IBF Wealth Management Seminar 2009

The Institute of Banking and Finance (IBF) held the IBF Wealth Management Seminar 2009 entitled “The Changing Landscape of the Wealth Management Industry 2009: Embracing Challenges to Enhance Growth” on Thursday, 10th September at the Pan Pacific Hotel Singapore.

Organised in collaboration with the CFA Singapore, the event saw a turnout of about 300 senior executives from banks and financial institutions.

Delivering the opening address, Mr Ng Nam Sin, Executive Director of the Monetary Authority of Singapore highlighted that while global conditions remain uncertain, Asia will play a key role in the recovery of the global economy. He noted that IMF forecasts have shown that emerging Asia could grow by at least 5% in 2009, “a remarkable figure compared to 3.5% contraction of G7 economies”. Financial sector players who are able to refocus on their clients and rebuild trust, will be able to capitalize on Asia’s rebound.

The seminar featured 3 thematic plenary sessions each comprising several senior management executives.

Session 1: Issues and Challenges Facing the Wealth Management Industry

In her presentation on "The Evolution of Client Needs", Ms Jan M. Richards, Managing Director, Head of Private Banking Southeast Asia of JPMorgan, commented that private banking relationships underwent significant stress during the recent downturn. Issues such as banker turnover, looming concerns over the stability of financial institutions and a breakdown in communications created a general feeling of insecurity among clients.

Ms Richards was of the opinion that while market sentiment is improving, clients are insisting on a change towards more conservative asset allocation and simplification of product offerings. Furthermore, she noted that clients are reducing the number of relationships by consolidating assets among a few of their more trusted firms. Despite these recent trends, Ms Richards felt that the long-term objectives of clients are basically unchanged as they will continue to require good, predictable and sustainable risk-adjusted returns. As such, clients must try to temper emotional extremes on short-term market performance and accept prudent advice from a trusted advisor to avoid big swings in their wealth.

Mr Marcel Kreis, Managing Director, Head of Private Banking Asia Pacific of Credit Suisse, then delivered his presentation on "Strategic Drivers of Product Mix". Mr Kreis discussed the effects of the financial crisis on private banking in terms of the client, the regulations, the products and the markets and its competitors. Mr Kreis classified clients into 3 fundamental categories, which were mainly the Delegator, the Selector and the Participator.

Given the different kinds of client types and investment types, Mr Kreis proposed a holistic advisory process that underpins confidence building and better risk management. He added that within this process, it is important to review the key determinants of product choices, which included: client type, investment experience, and the risk tolerance of clients.

In her presentation on "Closing the Private Banking Talent Gap", Mrs Christine Ong, Managing Director, CEO of UBS Wealth Management Singapore, shared that despite the current economic downturn, UBS estimates that there remains a shortage of up to 900 experienced private bankers in Singapore over the next 5 years. Strong industry demand for experience private bankers is underpinned by the robust Asian economic growth story, the relatively low penetration of wealth management services among Asian clients, and increasingly complex wealth management needs of clients spanning their personal, corporate and family wealth.

Mrs Ong emphasized that in order to deliver a value proposition that meets the clients' increasingly complex wealth management needs, the industry needs to close the talent gap. This could be done through the following ways:

Session 2: The Evolving Role of a Wealth Manager

Mr Peter Flavel, Global Head of The Standard Chartered Private Bank pointed out that a good understanding of the profile of clients in question and the products suitable for these groups of clients is essential before one can appreciate how the role of a private banker has changed, Asia has become and will continue to be an important source of high net worth wealth. As business owners see little differentiation between their professional and financial needs, the wealth manager needs to have a good understanding of the client’s business and the credit risks, so that he is able to look after the client’s business and personal needs.

Mr Flavel felt that there has been a shortage of relationship managers in the industry and when a relationship manager leaves an institution, he brings along about 25% of the clients and their portfolios with him. According to a case study done in the USA, the average value of assets at risk is US$31.3m per departing relationship manager. “There are two main contributors in keeping top performers happy”, said Mr Flavel. The institution needs to provide adequately for specialist staff and ensure effective leadership.

Dr Thomas R Meier, CEO Asia, Middle East & Eastern Europe, Bank Julius Baer & Co. Ltd, commented that prospects for the wealth manager have changed since the crisis. The key lessons from the crisis form the new building blocks for sustained success and these can be depicted in the “S” formula. Sustained success can be achieved by doing the following:

In the changing environment, there is a new call for transparency on how banks close deals, how they choose products and plan for the clients’ portfolios, with due consideration for the risks involved in the respective products. Dr Meier felt the need for a holistic advisory process, one that revolves around the client, is essential He further emphasized that building of a long-term relationship does not end with the close of a sale.

In his presentation entitled “Cultural differences between Asian & European Investors”, Mr Pierre-F. Baer Chief Executive Officer, Singapore & South Asia SG Private Banking, commented that Asia remains a fast growing and attractive market. Mr Baer shared that the main driver of the difference between Asia and Europe is the client and client’s investment philosophies. He felt that the Asian business model sits between two distinct models, that of the US and Europe. Mr. Baer emphasized that Asia needs a unique model of its own as the European model may not necessarily work well here, and Asia is defining its own business in terms of approach, offering and platform.

Session 3: Business Model and Market Complexity

In his presentation entitled “Business Model and Market Complexity – An Industry Perspective", Mr Justin Ong, Partner at PricewaterhouseCoopers LLP opined that private banks in Asia are now swamped with more risks and drivers for change than ever; adding that the changing client demands as well as regulatory requirements will drive changes to how banks deal with risk management.

Mr Ong felt that improving investment performance, and being held accountable for it, will require a change in mindset, systems and compensation structures. He also cited the top 3 most frequent reasons of clients leaving a private bank:

Mr Ong commented that the focus on protecting the client base and maintaining margins will lead the shift in business models. Beyond investment performance, banks must be equipped to provide an overarching wealth planning service to clients, which meant that product sales is no longer the focus for a wealth manager’s performance.


Mr Anil Venuturupalli, Chief Operating Officer, Asia Pacific of Deutsche Bank AG highlighted the important challenge of providing an operational platform that clients could learn to trust. He also deliberated on the issue of ascertaining the suitability of products that are sold to clients and how it has to be properly explained to the client in the advisory process.

Clients are increasingly interested in new product areas such as wealth planning, which will necessitate greater need for transparency in offshore banking while balancing clients’ expectations. Banks are therefore evolving towards offering products that meet new regulatory requirements. In determining the future platform, Mr Venuturupalli felt that financial institutions would need to relook their “product menu”, taking into consideration their client size and segmentation, and figure out their strengths and how they could differentiate themselves from the competition.

Mr Sum Yee Loong Tax Partner at Deloitte & Touche concluded the plenary session by sharing his insights regarding the developments in taxation and the implications to the financial services industry. He commented that Singapore is a tax efficient place to have wealth managed. Mr Sum further discussed the legislation on the Exchange of Information, and how banks are not spared from such regulatory provisions. With this legislation, in line with the G20 and the OECD, it would strengthen Singapore's standing as global financial services hub with a well-regulated business environment and a transparent tax regime.