THE MULTI-DIMENSIONAL APAC CLIENT OF TODAY

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The growth of Asian wealth shows no signs of abating. The past decade has been one of the most prosperous for the APAC HNW community, culminating in USD17.4 trillion of cumulative assets and dethroning North America in its quest for the coveted Global Wealth Crown.

This trajectory of wealth creation has cemented the region as the location to be for private banks and wealth managers, offering a plethora of opportunities from both service orientated and product focused angles.

However, the rapid acceleration of wealth has also brought about a string of challenges for typically western focused financial institutions as they try to navigate and appropriately service this dynamic client base.

APAC’s HNW community has evolved through the years and it has become increasingly apparent that the industry can no longer assume that consumption sentiments of the East will mirror those of the West.

Scorpio Partnership’s research into the habits of over 1,500 HNW clients across China, Hong Kong, Singapore, India, Indonesia and Malaysia sheds light on their interactions, usage and preferences regarding current financial providers, as well as spectrum of future financial needs.

For example, our research shows that HNW business owners and professional employees in Asia visualise the purpose of their wealth quite differently when compared to their Western peers. Notably, 47% of business owners in Hong Kong state that their wealth empowers them to support their families and offers greater opportunities; while 40% professional employees say they are more focused on using their wealth to pursue a certain lifestyle.

For HNWs in the West, these attitudinal differences are muted, and in some cases even reversed. We see that over 40% of business owners and employees in the USA perceive their wealth to be a medium that permits them to sustain a sense of security and well-being, with only 18% considering it to be an aid to pursue a lifestyle. Meanwhile, in the UK, HNW employees look to support their family through their wealth, and it is the business owners who are more likely to use their money to pursue lifestyle goals.

Another key finding to emerge is that there is an ever growing movement of independent thought, decision making and empowerment sweeping across the APAC HNW population. Indeed, in 2015, only 15% of HNWs living in Asia indicated that they did not seek advice in relation to their banking matters; within just one year, this share more than doubled to 33% [Figure 1].

Figure 1: Growing financial independence amongst APAC’s wealthy

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Source: Scorpio Partnership HNW Database, 2015 and 2016 Global HNW Study.

The trend towards financial self-sufficiency – be it banking or investments – is prominent throughout Asia. And while the majority of clients do still delegate investment decisions (57%) and expect proactive advice regarding their loans and deposits (67%) – the swing towards independence, ownership and control has real momentum.

These insights therefore suggest that our industry needs to be better at recognising that the Asian HNW cohort is a new breed of client, and should not be pigeonholed or compared to the definitions of clients originating from Europe and the US.

Instead, we need to remember that our industry is ultimately a relationship business. The success of any value proposition and service model is balanced on the chemistry and understanding that is developed between HNW clients and their primary RMs. A good relationship manager is expected to know a client’s needs, ambitions and worries often before the client themselves.

Hence, the ability for a financial institution to pair a client with the right RM to deliver to client the unique value proposition he or she is looking for – is one of the biggest challenges facing the Asian market today.

To reignite the relationship within Asia, the industry has to become better at listening to the needs of its clients. Institutions need to develop both an understanding and consciousness of nuances among their entire client base, and no longer apply the norms that exist within wealth management and private banking in the West.

Thought for the week:

The key to growth is the introduction of higher dimensions of consciousness into our awareness. – Lao Tzu

News from the world of wealth:

World Bank launches ‘pandemic bond’ to tackle major outbreaks – Reuters

Sustainable finance: Hedge funds meet ESG – Bloomberg

Blockchain moving into mainstream with IBM and seven European banks – CNBC

Singapore and Denmark regulators sign FinTech cooperation agreement – Finance Magnates

EC proposes use of pan-European pension products – Pensions & Investments

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Author: Nikhil Dama, Manager.

Expertise: Nik is engaged with project management, analytics and reporting across a multiple of client satisfaction, engagement and Thought Leadership insight work.

Background: Nik joined Scorpio from the investment team of a private family office in 2014. Nik holds a Bachelor’s of Science degree in Economics from the London School of Economics & Political Science, Nik spends his weekends rooting for a variety of sporting teams and sampling an array of foreign cuisines.

Photo from See-ming Lee, used under creative commons license.

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