Asia Pacific is a unique region for the wealth management sector, as it is home to a mix of mature and developing economies. Despite the differences in maturity, there is strong demand for personalised wealth management services across the region as a whole, writes Pascal Wengi managing director for Asia Pacific, the Middle East and Africa at Avaloq.
Countries in Asia Pacific also share two demographic factors that impact the services provided by wealth managers: generational wealth transfer and a large expatriate population.
In order to thrive, wealth managers need to look beyond meeting the current needs of investors and focus on building long-term investment plans, brand familiarity and trust to win and retain the next generation of investors.
Additionally, the wealth management needs of Asia Pacific’s expat population should not be overlooked. Many prefer working with a financial institution they are familiar with. They want quick, simple access to their assets while working overseas and to receive the same client experience across locations. It is therefore important for regional wealth management firms to create a seamless client experience for clients who work in different locations. This will become all the more important, as younger investors are more likely to explore work opportunities abroad.
Preparing for the next gen
Markets in Asia Pacific are also experiencing sustained economic growth and rising household incomes, resulting in a larger middle class and a pool of newly mass-affluent investors. Private banks and wealth management firms need to act quickly to support the wealth creation taking place in Asia Pacific.
It is also vital that they properly guide and advise new investors to build loyalty and trust at an early stage, especially since some of these mass-affluent investors may be the ultra-high net worth investors (UHNW) of tomorrow.
The new generation of investors want to receive the same quality in wealth management services as their (U)HNW peers in terms of advice, performance and personalisation. There will be visible differences, and this is mostly due to the fact that these younger generations often have different expectations from their parents, including a greater preference for digital technologies as well as a more hands-off approach that may even favour discretionary portfolio management, especially in China and Hong Kong.
The need to attract long-term loyalty
From a wider Asia Pacific perspective, serving this growing pool of investors at scale can put a lot of strain on relationship managers and advisers. Given the current talent shortage in the industry, with relationship managers having to oversee an increasingly large number of clients, there are still major challenges ahead for the region’s wealth managers.
Technology will play a vital role in ensuring that wealth managers can offer investors a wide range of investment services and a smooth onboarding experience. On top of that, integrating artificial intelligence solutions, such as virtual assistant technology and generative AI, to support relationship managers is what will make a difference in client loyalty.
In addition, the cloud is a key enabler of digital transformation in the finance sector. It enables wealth managers to roll out new services more quickly, increase cost efficiency through flexible pricing models, and rapidly expand into new markets. For frontend applications such as web and mobile banking, cloud technology is essential to ensure constant availability across devices. This is a demand that we see globally – not just in Asia Pacific.
An optimistic outlook
While we are optimistic about the outlook for the wealth management sector in the APAC region, there are still challenges to overcome. For countries such as Japan, where there is an ingrained conservative approach to investing, wealth managers can still encounter resistance when it comes to shifting potential clients to managed investment solutions and gaining their trust.
However, from a broader perspective, wealth managers can leverage digitalisation and improve operational efficiency, which will ultimately help them to reach and server a greater number of clients while providing a more holistic and personalized wealth management offering.
This article was written for International Adviser by Pascal Wengi managing director for Asia Pacific, the Middle East and Africa at Avaloq.
