Important Information Source: Legg Mason. This document is issued by Legg Mason Asset Management Singapore Pte. Limited (Registration Number (UEN): 200007942R), in Singapore and by Legg Mason Asset Management Hong Kong Limited in Hong Kong (“Legg Mason”). For Hong Kong, it is confidential and proprietary information and is intended only for professional investors in Hong Kong (as defined under the Hong Kong Securities and Futures Ordinance and its subsidiary legislation), and/or other investors in Hong Kong to whom it may be provided in accordance with applicable law relating to non-public offers. This document is for information only and does not constitute an offer or invitation to the public to purchase any shares in any fund in Singapore and Hong Kong.This document is for information only and is not intended to provide investment advice. All data, opinions, estimates and other information are provided as of the date of this document and may be subject to change without notice. Where past performance is quoted, such figures are not indicative of future performance. Investors intending to subscribe for any units or shares of a fund should refer to the Fund’s most current offering document. INVESTMENT INVOLVES RISKS. Please refer to the offering documents for further details, including the risk factors. Although information has been obtained from sources that Legg Mason believes to be reliable, no guarantee can be given as to its accuracy and such information may be incomplete or condensed and may be subject to change at any time without notice. Any views expressed are opinions of the respective investment affiliates as of the date of this document and are subject to change based on market and other conditions without notice and may differ from other investment affiliates or of the firm as a whole. These opinions are not intended to be a forecast of future events, a guarantee of future results or investment advice. The mention of any individual securities/ funds should neither constitute nor be construed as a recommendation to purchase or sell securities, and the information provided regarding such individual securities/ funds is not a sufficient basis upon which to make an investment decision. Portfolio allocations, holdings and characteristics are subject to change at any time. Legg Mason, its affiliates, officers or directors, may have an interest in the acquisition or disposal of the securities mentioned herein. Distribution of this document may be restricted in jurisdictions, other than Hong Kong and Singapore. Any person coming into possession of this document should seek advice for details of, and observe such restrictions (if any). Neither Legg Mason nor any officer or employee of Legg Mason accepts any liability whatsoever for any loss arising from any use of this document or its contents. The information in this document is confidential and proprietary and may not be used other than by the intended user. This document may not be reproduced, distributed or published without prior written permission from Legg Mason. The advertisement or publication has not been reviewed by the Monetary Authority of Singapore. The document has not been reviewed by the Securities and Futures Commission in Hong Kong. This is a sponsored article from Legg Mason Global Asset Management.

ADVERTORIAL

INDUSTRY

Candidates prioritise client requirements and platform capabilities: Huddleston Jones

rontline private bankers have demonstrated a notable shift in mindset and motivations towards movement over the past 12 months in a largely candidate-driven market, according to Danny Jones, founding partner at Huddleston Jones.

political agendas conclude — encouraging passive mindsets to [activate],” Jones said, against the backdrop of the still-unfolding 1MDB case, Indonesia’s and the Philippines’ tax amnesties, and China’s crimping of capital controls.

“Active candidates have placed priority towards client requirement and platform capability over personal needs or gain, which has historically been a primary driver for change,” Jones told Asian Private Banker, adding that stable management, positive brand image, and a pro-business approach to account opening have also ranked high on candidates’ agendas.

By employer type, Jones believes candidates will “remain indifferent” towards independent asset managers as the year progresses, judging from a fall in candidate inquiries relating to IAM models in 2018 as they gravitated towards more traditional private banking models.

This paradigm shift, according to Jones, is borne out of continued consolidation and “client cannibalisation” in the industry, increasing pressure on relationship managers to provide additional value on top of their core everyday capabilities.

Meanwhile, as employers engage in intensifying competition for talent, Jones is seeing private banks look beyond traditional talent pools to upscale internal expertise across their breadth of product coverage, leveraging from “an influx of talent” made available from downsizing investment banks and capital market divisions in the region.

Danny Jones founding partner Huddleston Jones

In the first half of 2019, however, Jones expects hiring to “remain stagnant” despite robust demand for human capital at private banks, as candidates adopt a wait-and-see stance amid regulatory and geopolitical uncertainties.

“However, the emphasis will likely switch in favour of boutique wealth managers that have shown increased growth, appetite, and commitment in Asia throughout 2017 and 2018,” Jones added.

“We anticipate a rise in competition for capital market specialists transitioning from product-focused roles within the corporate and investment bank into the private bank, fuelled by ongoing displacement,” Jones concluded.

“Interest in external opportunities [are likely to spike] later in the calendar year, when geo-economic tensions resolve and domestic 15

INDUSTRY

PB network is vital to Lombard Odier’s Asia ambitions: Magnenat

n the historically sequestered realm of Swiss private banking, Lombard Odier has woven a network of onshore-offshore strategic alliances to address onshore Asian markets, demonstrating a penchant for working with local peers rather than going it alone, according to Vincent Magnenat, limited partner and CEO Asia Pacific at Lombard Odier. The emphasis for Magnenat is on the multiplicity of a network — as opposed to siloed bilateral tie-ups — that opens doors to further opportunities, such as in Taiwan, with the Swiss pure play having signed their most recent strategic alliance with Taipei Fubon Bank in November 2018. This alliance is the latest in a series, with the Swiss lender having entered into tie-ups with Kasikornbank in Thailand, UnionBank in the Philippines, Bank Mandiri in Indonesia, Mizuho Securities in Singapore, and JBWere in Australia and inking a handful of memorandums of understanding. “This [private banking] network is one of the key objectives of these strategic alliances,” Magnenat told Asian Private Banker, stressing that Lombard Odier’s strategic allies gain access to a global network that is the “biggest private banking alliance in Asia”. 16

And although Magnenat pointed out that the rationales behind each alliance are not one and the same, he highlighted the commonality of friendship and symbiosis in each. “An ‘alliance’ is a synonym of ‘friendship’,” he explained. “As two banks decide to work together and to be friends, both banks would grow their businesses together and benefit. It cannot be a one-way interaction — it’s always both ways, making it a better strategy than unequal joint ventures or mergers.” On the alliance with Taipei Fubon Bank, Magnenat sees in Taiwan a mature market in terms of the level of sophistication of its clients. “There is also a real interest in shifting to a fee-based model,” he said. “Private banking for Taipei Fubon Bank is one of the major developments to come in the next few years.” Taking a broader perspective, Magnenat attributed the industry’s rising interest in Asian onshore-offshore partnerships to the dual trend towards the onshorisation of assets on one hand, and a demand for the global diversification of assets on the other.

INDUSTRY

Vincent Magnenat, limited partner and CEO Asia Pacific, Lombard Odier

“With global regulations like the FATCA and CRS, and with local tax amnesties and changing local regulations, more and more clients are keeping their assets onshore, while looking to diversify by investing globally at the same time, particularly in a low-interest rates environment,” he said.

When questioned on the challenges one faces in strategic alliances, Magnenat was loath to call any as such, underlining instead the importance of recognising the idiosyncrasies of each market and ally that would call for adaptations in approach, such as differences in local regulations.

Although some of Lombard Odier’s strategic alliances adopt a master-feeder fund arrangement and others involve platform sharing, Magnenat stressed that product distribution is not the be-all and endall in an alliance, which “always has more than one angle”.

“As we are still in the early stages for most of our strategic alliances, it would be normal for some of our partner banks to encounter teething issues in the process of building a fully fledged private bank or wealth management unit within their own organisations and countries,” he said.

Drilling down to the nuts and bolts of how their other strategic alliances manifest in on-the-ground operations, Magnenat offered an example of knowledge transfer, which involves training for bankers in both soft and hard skills via workshops and weekly calls covering the bank’s views on global markets and economies. “Twice a year, we invite bankers from each of our partners to join us at an offsite event, bringing together bankers from different banks and countries who then exchange ideas and learn from one another,” Magnenat said, returning to the concept of networks. Powering its initiatives with a dedicated team for such alliances, the Swiss bank also organises month-long training trips for its partners’ top bankers to Geneva, and is involved in interviewing candidates for key hires at its partner banks.

At the end of the day, the Swiss bank appears to be in it for the long run, believing alliances to be a core pillar of its growth in the coming few years. “The beauty of our strategic alliances in the region is that they’re long term,” Magnenat said. “Our steering committee meets monthly and puts everything on the table, but we have nothing to show on a quarterly basis to our shareholders — our managing partners running the business at Lombard Odier know exactly what’s happening.” Lombard Odier posted CHF 259 billion in total client assets globally, as at end-December 2018, with robust net new money inflows, according to its annual financial results.

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A history lesson for turbulent times: ‘Stay calm and stay invested’ History has shown that investors can navigate troubled economic waters by trusting in the long-term prospects of multinational companies with the resources and flexibility to bear the whips and scorns of time

scalating Sino-US trade tensions, the seething cauldron of Brexit, and rising volatility in global financial markets have combined to send a collective shiver through the investment universe as 2019 dawns beneath dark clouds of uncertainty.

But opportunities remain, particularly for investors who are prepared to take a long-term view and favour multinationals with the resources and flexibility to react to changing conditions, according to Capital Group. Capital Group’s New Perspective strategy has delivered annual returns of 11.0% p.a.1 over its 45-year history, driven by a reassuring philosophy: stay calm and stay invested. Andy Budden investment director Capital Group

“The way we look at the world is that there are a lot of great things going on and a lot of really good companies to invest in at attractive valuations, so the prospects for decent investment returns are good,” said Andy Budden, Capital Group’s investment director. “But you have to be smart and selective about which stocks to hold and which markets to invest in. Secondly, you have to accept we are going through a period when volatility is coming back and it is going to be a rocky road.” Managed by the same experienced team and following the same flexible approach as the US strategy, the Capital Group New Perspective Fund (LUX) is now available to investors in Europe and Asia (since 30 October 2015). 18

A rocky road with a silver lining The road ahead could be as long as it is rocky, with Budden describing the trade conflict between the US and China as a multi-faceted issue that could persist for decades to come. “This strategic rivalry is likely to continue for the next 20-30 years, so this is something we need to get used to and really learn to understand,” he explained, adding that multinationals have the innate ability to react to such situations, defining their ability to thrive in adversity. “By definition, they are operating in multiple markets. They have diverse revenue streams and often diverse ranges of products,” he said. “They have facilities in many markets around the world, which gives them a lot of flexibility. And they have experienced management teams, many of which have been through these kinds of challenging situations before.” Nike — a company caught more than most in the crosshairs of the current trade war — is a powerful case in point. “The reality is Nike has been developing production facilities outside China for a number of years in response to cost pressures in China. So it is quite easy for Nike to accelerate its investment in low-cost production outside China,” Budden said. “Is this disruptive for Nike? Yes. But is Nike flexible and agile and very experienced in dealing with these kinds of situations? Yes, absolutely. They can quickly react to this different type of environment.”

ADVERTORIAL

The same core belief has persuaded Capital Group to remain invested in Amazon since 2007. It continues to see attractive long-term potential for the company as e-commerce grows and cloud computing remains at an early stage of its upward trajectory. Capital Group is also very positive on the prospects for biotech and Budden believes companies creating new treatments for critical disease and personalised medicine will “transform healthcare and be an exciting place to invest”. Global air travel is set to be yet another area of explosive growth. “We are really quite excited about the aircraft manufacturers benefitting from continued growth in the number of people travelling by air, especially in Asia where there were 100 million first-time travellers in 2017 alone,” he explained.

