Asia's wealthy reveal doubts about financial advisers

Added 25th August 2017

High net worth individuals in Hong Kong and Singapore are much more aware of the human-related risks associated with wealth advisers compared to their global counterparts, according to a survey conducted by Factset and Scorpio Partnership.

Asia's wealthy reveal doubts about financial advisers

When asked in the survey of their view on the statement: "The information I receive may not be fully accurate" when working with a relationship manager, high net worth indviduals (HNWIs) in Hong Kong and Singapore considered this a bigger risk than their global counterparts.

Relationship managers are experienced investment advisers generally working for the major private banks.

According to the survey of 1,000 international HNWIs by Factset and Scorpio Partnership, when asked about the greatest risk in working with a human adviser, Asian respondents identified more with the statement: "My preferences are subject to interpretation by my relationship manager".

 

 Source: Factset, Scorpio Partnership

 

Another outlying issue was the perceived risk of working with relationship managers. Only 5% of investors in Hong Kong and 7% in the Lion City believe that working with a human adviser is risk-free.

“These clients would probably require greater visibility into systems that are used to support their relationships with the adviser,” said Annie Catchpole, director at Scorpio Partnership, in a webcast about the survey.

She added that Hong Kong and Singaporean HNWIs may need less convincing than their global counterparts about the benefits of digital integration in wealth management.

“From a client perspective, actually choosing to avoid technology altogether presents a risk to client relationships as humans naturally make mistakes when they are under pressure.”

On the flipside, HNWIs in the US and Canada put the greatest trust in their adviser relationships, with 30-40% saying there are no risks associated with a human personal adviser.

“These clients explained that technology is not intended to replace their advisers. In fact, they positioned technology to be more of a tool to strengthen execution and support their efficiency,” Catchpole said.

Online risks 

Globally, HNWIs are actively using online solutions to engage with their financial advisers. Around 44% of their wealth management activity primarily involves digital tools.

However, HNWIs are still very much aware of the risks associated with online platforms. Among Hong Kong and Singaporean respondents to the survey, only 4-5% believe that there were no risks associated with online wealth management solutions.

 

 Source: Factset, Scorpio Partnership

“Interestingly, Singaporeans expressed the greatest appetite for digital technology, but they are also most cognizant of their failings,” Catchpole noted.

“If advisers and digital solutions are to work together, then robustness is absolutely critical,” she said, adding that wealth managers should demonstrate that their solutions are secure.

The top risks associated with online interactions that Hong Kong and Singaporean HNWIs cited are cyber-attacks and system errors. 

Age differences

Besides the use of technology, Catchpole also highlighted that wealth managers should be aware of how clients from various age brackets have different preferences when interacting with their wealth managers.

“Baby boomers are much more interested in learning more about longer-term investment trends, while millennial clients want to improve their strategic understanding in investing,” she said. 

 Source: Factset, Scorpio Partnership

She also added that millennials favour more interactive learning methods, such as having more visual or graphic depictions within content.

“Younger clients look for tools that allow them to see their holdings more quickly. They want more advanced analytics. Even if they don’t use it, they want that choice, whereas older clients tend to be less demanding,” she said.

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