Anderson says the firm, which has $750m under advice, received £50m of new client investment last year, while two-thirds of the money coming in is from lump-sum business.
Consequently, Dabbs is upbeat about the MAS’s increasing regulatory oversight. He believes it has gone a long way in improving the standards of advisers in Singapore.
“The 55% cap is not a bad thing for the adviser because hopefully they will continue to service the client if they are being paid over a period of time. There is logic there,” he says.
However, Anderson concedes that smaller firms will struggle to survive the commission cap, predicting that of the 12 or so expat-focused advisory firms currently operating in Singapore, just three or four will survive the transition.
Referring to a 2013 Fair survey by the MAS, where 80% of respondents said they were not willing to pay an upfront fee for advice, Anderson thinks a complete ban on commission similar to the UK’s RDR model is a long way off. “They did research and didn’t think that model was right at this time,” he says.
Zurich and Standard Life’s decision to pull out of Singapore at the end of last year was a real shock, according to Anderson, who says the move impacted on product choice in the region.
“Zurich was a definite blow because they probably did the most business, not so much Standard Life because it was already bought out in the Middle East, if I remember rightly,” he says.
“A lot of the companies have also closed down regionally and won’t take business from anywhere apart from Singapore or Hong Kong. That does restrict our market.
“In other words, if someone is an expat in Malaysia, they would have to fly down here to get advice, and their options have been reduced unfortunately.”
Hotbed of growth
In July, Aviva, which already owns the domestic-focused PIAS, confirmed it has set up a 280-strong financial advisory firm in Singapore called Aviva Financial Advisers, which is also aimed at the local market.
The new venture is likely to compete with the Middle East-headquartered Nexus Group, which in September 2015 acquired 160 advisers from Zurich when the insurer closed-up shop.
There is speculation that Aviva’s new business is targeting wealthy individuals ‘tripping in’ from the rest of Asia. However, Anderson and Dabbs describe the move as a logical push to get more of the local market.
Whatever the reason, it signals that, despite the departures, Singapore remains a hotbed of growth for the advisory community in the coming years.
“We are seeing a lot of advisers from the region, such as Vietnam and Malaysia, wanting to come down and get regulated in Singapore. That is a big growth area for us at the moment,” says Anderson.
“The turnover in advisers is very low. They definitely see it as a career here in Singapore,” adds Dabbs.
Due to the shortage of qualified advisers, he predicts that each adviser can target up to 1,500 expat clients.
AAM hopes to use this to shore up the firm’s legacy and expand its existing pool of advisers. It has recently launched an academy in the UK to recruit and train graduates in Singapore. “We like the idea of training young guys up from scratch in the AAM way,” says Dabbs.
As for any expansion plans, he puts on his Old Mutual hat to reveal that “only large regions will be considered”.