“Our advice to investors right now is to stay calm and stay invested. People should only be investing in equities for the long term, but especially when you have this combination of long-term growth characteristics with heightened volatility, it really is important to stay invested,” he said, adding that since 1949, the average decline in the S&P 500 over the course of nine recorded bear markets was 33%, while the average gain for bull markets over the same period was 263%.2 “History shows that investing with a long-term horizon and riding through bear markets and recessions can be rewarding,” he said. “Staying invested matters more than market timing. The important thing is to find great companies and great funds and stay invested in them over the long term.”

Fortune favours the patient In this new era of colliding uncertainty and growth potential, investors should raise their eyes from bleak daily headlines and apply the sense of historical context that has produced strong gains for the New Perspective strategy over four-and-a-half decades, Budden believes.

For more information, please visit: www.capitalgroup.com/apac/npf-hk www.capitalgroup.com/apac/npf-sg

1 Data as at 31 December 2018. Returns calculated geometrically for the Capital Group New Perspective Composite, in US$ terms, from inception (31 March 1973). Net of management fees and expenses for the B share class as a representative share class of Capital Group New Perspective Fund (LUX) (launched 30 October 2015), applying the maximum Total Expense Ratio (TER) of 165 bps, based on the long-term annual management charge of 150 bps. Source: Capital Group

2 As at 31 December 2018. Bear markets are peak-to-trough price declines of 20% or more in the S&P 500. Bull markets are all other periods. Returns shown on a logarithmic scale. Sources: Capital Group, RIMES, Standard & Poor’s

FOR PROFESSIONAL INVESTORS AND INFORMATION PURPOSES ONLY Past results are not a guarantee of future results. The value of shares and income from them can go down as well as up and you may lose some or all of your initial investment. This information has been provided solely for informational purposes and is not an offer, or solicitation of an offer, or a recommendation to buy or sell any security or instrument listed herein. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore. It has not been reviewed by the Hong Kong Securities and Futures Commission. Statements attributed to an individual represent the opinions of that individual as of the date published and may not necessarily reflect the view of Capital Group or its affiliates. While Capital Group uses reasonable efforts to obtain information from third-party sources which it believes to be reliable, Capital Group makes no representation or warranty as to the accuracy, reliability or completeness of the information. This communication has been prepared by Capital International, Inc., a member of Capital Group, a company incorporated in California, United States of America. The liability of members is limited. The Fund is a sub-fund of Capital International Fund (CIF), organised as an investment company with variable capital (SICAV) under the laws of the Grand Duchy of Luxembourg and authorised by the CSSF as a UCITS. CIInc is the Representative of the Fund in Singapore and Hong Kong. A copy of the Hong Kong Covering Document and the Singapore Prospectus incorporating the Luxembourg Prospectus for the fund is available online at www.thecapitalgroup.com/asia. © 2019 Capital Group. All rights reserved.

INDUSTRY

Does DBS’s latest India play open the door for an eventual PB rollout? offerings as financial services continue to transform rapidly with changes in technology and consumer preferences,” said Surojit Shome, India CEO at DBS Bank. Meanwhile, DBS group CEO Piyush Gupta said the creation of a fullfledged subsidiary in India enables the bank “to scale up further and bring to customers a more compelling proposition”. DBS has a history of playing coy when it comes to its private banking ambitions in India and has typically preferred to direct focus towards its non-resident Indian (NRI) business.

he official launch of DBS’s wholly owned India subsidiary in March has further stoked speculation the lender could deploy its private banking services in the country, even though DBS refuses to be drawn on if or when that could happen. Under its DBS Bank India Limited (DBIL) setup, the Singaporean bank will further expand its corporate and retail operations in the country, effectively laying a solid foundation for it to install its private banking offering. By dint of its plans to set up more than 100 customer “touchpoints” — that is, branches and kiosks — across 25 cities in the next 12-18 months, the growing strength of DBS’s retail franchise in the country could provide it with a leg up on those competitors that have tackled the HNW market without the benefit of a retail offering to feed the private bank and spread costs. The India market has seen its fair share of bold entries and whimpering exits on behalf of foreign players. Local competition and regulatory complexities ensure a high barrier to entry. But few have entered the country with a dedicated setup already boasting a legion of clients. The bank’s objective to achieve scale via a hybrid ‘phygital’ model sharpens its competitive edge on the digitalisation and innovation front, tapping into the capabilities of its mobile-only ‘digibank’ which amassed a million customers in a year following its release in 2016. “The launch of DBIL will enable us to further build our relationships with our customers and create differentiated

“There is plenty of room from unbanked NRIs to help sustain the NRI business without having to have an onshore presence in India,” Lawrence Lua, deputy head of DBS Private Bank, told Asian Private Banker in an interview in 2016. But the sheer growth of India’s wealth opportunity — even since that comment was made — will have likely prompted a rethink. The country is on track to see its high net worth population accrue INR 188 trillion (US$2.7 trillion) of wealth by 2021, and on the back of India’s trend towards the financialisation of savings and assets, India’s top 20 private banks and wealth managers managed a total of US$169.3 billion in assets as at end-2017 — a remarkable 63.3% year-on-year increase, according to Asian Private Banker’s India 2017 AUM League Table. Add to this the advantages a bank and its clients derive from strong onshore-offshore connectivity, and the case for an onshore private banking offering becomes that much more compelling. BNP Paribas Wealth Management’s success in recent years is a case in point. Having set up its first representative office in India in 1994 and opening its first branch in 1995, DBS planned to establish nine new branches in March and extend its coverage to Hyderabad, Ahmedabad, Coimbatore, Vadodara, Indore, and Ludhiana. At that time, the bank was operating in 12 cities in the country — Delhi, Mumbai, Bengaluru, Chennai, Kolkata, Pune, Nashik, Surat, Kolhapur, Salem, Cuddalore, and Moradabad. Meanwhile, Credit Suisse has also articulated plans to enhance its India proposition, while Bank of Singapore entered into a strategic partnership with India’s Edelweiss Group in February, offering clients of both entities access to their respective product platforms. 21

INDUSTRY

Asia 2018 AUM & RM HEADCOUNT LEAGUE TABLES

-11.4% -7.3% +7.0% -3.6% +21.6% -6.7%

Asia private banking AUM growth stalls

ssets under management growth ground to a halt in 2018 as challenging market conditions tempered client activity and impeded performance for Asia’s private banks.

UBS Global Wealth Management retained the top spot on Asian Private Banker’s Top 20 League Table (excluding China onshore) despite a 6.7% decrease in the bank’s AUM. UBS GWM was well placed to cross the US$400 billion mark in Asia at the beginning of 2018 but significant deleveraging and suboptimal investments performance, which hit the entire industry, put the milestone out of reach. That’s despite net new money inflows of US$17.3 billion for the year in APAC, representing a 4.5% YoY increase. Of the Top 10 banks, only four — Credit Suisse Private Banking (2), Morgan Stanley Private Wealth Management (5), Bank of Singapore (6), and J.P. Morgan Private Bank (8) — posted improved AUM totals. UBP (20) recorded the biggest increase, albeit from a lower base, while CMB Private Banking (16) and EFG Bank (18) saw the largest declines.

Top 20 total AUM (US$) 2018

2017

1.63 1.69

trillion

Interestingly, the average decrease in AUM remained consistent when accounting for geographical and business-model variables. Universal — inclusive of retail-linked — banks (-3.6%) fared similarly to pure plays (-3.7%), while Asia-headquartered banks (-3.4%) were marginally better off than their international-headquartered peers (-3.7%).

20% decrease 0%

18%

10%

20%

30%

40%

50%

% of private banks

INDUSTRY

Top 20 Top 20 AUM Top 20 TopYoY20 total RM headcount 2018 RM headcount AUM Change 5y CAGR 2017-2018

2014-2018

5,497

-3.6%

2018

5,497

+6.9%

Meanwhile, the return of volatility after a remarkably calm 2017, a further breakdown in the correlation between stocks and bonds, and the US-China trade dispute conspired to exert pressure on private banks’ top lines. Banks entered the new year on the front foot, generally urging clients to stay invested and hedge amid bouts of volatility, and while their advice did not fall on totally deaf ears, clients exercised extreme caution by reining in trading activity, deleveraging, and upping cash holdings which sustained throughout the year. Meanwhile, flows into alternative asset classes picked up but not dramatically.

Private Banking, CMB Private Banking, J.P. Morgan Private Bank, and UBP. UBS GWM again ranks as the region’s biggest frontline hirer, with 1,138 client advisors in the region, up 9.7% on 2017’s year-end total. Unsurprisingly, Goldman Sachs Private Wealth Management, whose clients must have at least US$100 million in investable assets, has the highest AUM per RM total at US$882.2 million.

Top 20 total RM headcount 2018 The composition

5,497

The impact on private banks’ top lines was pronounced. Asian Private Banker estimates that some 54% of banks in the Top 20 saw a YoY decline in transaction-based revenues with 18% recording a decrease of 20% or more. Conversely, net interest income was generally up as were recurring revenues — 88% of Asia’s Top 20 private banks posted a YoY uptick in recurring revenues driven by fees and commissions — although these increases were generally insufficient to buffer the decline in transactional revenue. On the relationship manager front, hiring was concentrated around a select few banks, specifically HSBC Private Banking, Deutsche Bank Wealth Management, Bank of China (Hong Kong)

YoY wth

of the Top 20 League Table has not changed dramatically, nor have the criteria we use to assess and compile our data. That said, we have taken the unprecedented step to exclude two banks from our 2018 Top 20 League Tables: Citi and DBS. This decision reflects our commitment to increase the rigour of this data and to create a level playing field for all banks. Both Citi and DBS intermingle private banking and non-private banking assets, and while both have sufficient private bankingspecific AUM to feature in 2018’s Top 20 rankings according to our estimates, we draw the line at including data that is not ‘pure’. In Citi’s case, wealth management AUM (US$256 billion, +0% YoY) covers Consumer Banking and the Private Bank. DBS’s wealth management AUM at the end of 2018 (US$161.5 billion, +7%) includes Treasures, Treasures Private Client, and Private Bank. Therefore, neither total is directly comparable to the data presented in our Top 20.

Average AUM per RM Top 20 YoY RM growth 2017-2018

6.0%

Average AUM per RM in 2018

$299.1

million

INDUSTRY

Top 20 private banks in Asia (ex-China onshore): AUM (US$ billion) 2018 Asia

2017 Asia

YoY % change

2014-18 CAGR

AUM incl. loans?

