Asia-Pacific HNWIs look for local wealth solutions, says Capgemini/RBC report
Asia-Pacific offshore wealth centres, led by Hong Kong and Singapore, are attracting a growing share of the global wealth management business, as Asian-Pacific high net worth individuals (HNWI) increasingly seek out local solutions.
The HNWI population in the Asia-Pacific region, defined as clients with investable assets of US$1 million or more, has grown to 3.37 million in 2011. This makes the region home to the largest HNWI population in the world, says the Asia-Pacific Wealth Report 2012, published by Capgemini and RBC Wealth Management.
Singapore and Hong Kong, as the two main offshore financial centres of the region, have benefited most from this growth. The biggest driver for the growth of these offshore centres is the diversification of country risk prevalent in many markets in Asia-Pacific, the report says.
“These centers are attractive to Asia-Pacific HNWIs because of their proximity, cultural and linguistic alignment, proactive and transparent regulatory authorities, and the access they provide to investments in developing but highly regulated Asian markets such as India and China,” says RBC Wealth Management in a press release.
George Lewis, group head, RBC Wealth Management, said: “Clients often prefer to invest in markets closer to home, making Singapore and Hong Kong naturally attractive centers for those in the Asia-Pacific region. However, HNWIs have a variety of locations around the globe where they can book their assets. While Singapore and Hong Kong have the advantage of proximity, their future growth as offshore wealth centres will be dependent on their ability to offer full service wealth management advice and service underpinned by a transparent and compliant regulatory environment.”
Jean Lassignardie, corporate vice-president and head of sales and marketing, Capgemini Global Financial Services, said: “At present, the perceived benefits offered by Singapore overall slightly outweigh those of Hong Kong, but the authorities in Hong Kong are taking steps to bridge any gaps. Firms have a significant opportunity to leverage the benefits [that these] offshore centers offer HNWIs.”
The report identifies a scarcity of skilled talent as the most pressing issue for firms operating in the region, highlighting that a shortage of experienced wealth managers could undermine the capability of firms to effectively serve large numbers of clients.
In order to thrive in Asia-Pacific offshore wealth centres, the report finds that wealth management firms will need to be deliberate in their decision-making about how best to establish and expand their presence in these markets. It will be important for firms to focus on and invest in several key areas, including advisory, legal and fiduciary expertise, product offerings, risk and compliance measures, and IT infrastructure.
At the same time, as wealth management firms plot a path to growth in Asia-Pacific offshore centers, they will need to leverage the strengths of the jurisdictions in which they are operating, while making sure not to compromise their own core competencies.
RBC Wealth Management has C$562bn of assets under administration, C$324bn of assets under management, as well as about 4,300 financial consultants, advisers, private bankers and trust officers.