There is no doubt that Asia could offer great growth opportunities in wealth management—for both local players and international firms. Just consider for a moment the economic strengths and dynamic developments across a variety of different countries and markets that are driving the rising wealth in the region. And while we might see more volatility and uncertainty in the future, the underlying need for wealth management solutions that could help finance health and retirement at a larger scale is obvious.
To better understand the wealth management landscape in Asia, Accenture launched a comprehensive research effort focusing on clients, relationship managers (RMs) and C-level leaders in the industry:
- We surveyed more than 3,200 clients across eight Asian markets—China (mainland), China (Hong Kong SAR), India, Indonesia, Japan, Malaysia, Singapore and Thailand—and different wealth bands (affluent, high-net worth and ultra-high-net worth individuals).
- We also surveyed 550 RMs at private banks, wealth firms, retail banks and independent financial advisors across the same markets.
- We conducted 21 interviews with senior executives (CXOs) of wealth firms operating across Asia with most interviewees being the operating head of the wealth business for a region or market, or the head of a key business line such as strategy or operations.
It is probably no big surprise that the wealth management firms we spoke to are seeing a wealth of opportunities in Asia. However, the magnitude of the anticipated growth is impressive: our research found that firms expect assets under management (AUM) to nearly double from 2021 to 2025 and revenue to grow about 60 percent in the same period. But achieving those goals will not be easy as it comes with a strong need to retain existing clients and acquire new ones—against an increasing willingness of clients to switch providers even if they are satisfied with the investments’ performance they are getting. And it comes with the need to massively increase the number of relationship managers at a time of talent constraints.
Realizing firms´ growth plans would require delivering next-gen advisory
There are other important aspects to note: wealthy investors in the region can no longer be simply classified as self-directed only according to our research. The investor survey shows that—contrary to conventional wisdom—it is today the advice-seeking persona who prevails in the region. Therefore, in order for firms to grow, it is vital to deliver a comprehensive advisory proposition that is goals-led, integrated across advisory and investment management, digital-first and based on a transparent fee model.
But it is not only about clients, it is about the RMs too. They are holding the client relationship, hence are critical to a firm’s success and need to be able to provide what their clients want. Our research found, however, that RMs at Asia wealth management firms usually spend half of their week on non-revenue-generating activities like administration, non-client meetings and trade execution—including checking the status of trades. One reason for this productivity shortfall is that a typical RM uses an average of five tools or applications for each key activity he has to do. Nearly four out of five RMs in our survey said that in order to serve their clients better they would need a cockpit or portal solution that brings together all the capabilities needed in a one-stop platform across, for example, prospecting and onboarding, advisory, execution and order management, and client servicing.
Our research suggests a strongly rising demand for ESG products …
Looking at the proposition side, we found some interesting developments too. The first is an increasing demand for environmental, social and governance (ESG) products. Today, just 32 percent of wealthy investors are investing along ESG lines, according to our research. However, the demand for such products is expected to more than double in Asia in 2022 and clients want better ESG investment solutions—in particular funds, exchange-traded funds (ETFs) and fixed income solutions.
… while digital assets are already a top-five holding in Asia
The second is the rise of digital assets, such as cryptocurrencies, stable coins, security tokens, and others. Our research found that on average, affluent investors in Asia already allocate seven percent of their portfolio to digital assets—which makes it a top-five holding behind only equities, fixed income, cash and real estate. While currently 52 percent of affluent investors in Asia hold digital assets of some sort, our research indicates this number could reach 73 percent by the end of 2022. Yet many firms don´t have plans to offer a digital asset proposition to their clients.
Why is all of the above important? Asia’s affluent investors tend to be multi-banked and those investors who are satisfied with their advisory relationship hold a higher percentage of their wealth with their primary bank. In our investor survey, two out of five respondents said that they consider consolidating their wealth over the course of 2022 and nearly 80 percent of them said their primary bank would be a beneficiary of this consolidation.
We have detailed those and many other interesting findings from our research in our latest report on wealth management in Asia. Download a copy today and I hope you enjoy reading it.
Should you have any questions, please do not hesitate to reach out to me directly!