Minimum asset threshold*

2018 Global

UBS Global Wealth Management ¹

357.0

382.7

-6.7%

+7.0%

USD 2m

2,260.0

Credit Suisse Private Banking ²

205.1

202.1

+1.5%

+7.4%

N/A

CHF 2m

770.0

HSBC Private Banking ³

124.0

129.0

-3.9%

+2.6%

USD 5m

309.0

Julius Baer ⁴

111.9

115.0

-2.7%

+9.2%

No defined minimum

388.6

Morgan Stanley Private Wealth Management ⁵

105.0

102.0

+2.9%

+10.7%

Yes

USD 35m

2,300.0

Bank of Singapore ⁶

102.0

99.0

+3.0%

+18.9%

USD 5m

102.0

BNP Paribas Wealth Management ⁷

89.4

97.4

-8.2%

+10.8%

USD 3m

413.5

J.P. Morgan Private Bank ⁸

87.8

85.0

+3.3%

+9.1%

N/A

USD 10m

552.0

Goldman Sachs Private Wealth Management

79.4

87.0

-8.7%

+12.3%

USD 100m

650.0

LGT ⁹

57.0

60.0

-5.0%

+26.4%

No defined minimum

201.6

Deutsche Bank Wealth Management ¹⁰

56.1

58.8

-4.6%

EUR 2m (account balance)

228.0

Standard Chartered Private Bank ¹¹

46.0

49.5

-7.1%

+0.6%

N/A

USD 2-5m

59.2

Pictet Wealth Management ¹²

35.0

35.8

-2.2%

+6.2%

N/A

USD 3m

206.4

UOB Private Bank

34.0

34.3

-0.9%

Yes

SGD 5m

34.0

Hang Seng Private Banking

30.2

31.3

-3.5%

+8.2%

N/A

HKD 10m

30.2

CMB Private Banking ¹³

29.9

36.7

-18.5%

N/A

RMB 10m

296.5

Bank of China (Hong Kong) Private Banking

27.3

30.0

-9.0%

N/A

USD 2m

27.3

EFG Bank ¹⁴

18.7

21.1

-11.4%

-2.9%

Yes

EUR 1m

133.4

J. Safra Sarasin ¹⁵

17.8

19.2

-7.3%

+4.4%

N/A

EUR 1m

167.4

UBP ¹⁶

15.3

14.3

+7.0%

N/A

USD 1m

97.2

Top 20

1,628.8

1,690.2

-3.7%

Rank

Bank

9,226.3

CIMB Private Banking

14.1

11.6

+21.6%

+12.5%

Yes

SGD 2m

14.1

Indosuez Wealth Management ¹⁷

14.0

15.0

-6.7%

N/A

USD 1m

128.4

Maybank Private

12.5

9.9

+26.3%

+25.7%

Yes

USD 1m (account balance)

12.5

All figures are APB estimates unless otherwise stated. Footnotes on page 28. Figures may not add up due to rounding.

2017-2018

-3.6%

-3.7%

Top 20 YoY AUM

-3.6

6.0%

+6.9%

-3.6%

2017-2018

INDUSTRY

YoY AUM change 2017-2018

International PBs

2017-2018

Asian PBs

Universal PBs

-3.4%

-3.7%

Pure play PBs

(Greater China

-3.6%

of which American -0.7% of which European -5.6%

-3.7%

of which Swiss -3.7%

(ASEAN, Indian subcontin subconti

Omissions** 2018 Asia

2017 Asia

YoY % change

2014-18 CAGR

Citi (Citi Private Bank and Consumer Banking)

256.0

0.0%

0.1%

DBS Wealth Management (DBS Treasures, DBS Treasures Private Client, DBS Private Bank)

161.5

Bank

Approx. re revenue con

YoY AUM change

AUM incl. loans?

YoY AUM change Minimum asset 2017-2018 threshold*

N/A Priority PBs HKD 500K; Asian 460.0*** International PBs

Citigold HKD 1.5m; Citigold Private Client HKD 8m; Citi PB USD 25m (all account balance) of which American -0.7% 150.9

7.0%

2018 Global

-3.7%

-3.4%

of which N/A European DBS Treasures -5.6%

161.5

SGD 350K or HKD of which Swiss -3.7% 1m; DBS Treasures Private Client SGD 1.5m or HKD 8m; DBS PB SGD 5m or HKD 25m (all account balance)

** Exclusion of Citi from the League Table is due to reported figures being an aggregate of Citi's APAC consumer banking and private banking businesses Exclusion of DBS from the League Table is due to reported figures being an aggregate of DBS Treasures, DBS Treasures Private Client, and DBS Private Bank businesses *** Citi Private Bank only; Global AUM: publicly reported

Top pure play private banks in Asia (ex-China onshore): (US$ billion) 2018 Asia

2017 Asia

YoY % change

2014-18 CAGR

AUM incl. loans?

Minimum asset threshold*

2018 Global

Julius Baer ⁴

111.9

115.0

-2.7%

+9.2%

No defined minimum

388.6

LGT ⁹

57.0

60.0

-5.0%

+26.4%

No defined minimum

201.6

Pictet Wealth Management ¹²

35.0

35.8

-2.2%

+6.2%

N/A

USD 3m

206.4

EFG Bank ¹⁴

18.7

21.1

-11.4%

-2.9%

Yes

EUR 1m

133.4

J. Safra Sarasin ¹⁵

17.8

19.2

-7.3%

+4.4%

N/A

EUR 1m

167.4

UBP ¹⁶

15.3

14.3

+7.0%

N/A

USD 1m

97.2

255.7

265.4

-3.7%

Rank

Bank

All figures are APB estimates unless otherwise stated. Footnotes on page 28. Figures may not add up due to rounding.

INDUSTRY

Top Asian private banks in Asia (ex-China onshore): (US$ billion) Rank

Bank

2018 Asia

2017 Asia

YoY % change

2014-18 CAGR

AUM incl. loans?

Minimum asset threshold*

2018 Global

Bank of Singapore ⁶

102.0

99.0

+3.0%

+18.9%

USD 5m

102.0

UOB Private Bank

34.0

34.3

-0.9%

Yes

SGD 5m

34.0

Hang Seng Private Banking

30.2

31.3

-3.5%

+8.2%

N/A

HKD 10m

30.2

CMB Private Banking ¹³

29.9

36.7

-18.5%

N/A

RMB 10m

296.5

Bank of China (Hong Kong) Private Banking

27.3

30.0

-9.0%

N/A

USD 2m

27.3

CIMB Private Banking

14.1

11.6

+21.6%

+12.5%

Yes

SGD 2m

14.1

Maybank Private

12.5

9.9

+26.3%

+25.7%

Yes

USD 1m (account balance)

12.5

250.0

252.8

-1.1%

Top 20 AUM 20 total RM headcount 2018 figures are APB estimates unless otherwise due to rounding. Top 20 stated. Footnotes on page 28. Figures may not add upTop 5yAllCAGR YoY AUM 2014-2018

5,497

2017-2018

Revenue

+6.9% headcount 2018

YoY growth by revenue line

-3.6%

Though buoyant markets at the beginning of 2018 set up expectations for robust transactional volumes, over half (54%) of Asia’s private banks saw their transactional revenues suffer as markets turned mercurial and trading decelerated. 27% registered an 11-20% decrease in transactional revenues, with 18% posting drops of over 20%.

By contrast, those who amped up their emphasis on managed solutions saving grace as mandate penetration rates notched up. The vast YoY AUMfound change 2017-2018 majority (88%) of private banks in Asia witnessed an increase in recurring revenue, with 44% seeing a 1-10% rise, and 22% posting increases al PBs of over Pure play 20%. NonePBs registered a decrease. And due to some liberalising lending policies, 70% of private banks expe-3.7% rienced an increase in net interest income, with 40% seeing increases of over 20%. 30% saw a 1-10% drop.

Net interest income More than 20% increase 11-20% increase

Recurring revenue

40% 22% 0% 0% 22% 0% 30%

1-10% increase No change

44% 27% 0% 11%

Top1-10% 20 YoY decrease RM growth

18%

30% Average AUM per RM in 2018

$299.1

2017-2018 0%

11-20% decrease

27%

6.0%

More than 20% decrease

Average AUM per RM in 2018 Geographically, international players saw North Asia contribute 64% of

Transactional revenue

0% 0%

million

18%

10%

20%

30%

40%

50%

% of private banks

their private banking revenues, while South Asia made up 36% of the pie. Asian banks demonstrated a more even split, with 46% attributable to North Asia and 54% million to South Asia.

$299.1

YoY AUM change 2017-2018

ational PBs

Asian PBs

-3.4%

3.7%

merican -0.7% ropean -5.6% ive PB-specific

hution Swiss between... -3.7%

rth Asia26 an, Korea)

61.4%

Approx. relative PB-specific revenue contribution Top 20 Top 20 AUM between... Top 20 RM headcount YoY AUM Change 5y CAGR 2018 2017-2018 2014-2018 North Asia

-3.6%

(Greater China, Japan, Korea) vs

South Asia +6.9%

(ASEAN, Indian subcontinent, Australia)

61.4%5,497 38.6%

INDUSTRY

Top 20 private banks in Asia (ex-China onshore): RM Headcount Rank

Bank

2018 Asia

2017 Asia

YoY % change

2014-18 CAGR

UBS Global Wealth Management ¹

1,138

1,037

+9.7%

-1.0%

Credit Suisse Private Banking ²

580

590

-1.7%

+2.8%

HSBC Private Banking ³

541

470

+15.1%

+4.7%

Bank of Singapore ⁶

450

430

+4.7%

+9.8%

Julius Baer ⁴

430

400

+7.5%

+13.4%

Morgan Stanley Private Wealth Management ⁵

315

298

+5.7%

+3.5%

Deutsche Bank Wealth Management ¹⁰

280

250

+12.0%

+8.8%

BNP Paribas Wealth Management ⁷

263

268

-1.9%

+2.7%

Standard Chartered Private Bank ¹¹

240

259

-7.3%

-2.9%

LGT ⁹

198

199

-0.5%

+25.4%

J.P. Morgan Private Bank ⁸

160

135

+18.5%

+5.1%

UOB Private Bank

138

144

-4.2%

Bank of China (Hong Kong) Private Banking

131

109

+20.2%

CMB Private Banking ¹³

105

+29.6%

Indosuez Wealth Management ¹⁷

100

125

-20.0%

EFG Bank ¹⁴

109

-9.2%

-5.7%

Goldman Sachs Private Wealth Management

+2.3%

+2.7%

UBP ¹⁶

+21.4%

J. Safra Sarasin ¹⁵

-3.4%

Maybank Private

Top 20

5,497

Hang Seng Private Banking

-4.3%

+13.8%

Pictet Wealth Management ¹²

+4.0%

All figures are APB estimates unless otherwise stated. Footnotes on page 28.

Top 20 total RM headcount 2018

5,497

INDUSTRY

Top 20 private banks in Asia (ex-China onshore): Average AUM per RM AUM (US$ billions)

RM headcount

AUM per RM (US$ millions)

YoY % change in AUM per RM

Goldman Sachs Private Wealth Management

79.4

882.2

-10.8%

Pictet Wealth Management

35.0

673.1

-6.0%

J.P. Morgan Private Bank ⁸

87.8

160

548.8

-12.8%

Hang Seng Private Banking

30.2

450.7

+0.8%

Credit Suisse Private Banking ²

205.1

580

353.6

+3.2%

BNP Paribas Wealth Management ⁷

89.4

263

339.9

-6.5%

Morgan Stanley Private Wealth Management ⁵

105.0

315

333.3

-2.6%

UBS Global Wealth Management ¹

357.0

1138

313.7

-15.0%

LGT ⁹

57.0

198

287.9

-4.5%

CMB Private Banking ¹²

29.9

105

284.8

-37.1%

Julius Baer ⁴

111.9

430

260.2

-9.5%

UOB Private Bank

34.0

138

246.4

+3.6%

HSBC Private Banking ³

124.0

541

229.2

-16.5%

Bank of Singapore ⁶

102.0

450

226.7

-1.5%

J. Safra Sarasin ¹⁴

17.8

211.9

-3.9%

Bank of China (Hong Kong) Private Banking

27.3

131

208.4

-24.3%

Deutsche Bank Wealth Management ¹⁰

56.1

280

200.4

-14.8%

Standard Chartered Private Bank ¹¹

46.0

240

191.7

+0.3%

EFG Bank ¹³

18.7

188.9

-2.6%

UBP ¹⁵

15.3

180.0

-11.9%

Rank

Bank

Top 20

299.1

Maybank Private

12.5

178.6

Indosuez Wealth Management ¹⁶

14.0

100

140.0

+16.7%

All figures are APB estimates unless otherwise stated. Mid-market spot rates used as at 31 Dec for their respective years for non-USD reporting. For 2018: CHFUSD 1.0169; SGDUSD 0.7340; EURUSD 1.1455; CNYUSD 0.1454 N/A: not available * Minimum represents investable assets per client (unless otherwise stated) and equivalent in other currencies; minimum may change depending on location

