Is Usain Bolt the answer for Asian wealth management?

Private client investors in Asia are on the move. Fast. If wealth accumulation was a sprint, this region would be the equivalent to Jamaica’s Olympian Usain Bolt. Some are even predicting the total number of millionaires in the region to double again in 36 months. That is lightning bolt speed.

Whether you believe the numbers of not, growth is evident. Keeping up is going to be tough for the industry. And most wealth managers in the region are already breathless. Many appear uncertain what they will need to do next to convince clients to choose them.

Many, we think, are competing in the wrong race. To challenge for future business, they will need to consider adjusting their whole approach. 

In our view, there is evidence of a subtle, yet fundamental change underway in the requirements among Asia’s HNWIs. Crucially, the demands for opinions, knowledge and advice from wealth managers are on the up – at all wealth levels. 

Historically, without any sense of irony, when it comes to strategic planning, the industry has acted as if it has always believed its past is the best prediction of its future. In Asia, the industry has generally claimed all clients have only ever wanted supportive execution desks. Said often enough, it becomes fact. 

Based on this ideology, looking ahead, as the regional HNW client population swells, these wealth professionals believe success lies in having more brokers and offering better prices, to meet the wave of demand. Evidence for this typically includes information on how many advisers a client in the region maintains. 

The theory goes in Asia that the greater the number of advisers used by a client at multiple firms, the more of a market jockey a client actually is. But what if there is a different reason for this number? What if this relationship multiplicity is pointing to a transitional situation? What if, and this is critical, this number represents an ongoing quest by Asia-based clients to find a better valued relationship?  

Our insight about the Asian wealth consumer indicates a large proportion express deep frustration in having to have a series of different corporate relationships purely in order to get access to different types of necessary expertise to solve their wealth needs. Why is it not possible, they wonder, to get a team of specialists in one institution that can complement each other and provide a fuller wealth solution?  

To them, this is an extremely important issue in their future selection of wealth providers.

Our insights in Asia show HNW clients are not actively seeking out as many multiple relationships as the industry believes. Many openly state that if they could avoid this multiplicity in relationships across firms, they would. They long for the consistency of one corporate relationship focused not on trading the markets but on planning the future of their wealth. 

In reality, Asia-based clientele are often very aware of their deficiencies and when it comes to wealth, they know information is king. Currently, they value sources that can fill this need, and the region’s HNWIs are seeking out providers that can make a difference. Based on our latest Futurewealth research, it is clear that as a region, APAC consumers are the most aware of not getting the guidance they require.

Looking to the future, the Asia-based client is clearly trending toward an interest in a more complete wealth relationship, for better value. The capability of traditional firms in the region to undertake this is not always evident. Their single point of contact model is a limitation on capability to offer full value in a holistic relationship. Investors are now openly stating this. 

For some, this change will be too much to bear and they will not take part in the race. To them there is only ever going to be one way to compete. They are of the “run faster” school. But for others there will be a willingness to change. These guys are from the “run better” school.

When Usain Bolt blitzed the world in 2008 everyone was stunned. The sprinting world had changed. He literally changed the rules of the race. Who could have blamed other athletes if they hung up their running shoes? But not one did. They listened, they learned, they adapted. The elite performers recognise “run better” always leads to success. This would be an ideal lesson for Asia’s wealth management industry.  

Seb Dovey is managing partner at wealth management think-tank Scorpio Partnership