In fact, the business pre-empted the changes, recognising a customer sentiment that had become increasingly cynical over the years.
It was this realisation that sparked Capstone’s plan to use an online platform, which has proved popular among clients, particularly those whose previous experiences with advisory firms had given them reason to mistrust the industry.
Following the success of the platform, known as the Capstone Managed ETF Account, the firm decided to set up an insurance comparison website, www.expatinsurer.com, which went live last year.
Growth potential
“By moving into a fee-based SFC world, we are not bound by the new ILAS rules and the hugely complex application process"
“I think there is huge room for our online services to grow,” says Capstone’s managing director David Halley, who co-founded the advisory firm in 2009 alongside David de Lacy Staunton and Gareth Llewelyn-Williams.
“Our clients are really appreciative of these services,” says Halley. “There are not many new people coming into Hong Kong, so all the existing people were quite jaded by their previous experiences with advisers.
“We had to show clients something different and demonstrate we are transparent. Many also prefer to look through the different options online, at home with their families, instead of going through it with a salesperson.”
More than half of Capstone’s clients are expatriates, which means their portfolios need to be fluid and mobile to ensure that the financial products are appropriate for their shifting lifestyles.
“We wanted to avoid what we saw as pitfalls in the advisory process,” says Halley. “Contractual obligations held for a long period of time were never something we believed in. Expat lifestyles change a lot, and it’s very hard to say what we talk about today is going to be suitable in every jurisdiction during a person’s career.”
There might be plenty of expats in Hong Kong who choose to stay for the long term, but there is also a vast number moving around, particularly to places such as Singapore, the UK and Australia. This is not necessarily a problem for Capstone because its Securities and Futures Commission (SFC) licence means its advisers can look after clients internationally from its base in Hong Kong.
“We have got a different model to some of the other companies because we don’t believe in opening offices everywhere,” says Halley. “We believe we can manage clients’ money more effectively by centralising the business in a regulated environment. I’m much happier looking after clients’ money in another jurisdiction from Hong Kong with the SFC oversight because clients feel more protected.”
Fertile ground
But that is not to say Capstone would not consider opening offices in jurisdictions with the right level of regulation.
In fact, the firm’s decision to set up offices in Shanghai and Kuala Lumpur was partly driven by the regulatory environment in the two cities, as well as their close ties with Hong Kong.
And while there is a large local market for financial advice in Asia, Capstone emphasises that this is not its niche. “It’s a competitive environment for insurance brokers, but we don’t see ourselves as competing against them because we are more of a wealth management firm,” Halley says.
Earlier this year, Capstone acquired an asset management licence, which gives the firm discretionary management rights on clients’ accounts.
This was a decision made by the directors after learning about the success of UK-based platforms such as Nutmeg, a business model Halley says is now seeping into the advisory process in Hong Kong.
This new licence, granted partly because of the firm’s use of technology, means the business now has three SFC licences to cover dealing, advising and asset management.
“It’s quite rare to get all these licences because you need suitably qualified personnel, which is the hardest thing because people don’t often have enough experience in the business for the SFC to trust them with the licences,” he says.
“Globally, there have been issues with product mis-selling, which has spurred regulators to ensure the adviser process is entrusted with qualified employees; and, of course, that’s the most important part – the people actually giving the advice.”
In fact, the business pre-empted the changes, recognising a customer sentiment that had become increasingly cynical over the years.
It was this realisation that sparked Capstone’s plan to use an online platform, which has proved popular among clients, particularly those whose previous experiences with advisory firms had given them reason to mistrust the industry.
Following the success of the platform, known as the Capstone Managed ETF Account, the firm decided to set up an insurance comparison website, www.expatinsurer.com, which went live last year.
Growth potential
“I think there is huge room for our online services to grow,” says Capstone’s managing director David Halley, who co-founded the advisory firm in 2009 alongside David de Lacy Staunton and Gareth Llewelyn-Williams.
“Our clients are really appreciative of these services,” says Halley. “There are not many new people coming into Hong Kong, so all the existing people were quite jaded by their previous experiences with advisers.
“We had to show clients something different and demonstrate we are transparent. Many also prefer to look through the different options online, at home with their families, instead of going through it with a salesperson.”
More than half of Capstone’s clients are expatriates, which means their portfolios need to be fluid and mobile to ensure that the financial products are appropriate for their shifting lifestyles.
“We wanted to avoid what we saw as pitfalls in the advisory process,” says Halley. “Contractual obligations held for a long period of time were never something we believed in. Expat lifestyles change a lot, and it’s very hard to say what we talk about today is going to be suitable in every jurisdiction during a person’s career.”
There might be plenty of expats in Hong Kong who choose to stay for the long term, but there is also a vast number moving around, particularly to places such as Singapore, the UK and Australia. This is not necessarily a problem for Capstone because its Securities and Futures Commission (SFC) licence means its advisers can look after clients internationally from its base in Hong Kong.
“We have got a different model to some of the other companies because we don’t believe in opening offices everywhere,” says Halley. “We believe we can manage clients’ money more effectively by centralising the business in a regulated environment. I’m much happier looking after clients’ money in another jurisdiction from Hong Kong with the SFC oversight because clients feel more protected.”