UBS Global Wealth Management: Global/Asia AUM and RM headcount: publicly reported 2 Credit Suisse Private Banking: Global AUM and RM headcount accounts for Swiss Universal Bank Private Clients, International Wealth Management, and APAC Private Banking within Wealth Management & Connected; Global/Asia AUM and RM headcount: publicly reported 3 HSBC Private Banking: Global/Asia AUM: publicly reported 4 Julius Baer: Global AUM and RM headcount: publicly reported 5 Morgan Stanley Private Wealth Management: Global AUM: publicly reported; Global AUM is reported as client assets 6 Bank of Singapore: Global/Asia AUM: publicly reported 7 BNP Paribas Wealth Management: Global AUM: publicly reported 8 J.P. Morgan Private Bank: Global AUM and RM headcount: publicly reported 1

LGT: Global AUM includes AUM from asset management division; LGT’s Asia figures include Middle East assets/RMs and assets/RMs post-ABN AMRO acquisition and excludes loans; AUM includes assets under custody/administration; 2017 Asia AUM including loans is USD 63B 10 Deutsche Bank Wealth Management: Global/Asia AUM: publicly reported; CAGR not provided as 2014 AUM includes asset management AUM, Deutsche Bank restructured and split the asset and wealth management businesses in 2015 11 Standard Chartered Private Bank: Global AUM: publicly reported 12 Pictet Wealth Management: Asia RM headcount: provided by the bank 13 CMB Private Banking: Global AUM: publicly reported 14 EFG Bank: Global/Asia AUM and RM headcount: publicly reported 15 J. Safra Sarasin: Global/Asia AUM: publicly reported 16 UBP: Global AUM and RM headcount: publicly reported 17 Indosuez Wealth Management: Global AUM: publicly reported 9

AWARDS

While 2018 was certainly no walk in the park, the resilience of some exceptional asset managers and their investment teams did not go unnoticed. Based on the anonymous polling of 36 fund selectors from 27 private banks/wealth managers, Asian Private Bankerâ&#x20AC;&#x2122;s Judging Panel shortlisted fund providers who excelled across four key criteria: product performance, business performance, service competency, and branding and marketing. The fund providers then pitched and competed across 31 categories. We present to you, the worthy winners of Asian Private Bankerâ&#x20AC;&#x2122;s Asset Management Awards for Excellence 2019.

AWARDS

Congratulations to the following winners

AWARDS

R E G U L AT I O N S

Establishing FOs in haste can result in misaligned expectations: Lombard Odier

G Lee Wong head of family services, Asia Pacific Lombard Odier

iven developments in Singapore’s tax incentive scheme, wealthy families in the city-state have rushed to establish family offices, potentially leading to miscommunication and misaligned expectations, according to Lombard Odier’s APAC head of family services.

The original deadline for Singapore’s tax incentive scheme for funds and fund managers was set for 31 March, contributing to the proliferation of family office setups last year as wealthy families worried that future schemes would be less lenient, Lee Wong, head of family services, Asia Pacific at Lombard Odier, told Asian Private Banker. “I don’t think it is ideal to rush into setting up a family office,” Wong said. “A well-oiled family office requires family members to be properly aligned in relation to issues such as the purpose of shared family funds, how they are to be invested, and what level of risk is appropriate to take. When this alignment is missing, tension could arise due to a mismatch of expectations and miscommunication.” Despite HNWIs’ concerns leading up to the budget speech on 18 February, the government announced that all tax incentives would be extended until 31 December 2024, giving Singaporean families a few more years to consider establishing a family office. According to a client briefing published by law firm Allen & Gledhill, the extension was accompanied by a number of enhancements and additional exemptions — made to Income Tax Act sections 13CA, 13R, and 13X — in order to ensure the scheme remains “relevant” and to “ease the compliance burden”. “With the aim of further growing Singapore as a centre for fund management and administration, the current concession that allows qualifying or approved funds under one of the fund management tax 32

incentive schemes to claim, by way of remission, goods and services tax (“GST”) incurred on expenses at a fixed recovery rate will likewise be extended until 31 December 2024. Further details will be released by the Monetary Authority of Singapore by May 2019,” the briefing read. Given the extension, Lee said families can now develop their family offices in a more measured and sustainable way. “For now, we are working with families who have set up their family offices but have identified gaps and are facing challenges in implementation to assist them to resolve governance issues and achieve alignment within their families,” she said. “For families who are interested in setting up family offices, we are walking them through a needs-based approach to ensure they are clear about their objectives for setting up a family office and to then work out a roadmap to construct one that is fit for purpose.” The ‘needs-based’ review process facilitates the establishment of more cost-efficient setups — particularly important in the case of family offices which typically incur higher operational costs than other readily available alternatives. Offering an example, Wong said some families may wish to set up a family office in order to gain a more consolidated view of the unit’s total assets across multiple accounts or locations. Accordingly, the bank can, from the start, offer the family an asset consolidation platform through which the relevant parties can view aggregated data. The number of family offices in Asia has increased significantly of late as wealth in the region continues to accumulate. In September 2018, Hong Kong’s Private Wealth Management Association (PWMA) identified the attraction of more family offices to the city as a priority for driving the private wealth industry forward. Meanwhile, Raffles Family Office and Chapman Eastway, an Australia-based tax and family office advisory firm, have also recently unveiled their expansion plans for the region.

INDUSTRY

INVESTMENTS

PBs in Asia at an “inflection point” in approach to alternatives: J.P. Morgan AM

rivate banks in the region are at an “inflection point” in how they allocate to alternatives, shifting from a ‘best ideas’ approach to a more holistic framework, according to J.P. Morgan Asset Management.

Shawn Khazzam head of alternative solutions group, Asia Pacific J.P. Morgan AM

Shawn Khazzam, head of alternative solutions group, Asia Pacific at J.P. Morgan Asset Management, told Asian Private Banker that historically, the region’s private banks have allocated to an alternatives basket of ‘best ideas’.

“For example, when they see an interesting fund that is being launched, they may add it to their platform,” he explained.

Indeed, average purchase price multiples within private equity have significantly trended up over the past few years.

Yet, according to Khazzam, as more alternatives products and solutions become available, private banks are relying on “more science and less art” as they begin to retire the ‘best idea basket’ method in favour of a more comprehensive framework.

For example, according to Bain & Company’s Global Private Equity Report 2018, average purchase price multiples for leveraged buyouts (LBOs) rose to historic highs in 2017 in a crowded market.

“We work with clients to come up with a framework for thinking about the alternative allocation at the most basic level and what percentage of that allocation to alternatives should go to real estate, private equity, and hedge funds, and so on and so forth,” he said, adding that once the framework is established, end-investors identify the building blocks for their portfolios. Although the asset class has gained traction amongst investors following a tough year for traditional assets, alternatives inflows are constrained by Asian HNWIs’ historical proclivity for private equity to drive returns and generate alpha, according to Khazzam. This trend is due, in part, to the entrepreneurial origins of Asia’s wealth, which is still dominated by the region’s first generation of HNWIs despite the ongoing intergenerational wealth transfer. However, relative concentration in private equity among private clients in Asia exposes investors to major risks, especially in the current late economic cycle, explained Khazzam. “Over the last ten years, private equity has had a bull run and delivered an outsized relative return, which obviously attracted a lot of attention and investment. But having said that, I think it’ll be harder to continue achieving those same returns for private equity because of where valuations are today,” he said. 34

Accordingly, J.P. Morgan Asset Management advises its clients to employ a ‘core’ and ‘non-core’ approach to alternatives investing. “Core alternatives are those where the majority of the return comes from a forecastable and stable income while non-core alternatives aim to achieve most of their return from capital appreciation,” Khazzam explained, adding that the firm recommends a 70:30 split for a diversified alternatives portfolio. In general, the asset manager includes hedge funds, income-generating real assets, and high-quality private credit in the core basket, while distressed debt and private equity are typically considered non-core. “The need for diversification across core and non-core — like the 70:30 split rule — becomes exacerbated in the late cycle,” he said, highlighting that non-core returns are more market sensitive and very dependent on capital appreciation and valuations, making it more challenging to achieve high risk-adjusted returns in this space. Moreover, a diversified alternatives portfolio can offer investors “a double diversification benefit”, with some alternative asset classes presenting low correlations not only to their traditional counterparts but also to each other. “For example, real assets can be a diversifier to private credit,” Khazzam concluded.

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INVESTMENTS

DPM gains traction with domestic Chinese investors: Noah’s Ma

oah Holdings’ discretionary assets have grown to total US$1.1 billion as Chinese high net worth investors increasingly delegate their investment decisions to professionals given uncertainty in the markets.

William Ma, CIO of Noah Holdings (Hong Kong), told Asian Private Banker that the wealth manager now has two discretionary portfolios — one for its onshore and another for its offshore family office clients — which both use an endowment format. Underlyings include traditional capital market assets and alternatives, such as hedge funds and private equity. William Ma CIO Noah Holdings

“We have seen a huge demand for our DPM and other asset allocation strategies from Chinese clients over the past year as DPM is becoming a bigger topic in their radar screen,” Ma said. “Last year was one of the worst years for the A-share market in history. Only to complicate the issue is the fixed income market which was also quite challenging last year, both domestically and globally. Our clients are demanding more advice from professional financial institutions, rather than investing in the market directly.” Comparing the DPM offering to that of offshore private banks, Ma added that Noah’s endowment-like mandates require clients to lock up their capital for five-to-seven years, enabling the team to invest in a wider set of asset classes and less-liquid products in order to generate premium. Indeed, the USD offshore mandate has returned 50% since its inception in January 2017, while the domestic RMB portfolio has outperformed its benchmark “by the low teens” since its launch in December 2016. Ma also pointed out that the firm aims to achieve diversification across regions and asset classes, even though the RMB mandate is faced with some constraints in terms of overseas investments. 36

“For the domestic DPM, 30% of the exposure is in the QDLP products which are non-RMB products, and the remainder is in domestic PE funds or PE direct deals, domestic hedge funds, and mutual funds,” Ma explained. He added that the investment team’s swift trading ideas and tactical positions are also responsible for the mandates’ outperformance. “China A-share and Hong Kong markets were up 10% early [in 2018] but we believed that investors were super objective and optimistic back then,” Ma said. “Since the January peak, we had already taken down risk exposure by redeeming long-only managers and adding some tradingoriented long-short managers. We started to increase our equity exposure in the second half of 2018 when we believed the market was too bearish.” Heading further into 2019, Ma said investors should be cautious and mindful of risk-on sentiment despite the year-to-date rally. “It’s alarming now, but the market just ignores it as reflected by the strong market sentiment YTD,” he said, adding that a significant portion of Asia Pacific companies reported missed earnings expectations in 4Q18 and that markets are likely to experience a meltdown and volatility in the near term. Yet, in the medium and long term, the wealth manager sees attractive investment opportunities in China’s A-share markets. “We expect the US equity market earnings growth to be 5% this year, and China stock earnings growth to stand at 11%. From a PEG perspective, as the A-share market is trading at 11 times versus the US’s 17, China is still more attractive,” he concluded.

In 2018, Asian Private Banker introduced the China Wealth Awards to recognise China-based wealth management firms which — in the face of a transforming industry — have guided their high net worth clients towards their goals while developing their businesses in a sustainable fashion. The inaugural Asian Private Banker China Wealth Awards attracted over 70 submissions from more than 25 private banks and wealth managers in China, each making a strong case for their respective strengths across business, service, and investment solution categories. Congratulations to the deserving winners! 亚洲私人银行家在2018年首次颁发中国财富奖以此表彰的即使经历资产管理新规带来的巨变仍然持续引领高净值客户接近其财富管理目标并带动行业前进中国财富管理机构首届亚洲私人银行家中国财富奖共收到了来自超过25家中国私人银行及财富管理机构的 70余份参选申请每个申请案都强而有力地展示了其在业务能力服务水平及投资解决方案上拥有自身优势的事例恭喜所有实至名归的获奖者

AWARDS

INVESTMENTS

PBs flock towards bond ETFs despite concerns over cap-weighted construction

ond ETFs have proved particularly popular amongst private banking investors, Vanguard told Asian Private Banker, highlighting that, over the last six months, four of its top ten funds by inflow were fixed income solutions.

Linda Luk, managing director, head of distribution, Hong Kong at Vanguard Investments Hong Kong, said that most bond ETF inflows have gravitated towards the short-duration space, while riskier fixed income products face redemption pressures. Linda Luk managing director, head of distribution, Hong Kong Vanguard

“We find that investors like the flexibility of fixed income ETFs compared to investing into single bonds. Bond ETFs are also more [liquid] than bonds, and they provide diversification and cost benefits,” Luk said. “Corrections and bear markets both happen often, so it’s important for investors to focus on what they can control — creating clear, appropriate investment goals, staying diversified, minimising cost, and maintaining perspective and long-term discipline, particularly in times of market turmoil.” She added that increased volatility tends to affect banks’ confidence in their market outlooks, which generally benefits the ETF space overall.

“Amid recent market volatility, growth and non-investment grade fixed income-related assets appeared to be out of favour with private banks,” Luk said, adding that despite the year-to-date rally, investors are seeking safer investment instruments.

“If the portfolio manager doesn’t have a strong conviction on which fund manager will outperform under uncertain and volatile market conditions, they are likely to use ETFs instead of mutual funds in their portfolio construction,” Luk said.

However, some industry experts have criticised the capitalisationbased weighting method employed by most bond ETFs.

Further, the asset manager identified ‘buy on dips’ behaviour in the last few months of 2018 when markets experienced a tremendous sell-off.

Case in point, panellists at a recent ETF-related event hosted by Asian Private Banker said active bond funds will “reign supreme” over their passive counterparts as the latter’s market cap benchmark methodology exposes it highly indebted issuers, thus running counter to investors’ need for diversified fixed income cash flows.

“Last December, we saw a total of US$50 billion monthly industry flow, largely led by US equity and international equity ETFs,” Luk concluded.

Yet, Luk said that compared to investing directly into bonds, ETFs provide more flexibility and better liquidity, which is why the instrument has gained traction of late.

INDUSTRY

Close to the heart: Women’s wealth matters in private banking On International Women’s Day, private bankers and wealth managers across the region spoke to Asian Private Banker on the finer nuances of addressing the high net worth female demographic, including wealthy women’s deepest worries and most pressing concerns, the evolving roles and burdens they assume in wealth planning and transfer, and their investment interests and priorities. Top concerns: What are some of your female clients’ top concerns, and which areas of wealth management are women most interested in? Wealth planning: In what ways is the role of women evolving in succession and wealth planning? Product appetite: What differences do you see in women’s appetite for private banking products and services?

Marina Lui head of wealth management China, UBS GWM On wealth planning: In Asia, the greater longevity of women is a key reason why women need to focus on longer-term financial planning. Indeed, according to our latest UBS Investor Watch, more than 70% of Hong Kong women believe they will outlive their spouse. We should acknowledge their financial challenges and turn longevity into an opportunity. I believe most women understand that financial planning can help them own both their present and future. As they go through a number of critical stages in life, most of them worry about their long-term care planning, retirement, and insurance. Our clients fully understand that with concrete planning and professional advice, they can have financial security through it all, regardless of their stage of life.

On product appetite: In general, female clients are less aggressive than men when it comes to investments, and are more inclined to look for long-term and stable investments. Most female clients prefer following a disciplined plan for their wealth and are less likely to try ‘time the market’. Women also tend to trade less, which helps their portfolios outperform men’s portfolios with the same risk/return profile. My advice to them would be first and foremost to focus on the long term and stay invested. Also, maintain a diversified portfolio, always integrate sustainable investments in your portfolio, and start wealth planning as early as possible. Better serving female clients is a business priority at UBS Global Wealth Management. Be it men or women, we need financial advisors who understand women’s unique needs, goals and views towards money. We remain fully committed to this very important client segment and will continue to focus our advisory capabilities, evolve our client offering, conduct dedicated research, implement the female/gender view in all relevant processes, and increase the overall diversity of our workforce.

Alice Tan head of private wealth and head of products & investment solutions, Maybank Singapore On top concerns: Women, depending on their marital and career status, have different concerns. Those with family commitments

INDUSTRY

and an extended family would look for accrual growth in their financial and property assets, and even consider an endowment fund for posterity. Female business owners tend to be concerned with business continuity and would be keen to spread their risks with a diversified portfolio, buying into fixed income and structured products. Unlike men, women see value in owning heirloom treasures in the form of limited edition bags, art pieces, watches, jewellery, and haute couture. All these add up to their wealth assets. On wealth planning: A succession plan is crucial when it comes to ensuring the continued success of a family business. For women, helming a family business, finance, relationships and legacy are inseparable. Maybank Private recommends structuring the family liaison around four decision-making pillars: families must first discuss the roles and responsibilities that key family members will take on, decide whether the family will maintain control or invite outside shareholders and have a governance structure, agree on the values and principles that will underscore and guide investment decision-making, as well as consider wealth transfer channels and the myriad of legal and tax implications which follow. On product appetite: Globally, most women listed on Forbes’ list attained wealth through their family wealth, rather than via entrepreneurial activities. Hence, it is not surprising that HNW female clients are generally more risk-averse than their male counterparts, as their wealth was made passively, rather than through taking business risks. Demand for yield products is more pronounced among female HNW clients. That said, we are seeing a clear trend of second-generation HNW women being better educated and more involved in their family businesses. As this group of female investors grows more sophisticated, it is imperative that we engage them deeper in the area of investments by making more resources available to them, such as investment specialists to address their investment needs, and also encouraging them to participate in investment outlook seminars.

Kanas Chan head of North Asia, Deutsche Bank Wealth Management On top concerns: Female clients tend to be more risk-averse than men. Depending on their portfolio compositions, women are often focused on wealth preservation rather than return generation. On wealth planning: From my experience, female clients are generally more interested in wealth succession planning and are more keen to exchange ideas in preparing heirs for continuing the legacy of their families’ business and wealth. High net worth clients usually possess assets around the world, so with more and more regulatory changes in different jurisdictions, clients may find it challenging to understand the evolutions. Therefore, we at Deutsche Bank Wealth Management, are providing educational events and professional advice to women to keep them updated on the regulatory changes and market trends. On product appetite: Traditionally, female clients are more interested in stable-income instruments and tend not to invest in overly

complicated investments. However, there has been a shift in recent years where women in the region are becoming more independent with their own finances, and they are more open to family wealth-planning ideas. At Deutsche Bank WM, we update our clients with our CIO views and market trends on a regular basis. We also organise different thoughtleadership events to provide strategic and insightful ideas to help with family wealth transfer and succession planning.

Grizelda Lee head of DPM, Asia, Indosuez Wealth Management On top concerns: It is common to find women who feel that taking care of others is a personal expectation, hence very often, issues like financial independence, children’s education planning, legacy planning, etc. strike a chord. On wealth planning: These days, women are gradually more so the primary decision makers for financial planning, especially as our society becomes more inclusive. What appears to be prudent, like succession planning and wealth structuring, can, in reality, be an emotionally draining exercise. It is important to lay the groundwork for such complex transitions earlier, instead of waiting for trigger points like ailing health or business buyouts. On product appetite: Many a time, my conversations with female clients revolve around conservative investing, capital preservation, and customisation. However, in time, we also need to take into consideration other factors like lifestyle, behavioural profiling, personal life — as is the case with men, women are not a homogenous group.

Sim S. Lim group head of consumer banking and wealth management, DBS Bank On product appetite: Based on our products, we have observed that female clients are generally interested in achieving a positive impact through their investments. They also tend to be less active on digital investment platforms compared to men. That said, recent research studies have found that when women do invest, they tend to make more informed and calculated decisions than men. Our view is that every individual is unique and so are their needs — this goes beyond categorising by gender. We focus on understanding our clients as individuals, taking into consideration their investment styles, priorities, and preferences. On wealth planning: Increasingly, there are fewer differences in the roles that women and men play today in succession planning. What really matters is their ability to cultivate wealth and take it to the next level, and honour their family’s legacy. As wealth changes hands, what’s interesting is how the next-gen’s globalised perspectives and growing concerns of what’s happening in this world play out. Already, we’re seeing a shift in philanthropy from traditional cheque-giving to sustainable investing and social enterprises. 41

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This is where banks have a role to play — as advisors, we are well placed to help them realise their ability to do good for society and provide access to ways in which they can do so meaningfully. For instance, we at DBS hold a quarterly ‘Windows to Philanthropy’ lunch series to introduce our clients to a range of philanthropy-related topics and connect them to social entrepreneurs.

Ronald Lee head of private wealth management in Asia Pacific, Goldman Sachs On top concerns: Succession planning is a key theme in our conversations with female clients. This covers different topics including wealth preservation, choices regarding education, and business succession. Many female entrepreneurs are also interested in charitable giving as part of a broader focus on making an impact on society. On wealth planning: We see women playing a larger role in succession planning, whether they are taking over the helm of the family business or are involved in making decisions on wealth transfer. A key area of focus is getting a holistic view on the process and that’s where wealth managers can come in to direct clients to review their planning and structuring. On product appetite: There is no discernable difference in the types of product offerings they look for, but we have seen increased openness among women to seek professional wealth management services. Our approach remains the same which is to stay close to the client. As we see more women generating and managing wealth, we also plan to have more senior female bankers to help meet their needs.

Zohra Hajiani managing partner, private client group, WGC Wealth On top concerns: The increasing levels of active involvement by women in matters concerning financial planning is truly refreshing. Most women prefer to have their portfolio in the growth phase with maximum investments in the equity market since they promise longer and double-digit growth figures. However, during the retirement phase, the preference is largely towards financial instruments that guarantee inflation plus risk-free returns. However, there are still key concerns that keep them up at night. One of the primary issues is their absolute understanding of the various financial instruments, which brings in the fear of taking decisions and prudently allocating surplus funds. Age is another key factor that acts as a major concern for women when it comes to understanding family wealth. For those who are in their 50s and have always been homemakers, it is difficult to fathom being involved in decisions pertaining to the family wealth, should they survive their husbands. Though, the levels of involvement are increasing in order to retain their lifestyle, health, and 42

avoid dependence on children and lead a financially secure and stable life. This also holds true for single mothers and widowed women. On wealth planning: While the traditional mindset continues to remain wherein men are deemed to be better equipped with financial decisions, a slow but steady increase in the involvement of spouses/daughters in financial matters is being witnessed. We largely recommend family members sit together for portfolio review meetings and understand the overall financial wealth of the family. One important trend we see today is wives actively ensuring their financial independence. We believe that familiarising women with money matters, bank accounts, filing returns, and systematic investment plans or mutual funds would be instrumental in managing their own portfolios with the help of a trusted advisor. On product appetite: Being able to provide for their lifestyle and independently establish financial security, no matter what their age or circumstance, is the need for every HNW client. Regular income is a key factor that determines their attitude towards wealth planning and creation. They want to see their goals — such as being able to provide for themselves, higher education and marriage for their kids, and quarterly planned international holidays — being met. Some of them also want to contribute to the charity of their choice while they are alive and are keen to have such regular cash flows to give back to society along with enjoying their post-retirement phase. Amongst the fairly younger audience (up to their early 40s) there is a huge appetite to save and invest in equity with a long-term return focus. They seem keen to allocate 20-30% of their portfolios to small and mid-cap stocks or mutual funds based on hand-holding done by the trusted advisor and also plan for health insurance, life insurance, and retirement. At WGC Wealth, we are working to advise women and actively engage them in portfolio reviews to provide yearly cash flows, adopt passive investment strategies to avoid volatility, and revisit goals set at the beginning of the year to ensure that the future cash flow matches the intended needs.

Marc Van de Walle global head of products, Bank of Singapore On wealth planning: Client conversations on succession planning are centered around achieving the desired outcomes outlined by the owner of the assets, regardless of whether the asset owner is a man or a woman. In our experience, female decision makers of family businesses tend to prefer solutions which also consider the emotional and practical aspects of the family to ensure that their family values are enshrined in the planning. On product appetite: Women tend to be more considered than men when making investment decisions, leading them to generally trade less. They also take a longer-term view. This helps them to achieve good investment performance.

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Rohit Ganguli head of wealth planning Asia, EFG Bank AG, Singapore Branch On top concerns: While each case is obviously different from the other and each case entails different concerns and wishes, generally one of the main concerns we see from women clients is a concern on the provision of adequate income sources and liquidity in the future to ensure that the family is well looked after, that children’s education needs are fully provided for, and also to try and avoid family disputes which can happen when there is no clear succession plan. On wealth planning: Succession planning is a key concern with many clients — this is an area that largely deals with the preservation of the wealth the client has generated over his/her lifetime and looks at a suitable solution to allow the transmission of this wealth to future generations in accordance with the client’s wishes. A suitable succession planning strategy must be bespoke and involves detailed discussions by us with clients to not only understand their background and concerns in this area but also to ensure that any proposed solution is an exact fit for them. While these discussions were previously most often had with the patriarch of the family, increasingly we see that women are an integral part of succession planning discussions and in framing the solutions we can assist with, given the evolving multi-faceted role they play in families today. On product appetite: In our experience, there is not really a noticeable change in the appetite of any of our clientele, whether male or female. The main drivers to put in place a succession plan have always been planning on how best to preserve their estate and to protect loved ones, and this will generally always be the case. There are several tools to address these concerns including trusts, foundations, corporate structures, and insurance solutions. As mentioned, there must be detailed discussions with clients to ensure the most suitable tools and solutions are in place. At EFG, clients’ needs and interests are our top priority — as such, we have always partnered with our clients to understand their individual needs and to identify solutions which work for them before moving ahead to work on these solutions. This approach is critical to ensure you have ‘got it right’. Additionally, the awareness of trends and the manifold products available in the market is an important part of our role to ensure we are able to make the difference.

Ivy Li head investment specialist, fixed income, Asia, Bank Julius Baer On product appetite: When it investment, there isn’t much between men and women. All about risk and reward. There

comes to difference along it’s might be

certain occasions when men are more open to ideas in the automobile space and women look more to the high fashion industry, for example. Nevertheless, this type of gender stereotype would never be the investment consideration. Regarding risk tolerance, some might think that it’s higher for men than women. That also depends on factors such as the source of wealth, investment horizon and risk appetite, and income needs, etc. We don’t see that a woman investor would have a lower risk appetite than her male counterpart. Over the years, with an increasing number of women professionals and entrepreneurs, demand for products and services management from female high net worth clients has been on the rise.

Prateek Pant head of products & solutions, Sanctum Wealth Management On top concerns: In the context of wealth planning, the key areas of concern for women are to ensure that family harmony doesn’t get disrupted and that there is hasslefree transmission of wealth. When they have their children or intended recipients living in another jurisdiction or overseas, it becomes all the more cumbersome to have to deal with administrative complexities, so they want to understand how to pass on wealth in a seamless and efficient manner. When you have clients with minors, the key concern becomes how will financial affairs be managed for the children should something happen to both parents. On product appetite: In Indian society, it’s predominantly the patriarch that calls the shots. However, we are seeing a gradual change, wherein women are starting to take an active rather than just a passive approach pertaining to estate and wealth planning. Women are beginning to become key influencers in opening up discussions around wealth planning because the community is beginning to realise that while it’s important to grow wealth, it’s equally important to preserve wealth and ensure its smooth transmission to the next generation. So women are actually influencing patriarchs to have a discussion on and to do something about such matters, rather than keeping them on the backburner. Usually, men tend to have a very goal-oriented or objective discussion, while women tend to pay heed to the softer emotional aspects that become very relevant in discussions like these. However, women may face challenges like getting involved in matters related to wealth only at a late stage, in many cases only when there are trigger events like a death in the family. Moreover, it’s mostly the patriarch that holds information pertaining to wealth and this information is not readily available to other family members or spouses, so women may struggle with actually understanding where all the assets are located or invested. Most significantly, when women participate in discussions, it’s considered more of an indulgence rather than an expectation. So when we have discussions on wealth planning with clients, we do encourage women to participate, get apprised of the entire estate and prepare for any eventuality so they can deal with things head-on rather than running helter-skelter when they need to get involved. 43

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TECHNOLOGY

At the vanguard: Private banking’s women in tech talk inclusivity and innovation Leading the charge on digital transformation at private banks, the industry’s top women in tech spoke to Asian Private Banker on International Women’s Day about improving inclusivity for women in the industry, their personal experience in driving tech projects, and how digital solutions can positively impact female HNW clients. Evy Theunis head of digital wealth, DBS Bank How can the fintech industry promote inclusivity for women? Organisations should be mindful of their female representation, and hiring numbers are a good start, but inclusion goes beyond that. It entails ensuring both men and women have equal chances to lead, and a say in key decisions vital to the organisation’s well-being and future. Upon identifying such gaps, address them by taking action — don’t stay in the comfort zone. If too few females are in technically skilled fields, go the extra mile to understand why, rejig the role to better address their needs, and build a network to reach these talents. For instance, DBS launched its inaugural Hack2HireHer programme this year, which is an initiative aimed at boosting our intake of female technologists. Also, do be aware of pre-set biases. Often, we may not realise that certain biases or stereotypes are clouding our judgement — this applies to everyone, myself included. These aren’t representative of an individual, or the value he or she can bring to an organisation. Make a conscious effort to keep an open mind. That said, it is heartening that the industry has become more cognisant of the value-add diversity brings, be it in terms of gender, background or

I was four months pregnant when DBS hired me to lead a major project, which wasn’t the most common nor the easiest move for an organisation to make perspective. More organisations are increasingly strengthening their awareness efforts, which is a significant step towards creating a more inclusive environment. What has been your personal experience as a woman in fintech? One of my key learnings so far is that we are our strongest advocate. Too often, we hinder ourselves from progressing by getting consumed by what society expects of us or regards as the norm — for example, “your priorities will change upon becoming a mum”, “women shouldn’t be too ambitious” — when what we should do is to understand what we want for ourselves, speak up about our aspirations and thoughts, and openly pursue them with confidence. Put in the fight, and don’t leave things to chance. It is also essential to find yourself an environment that supports, nurtures and gives you room to grow. Often the only female at the table in my previous roles, I was pleasantly surprised to see many 45

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high-ranking women in DBS — all of whom were different, be it in their personal or career backgrounds, stage of life, etc. To me, this spoke volumes about the company — success wasn’t defined by a certain gender or stereotype; it wasn’t a one-size-fits-all. Everyone had a chance at it just by being who they were. People play a key role, too. I’m grateful to have met people who believed in me and helped me to progress. I was four months pregnant when DBS hired me to lead a major project, which wasn’t the most common nor the easiest move for an organisation to make. But they saw my potential and took a chance on me, for which I am very thankful. How can the finance industry use tech to better meet the evolving needs of female clients? Women may have certain life-cycle needs such as longer life expectancies, which need to be factored into their long-term financial planning or maybe they need to be more involved in managing the family’s finances. They may also display behavioural characteristics such as being less active on digital investment platforms compared to men but tend to make more informed and calculated decisions when they do invest. However, these aren’t prescriptive, especially as society continues to evolve over time — gender lines are blurring and ageold stereotypes (for example, men run the business, women run the family) no longer hold. Every individual’s needs are unique and can’t be categorised by gender. Instead, these needs are determined by the job or activity at hand. This is reflected in our technology efforts as well. Taking our digital investment tools as an example, we are continuously focused on enhancing them based on client characteristics such as their familiarity and investment style, not gender. 46

Vivien Jong chief digital officer for Asia, BNP Paribas Wealth Management How can the fintech industry promote inclusivity for women? While there is still a lot of work to do — not just in finance and tech but across the board — some notably encouraging steps have been taken. Certainly, at BNP Paribas, there have been a number of initiatives to increase representation of senior women. For example, the bank is a signatory of the Women in Finance Charter and the UN’s Women Empowerment Principles and is implementing gender targets for participation in leadership programmes. As a single parent, it’s also important for me to have workplace flexibility. I would not have been where I am today if not for great mentors, great bosses, and great work environments. I have personally benefited from many remarkable leaders and if I can pass these attributes forward, I am sure others will see that it is possible to improve inclusion for women, enrich the talent pool, achieve results, and drive innovation.

I am sure others will see that it is possible to improve inclusion for women, enrich the talent pool, achieve results, and drive innovation

TECHNOLOGY

What has been your personal experience as a woman in fintech? During my 24-year-long career in the business, I have had to overcome many challenges commonly faced by women around the issue of gender imbalance. With technology deemed as a male-dominated sector, gender discrepancies become even more pronounced. Even though a lot of progress has been made and the tech industry is becoming more diverse and companies are directing more resources to help develop more gender-balanced teams, the gender gap is still an issue that needs tackling. How can the finance industry use tech to better meet the evolving needs of female clients? Our digital strategy focuses on client experience through digital offerings to meet client needs — so we are gender-agnostic on this topic currently. However, BNP Paribas Wealth Management is committed to understanding, serving, and celebrating women entrepreneurs and we have developed specific initiatives to support these goals. Our annual programme at Stanford University involves mentoring, training, and high-level networking for women entrepreneurs. Nearly 150 women have since benefited from this unique growth and leadership programme that started in 2015.

Cat Rüst head of innovation technologies for Greater China, UBS GWM How can the fintech industry promote inclusivity for women? I am extremely fortunate to work in UBS Wealth Management Asia Pacific where over 60% of employees are female. It’s an incredibly inclusive environment and the presence of inspiring female role models, leaders and mentors is, without doubt, empowering others to follow in their wake. In real terms, female mentors, nursing rooms, parental breaks, etc. are all part of what is offered to support women at UBS. But it really goes beyond that, well into the whole culture of diversity and inclusion. Our digital hub in Kowloon also caters to our female clients focusing on how technology affects their businesses, their lives, and their families. Equality isn’t the case in all aspects of the finance industry, nor is it the case in the tech industry. I think the problems start much earlier and are well embedded in society so we also need to be looking at initiatives such as those keeping girls in STEM subjects — for example, the Women’s Foundation’s Girls Go Tech programme — where previously they might have been discouraged.

Equality isn’t the case in all aspects of the finance industry, nor is it the case in the tech industry.We also need to be looking at initiatives such as those keeping girls in STEM subjects Additionally, women need to value their own worth. I used to have a female developer who worked for me — very young but highly capable. We did a ‘holocracy’ workshop whereby everyone discussed their salaries and relative pay. We were an incredibly diverse team, men and women, with no two developers from the same country and they jointly recommended an increase in her salary. She hadn’t believed how good she was, and happily, that has changed! Having run multiple tech start-ups before joining the bank, I have been impressed by how being different has been seen as such an asset. It’s that culture of inclusion that we all need to be building. 47

TECHNOLOGY

PBs in Asia shift tech focus from client-centricity to RM productivity

aving dedicated considerable resources towards creating clientfacing tools that cater to Asian HNWIs with an affinity for convenience, many private banks in the region are now looking inwards with a renewed focus on relationship manager productivity.

Nicole Bodack managing director and APAC head of wealth and asset management Accenture

In the last few months alone, Credit Suisse launched CS Chat and DBS rolled out Wealth Chat for their private clients in the region who demand convenient channels through which to communicate with their relationship managers. However, given high frontline salaries amid an ongoing hiring drive, increasing compliance costs, and a challenging year for markets in 2018, the focus has shifted to solutions addressing relationship manager productivity and efficiency. “Private banks will continue to struggle making the money they used to make without the right investments in technology,” Nicole Bodack, managing director and APAC head of wealth and asset management at Accenture, told Asian Private Banker. “We will probably see more technology solutions that can improve advisor performance, to trickle down best practices from top profitgenerating RMs to the rest of the team.” Echoing Bodack’s sentiments, two industry sources who spoke to Asian Private Banker on the condition of anonymity said private banks in the region are prioritising building tools in-house to maximise relationship manager productivity. “Developing our RM tools in-house will allow us to have more control because that’s going to help drive further operational improvements for our RMs,” a source from one private bank said, with the other adding that “only a fraction” of their bank’s ongoing projects are client-facing. Specifically, banks view artificial intelligence as a stone with which they can kill two RM-related birds. Not only can AI-driven tools perform manual operations and assist in investment decisions, thereby freeing time for the relationship manager to spend serving clients, but such technologies can also make it significantly easier for banks and their relationship managers to comply with increasingly stringent regulations across jurisdictions, thus cutting both costs and risk. “Moving forward, we will see a lot more people looking into what AI can do around advisor efficiency, how to get the advisor the right type of information that they want to see at the right point in time to just the right clients — the right call in the right moment,” said Bodack.

Credit Suisse Private Banking, for example, has employed live ‘robots’ since 2017 to improve operational efficiency and reduce human error, while last year, UBS deployed 700 such bots globally, including 100 in Asia to assist in AML, onboarding, and advice distribution processes, complementing the role of the relationship manager. Meanwhile, other banks in the region look to boost RM productivity by consolidating and streamlining relationship manager tools, such as DBS Bank’s RM Mobility platform, which has proved successful in cutting inefficiencies. “[RM Mobility] has certainly significantly reduced RMs’ preparation time,” Patrick Dreyfuss, DBS Wealth Management’s COO, told Asian Private Banker in December. “More importantly, it brings up the quality and consistency of the information shared with the client.” According to Bodack, such efficiency gains could lower wealth management fees and, in turn, attract a larger client base and thus higher revenue. “Clients in Asia tend to jump around, so the opportunity to provide better discounts on products is a major issue for private banks. This will be explored further to increase profitability in challenging times,” she explained. In March, DBS Bank launched digiPortfolio — a robo-driven portfolio investing tool — in a bid to lower fees and boost revenue as the solution is rolled out in more jurisdictions and is made accessible to more client segments over time.

TECHNOLOGY

AppMap: The 2019 update As private banks in Asia continue to invest in technology, Asian Private Banker reviews the milestones that the industry has reached in its 2019 update of AppMap — the most comprehensive roundup of front-office and client applications deployed by the region’s wealth managers. Significant updates and tweaks in the last 12 months include reducing the friction of client-RM communications, upgrading personalisation, and enhancing digital investment propositions. Learning to talk In order to establish communication audit trails, private banks have enhanced their in-app instant messaging features to be as seamless as possible, aiming to match the convenience of popular third-party messaging apps such as WhatsApp and WeChat. While some private banks have added the option for voice and video calls, in the case of Bank of Singapore and Credit Suisse, more advanced functions like file and screen sharing are respectively offered so RMs and clients can review identical information during their discussions. Still, Asian HNWIs’ affinity for WhatsApp and WeChat is hard to curtail and communications with RMs are often remain on these

channels. While institutions like Deutsche Bank Wealth Management have opted for internally-developed instant messaging, the likes of DBS and Credit Suisse have added compliance layers to thirdparty apps so all communications history can be recorded in — and retrieved from — the banks’ servers for audit purposes.

To each their own To deliver unique client experiences, private banks have added more personalisation features to their apps. To customise content, DBS’s iWealth curates research articles based on a client’s portfolio holdings while Credit Suisse, via the CS invest platform, generates ideas based on clients’ pre-selected interests. A number of banks also allow clients to modify notification settings so that alerts are sent when a particular investment of choice is priced above or under a certain threshold. On usability, UBS has designed a customisable interface which allows users to pick which charts and news to display on their landing page.

Investing by fingertip Pending regulatory approvals, private banks have, slowly but surely, been adding trading capabilities to their apps in a bid to increase transactional and, in some cases, recurring revenue. Currently in its infancy, apps with trading execution functions mostly have vanilla asset classes on offer but some (UBS, Vontobel, and VP Bank) have made a selection of structured products available. In the case of DBS and its recently launched digiPortfolio, roboadvisory and discretionary portfolio management have simultaneously made its way into apps, with the robo-advisory component of the solution democratising DPM investing. 51

TECHNOLOGY

Target User

Private bank

App

Portfolio information

Client

Bank of Singapore

Bank of Singapore digital services

- Touch ID (fingerprint) - Face ID (facial recognition by Apple) - 2FA via OTP

- Portfolio overview; breakdown by asset class, instrument, sector, geographical distribution (Portfolio 360) - Updated at periodic intervals in a day - Rates updated at start of business day

Bank of Singapore

Bank of Singapore RM Navigator app

- Portfolio overview; breakdown by asset class, instrument, sector, geographical distribution (Portfolio 360) - Updated at periodic intervals in a day - Rates updated at start of business day

Client

BNP Paribas WM

Voice of Wealth

Client

BNP Paribas WM

myWealth

- Touch ID (fingerprint) - Face ID (facial recognition by Apple) - 2FA via OTP

- Portfolio overview; breakdown by asset class and currency distribution

Client

BNP Paribas WM

The Leaders' Connection

Client

Citi PB

Citi Private Bank In View

- Touch ID (fingerprint) - Face ID (facial recognition by Apple)

- Portfolio overview; breakdown by region, asset class, and currency distribution

TECHNOLOGY

Transaction execution

Available for clients booked in...

Other

Instant messaging

Research & content

Reporting

Yes; includes multi-party video calling and file sharing

All research published by the CIO team and provided through Morningstar within past 12 months; updated intra-day

- Monthly statements - Contract notes - Important notices - General updates

HK & SG

Yes; includes multi-party video calling and file sharing

All research published by the CIO team and provided through Morningstar within past 12 months; updated intra-day

- Monthly statements - Contract notes - Important notices - General updates

HK & SG

Content library for investments, insights on financial markets, market trends, reports, and research

Trades available on Australia, Hong Kong, Japan, and Singapore exchanges

Yes

Equity research publications, news by Thomson Reuters, daily market commentary, and news curated to clients' portfolio

- Pre-generated monthly statements by month or customised date range

HK & SG

N/A

Private networking application for BNP WM investors to: - Contact each other - View sell-side mandates from the bank - Share and discuss investment ideas on co-investments

Yes

Reports, description of products and services

- Statements, confirmations and tax information which are sharable with relationship team

HK & SG

TECHNOLOGY

Target User

Private bank

App

Portfolio information

Client

Credit Suisse PB

Credit Suisse PB APAC App

- Touch ID (fingerprint) - Face ID (facial recognition by Apple) - 2FA via digital token

- Portfolio overview; breakdown by asset class and currency distribution - Positions viewer; compare performance against benchmarks - Personalised watchlist to track multiple assets & notifications on FX and equity trade activity - For CS Invest clients: CS Invest portfolio summary page, customised investment ideas (within last 30 days), notifications for portfolio development

DBS PB

RM Mobility

- Portfolio overview; breakdown by geography, sector, asset class and currency distribution - Portfolio analysis; breakdown by credit portfolio, transaction history, retail holdings, account information, outstanding call reports, and notifications

Client

DBS PB

DBS iWealth

- Touch ID (fingerprint) - Face ID (facial recognition by Apple) - 2FA via digital token & OTP

- Portfolio overview; breakdown by geography, sector, asset class and currency distribution - Portfolio analysis and transaction history for past 12 months - Access to retail accounts

Client

Deutsche Bank WM

Deutsche Wealth Online APAC

- Touch ID (fingerprint) - 2FA via mobile digital token

- Portfolio summary overview; breakdown by asset class and currency, performance charting, P&L view - Portfolio consolidation to view aggregate portfolio views

Deutsche Bank WM

Deutsche Bank WM Spotlight

Deutsche Bank WM

ECQ Pricer

TECHNOLOGY

Transaction execution

Available for clients booked in...

Other

Instant messaging

Research & content

Reporting

Securities on major global exchanges, FX spot and forward trades

Yes; includes video calls, audio calls, and screen sharing capability

Proprietary investment strategy and research publications

- Bank statements, correspondences and advices within past 12 months - Document sharing function

HK, SG & AU

Funds – purchase and redemption

Proprietary research and insights

- Research, documentation and meeting details - Shareable with clients

- Available on iPad instead of mobile - Other features: calendar, conversation planner, client 360 - Prepare and deliver customer presentations - Consult and capture call reports

Equities in 7 markets, funds, FX, fixed deposit, online leveraging and banking transactions

Yes; via DBS Wealth Chat on WhatsApp

Proprietary research and insights, personalised research articles related to client’s portfolio holding, CIO equity insights and relayed research, insights on selected DBS focus funds tailored to the customer’s risk appetite

- Bank eStatements - Wealth eAdvices - Portfolio-related price alert notifications for equity, FX, funds, and fixed income

HK & SG

CIO insights and selected publications

- Monthly and daily statements - Advices and correspondences

HK & SG

Market news and updates across all asset classes

N/A

- Price discovery app - "On-the-go" equity structured product solutions and live pricing

TECHNOLOGY

Target User

Private bank

App

Portfolio information

Client

Goldman Sachs PWM

Goldman Sachs Private Wealth

2FA via OTP

- Porfolio overview; breakdown by asset class, positions, and recent transactions

Client

HSBC PB

HSBC Private Bank Mobile

2FA via OTP

- Portfolio overview; breakdown by asset class - Account balance are as of previous business day

Client

Indosuez WM

Indosuez Insights

Client

Julius Baer

JB Investment Insights

Client

Pictet WM

Wealth

- Portfolio overview; breakdown by valuation, performance and asset allocation - Includes market and currency effects on each security

Client & RM

Standard Chartered PB

Portfolio View & Messaging

- Touch ID (fingerprint) - Face ID (facial recognition by Apple) - 2FA via OTP

- Portfolio overview; breakdown by asset class - Currency rates valued daily at start of business day via Thomson Reuters

Client

UBS GWM

UBS Mobile Banking

- Touch ID (fingerprint) - 2FA via authentication app 'UBS Access'

- Portfolio overview; breakdown by asset class and currency distribution - Updated and screened for daily health

Client

Vontobel WM

Vontobel Wealth

Touch ID (fingerprint)

- Portfolio overview; breakdown by asset class and currency distribution

Client

VP Bank

VP Bank e-banking mobile App

- Touch ID (fingerprint) - Face ID (facial recognition by Apple) - 2FA via OTP

- Portfolio overview; breakdown by asset class, sector, and currency distribution

TECHNOLOGY

Reporting

Available for clients booked in...

Other

Proprietary research, insights and strategies, market news and data

HK & SG

Daily news, proprietary economic and financial research

N/A

Proprietary research, CIO and investment content via articles or videos

N/A

Yes

Proprietary publications, research and videos, macroeconomic news, market data and charts for each position

- Account statements - Correspondence with RM

HK & SG

Yes

- Account statements - Advices

HK & SG

Equities, funds and selected structured products

Yes

Proprietary publications, CIO views and research, market and trade news

- Account statements - Advice and correspondence

HK & SG

Equities, bonds, selected funds and structured products

Yes

Investment topics, news and publications

- Account statements - Investment proposals - Wealth statements

Available to Asia clients who are booked in Vontobel's Swiss booking center

Payments, equities, bonds, selected funds and selected structured products

Yes

- Account statements - e-Post documents

Transaction execution

Instant messaging

Research & content

AWARDS

The Asian Private Banker Technology Awards recognise best-in-breed technology solutions and services providers for Asia’s wealth management industry with an emphasis on quality, relevance, business performance, and foresight. This year, the Judging Panel received an unprecedented 120plus submissions from 35 vendors and also had the pleasure of welcoming a number of firms to the programme’s first ever ‘Demo Day’ in Hong Kong. Thank you to all who participated and congratulations to those who came out on top!

AWARDS

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Industry-wide participation necessary to tap WM opportunities in GBA: KPMG

hile the relevant authorities scour through proposals as they make progress in realising their Greater Bay Area (GBA) ambitions, private banks in Hong Kong should collectively communicate with the government in order to capitalise on the potential wealth management opportunities, according to Vivian Chui, partner at KPMG. Since July 2017 when the governments of Hong Kong, Macau, and the Guangdong Province signed a framework agreement to develop the GBA, a number of private banks in the region have taken steps to target growth opportunities in the area. Bank of East Asia, for example, has drawn up a GBA plan covering client acquisition, product innovation, and process optimisation, while Bank of Singapore has been mobilising resources around its Greater China franchise. “The GBA undoubtedly presents huge opportunities for private banks. In fact, the financial sector is one of the key major sectors the governments would like to promote in the GBA plan,” Chui told Asian Private Banker. “But in order to further explore the opportunity, it is important to communicate with authorities on the unique needs of infrastructure to establish a successful wealth management ecosystem in GBA. This can hardly be done by individual private banks but needs the industry to come up with ideas and proposals as a whole.” According to the GBA Outline Development Plan published in February, three sectors have been prioritised, namely, the advanced manufacturing, financial, and ‘strategic emerging’ — such as healthrelated technology and 3D printing — industries. For the financial sector specifically, Hong Kong is expected to drive development in the area given its role as an international financial hub. Further, the GBA plan emphasises the importance of facilitating connectivity between Hong Kong’s and Shenzhen’s financial markets 60

in a bid to expand the scale and scope of cross-boundary RMB business in the GBA. The Outline also suggested that cross-boundary transactions of funds, insurance, and other financial products be conducted in “an orderly and regulated” manner and that cross-boundary product categories and funding channels be expanded in both depth and breadth. It also highlighted the possibility of allowing the cross-distribution of wealth management and various RMB investment products within the GBA. “Currently, most private banks in Hong Kong are targeting offshore Chinese wealth and it has already contributed enormous growth to their wealth management business,” Chui said. “GBA offers the opportunity for Hong Kong private banks to tap into the much larger pool of onshore wealth, providing a channel for Mainland investors to gain international investment exposure while also increasing international clients’ access to China.” Last year September, the Private Wealth Management Association (PWMA), in partnership with KPMG, published a whitepaper recommending the development of a wealth management scheme in the GBA for mutual sales access, as well as less restricted cross-border fund transfers. “A lot of details in this suggested scheme are still waiting for discussion, but the possible construction of the ‘wealth connect’ scheme would be a quota system on wealth management investment — something similar to QDII but in the unit of HNW investors,” Chui added. Under the current QDII scheme, qualified domestic institutional investors can apply for offshore investment quotas. In the first two months of 2019, the overall monthly quota was around US$101 billion, which is subject to change every month at the discretion of the State Administration of Foreign Exchange.

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China Regulatory Round-up: Reforms impact HNW client product preference

hina’s wealth management landscape has undergone a major transformation over the last two years, driven by three rules the government implemented in order to stop wealth management products (WMPs) being issued with implicit guarantees and avoid conflicts of interest between product issuers and wealth managers within a bank. The rules comprise the ‘Guiding Opinions on Regulating the Financial Asset Management Business’ (Guiding Opinions), the ‘Measures for the Supervision and Administration of the Wealth Management Business of Commercial Banks’ (Wealth Management Measures), and the ‘Measures for the Administration of Wealth Management Subsidiary Companies of Commercial Banks’ (Measures for Bank Subsidiaries). The first, Guiding Opinions, standardises asset management principles and lays out the rules on establishing wealth management subsidiaries for institutions whose primary business is not asset or wealth management. Such subsidiaries are regulated by the Wealth Management Measures. Further, if the subsidiary is owned by a bank, the setup must comply with the Measures for Bank Subsidiaries. The second and third principles are more prescriptive in nature, describing how wealth management subsidiaries should operate on an everyday basis to remain compliant with the Chinese authorities’ new standards. “For private banking services provided by banks, it would fall into the area of different new regulations depending on its business type,” Liu

Linlin, partner at King & Wood Mallesons Beijing, told Asian Private Banker. “The Guiding Opinion regulates money trusts and asset management services but may not be applicable to family trusts. If the service or product is taken as a wealth management product, it would be Liu Linlin regulated under the Guiding Opinion. As partner King & Wood Mallesons for tax consultancy and wealth planning Beijing businesses, it is likely that it will be regarded as assets management advisory and consulting services, which shall be provided by wealth management subsidiaries and be regulated by the Wealth Management Measures and rules regulating wealth management subsidiaries.” To cater to Chinese clients’ need for wealth management services, the China Banking and Insurance Regulatory Commission (CBIRC) has approved applications by the country’s five major banks to set up subsidiaries and has also accepted applications from local commercial banks. According to Liu, by removing implicit guarantees, the new regulations have increased investment risks, thus shifting private clients’ product preferences. “Before the launch of Guiding Opinions, wealth management products issued by banks, trusts products and other instruments

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with fixed income comprised the majority of private clients’ portfolios,” Liu explained.

facilitate the incorporation of foreign private banking and wealth management platforms in China.

“Since the new regulations target combating ‘implicit guarantees’ — which existed in many of the aforementioned products — it is likely we’ll see a divergence in private clients’ appetite in the future. Clients who would rather sacrifice return for capital protection would likely invest in structured deposits or certificates of deposits, while more sophisticated clients with a higher risk appetite may move towards private equities and investments, on top of existing wealth management products.”

“The private bank and wealth management business in China is subject to industry regulations on licensing and on-going compliance requirements, which is a source of regulatory burden and can be costly to comply with. Foreign private banks and wealth managers are particularly susceptible to this, given their lower tolerance for regulatory risks,” Wang told Asian Private Banker.

To prepare for diverse client needs, Liu suggested private banks in China strengthen their in-house investment capabilities in order to provide a wider range of services. Meanwhile, foreign players have gained more flexibility from China’s authorities, who recently passed the Foreign Investment Law, making good on the promise Guo Shuqing made in 2017 to better accommodate overseas banks. “According to the Foreign Investment Law and the negative list on special management for foreign investors updated in 2018, the restriction for foreign investors that the foreign shareholdings on securities investment fund management companies cannot exceed 51% will be abolished in 2021,” explained Liu. Jack Wang, partner at Allen & Overy Shanghai, added that the Foreign Investment Law, in addition to other relevant regulatory changes, will

Jack Wang partner Allen & Overy Shanghai

“In this regard, the new FIL provides that, subject to the few exceptions specifically set out in law, foreign investors should have national treatment (i.e. same treatment as the Chinese domestic players). If properly implemented and enforced, this should represent FIL’s biggest impact from the perspective of foreign private banks or wealth managers.” Owing to China’s fast-growing HNW population, foreign private banks are eager to nab a piece of the China pie through joint ventures. Recently, the Chinese government eased shareholder requirements, allowing overseas banks to have a majority stake in the business. First off the mark in December 2018 was UBS, which received the official go-ahead to up its stake in UBS Securities to 51%, followed by Nomura and J.P. Morgan which were given the green light in March.

PEOPLE MOVES

Movers & Shakers Asian Private Banker maps recent industry moves. For the bigger picture, click on People Moves at www.asianprivatebanker.com

n the wake of discretionary bonus announcements, March saw bankers choose between staying put or seeing if the grass really is greener despite concerns over whether or not the talent war is drawing to a close. While a number of recruiters hold a positive outlook on 2019’s private banking job market given the year-to-date rally, others are less optimistic. “All private banks have done a lot of hiring in the last three-to-five years, especially tier-two banks. However, the performance in terms of the transfer of assets of new hires is quite limited. As banks haven’t reached the AUM they want, they are more reluctant to increase RM headcounts,” Sid Sibal, director at Hudson Hong Kong, told Asian Private Banker. “2019 will be tough for private banks in Hong Kong — banks are cautious in hiring and will be very cost-based probably for the entire year. On the other hand, bankers are more inclined to stay with their current employer and are looking less actively at opportunities to move.” In terms of markets, Sibal said banks are keen to hire Greater China relationship managers — including those with experience in the 64

Taiwan market as well as tier-two Chinese cities and below — in a bid to attract new assets. However, he added, private bankers are “feeling the effects of regulation changes” in the Mainland and it’s becoming increasingly difficult to move assets from China to Hong Kong, so the slowdown in hiring will likely continue. As for the Singaporean market, Liu San Li, business partner at wealth management firm Avallis Singapore and a former private banker, told Asian Private Banker that most private banks are “hiring but very selectively”. “The private banks now only prefer hiring bankers at the director level or above and are quite selective for associate directors. Although still hiring, the first-tier private banks, especially the ones with major [pre-existing] hiring plans, are much less aggressive,” he said. According to Liu, employees who choose not to move will still be faced with more challenging performance targets. For example, the KPI for revenue is “forever increasing yearly” at a pace of US$250,000-500,000 per annum — significantly higher than the basic 5-10% annual salary hike.