Distribution considerations for Private Banks in Asia & Singapore

March 2014

Prepared by Eric Chua, eric.chuakh@yahoo.com

Singapore as a Wealth Hub

• Growing wealth of Asians

• Business environment, tax regime, political stability

• Government’s support as a key regional financial hub to be the “Switzerland of Asia”

Emerging Markets will soon represent 37% of global millionaire wealth

• No. of millionaires to rise 30% to 16 million

• Over next 4 years, Asia to surpass other regions by creating USD 7 trillion in net wealth

• Regulations continue to shape offshore vs onshore private banking

Investment behaviour in Private Banking Hubs - by asset class

Investment behaviour in Private Banking Hubs – key findings

• Large cash portfolios in AsiaPrivate banking clients in Singapore currently invest around half their assets in cash funds. In Hong Kong this share is around one third, and around one quarter in Switzerland.

• Commodities and gold popular in AsiaThe share of assets (excluding cash) invested in commodities, gold or precious metals is 28% in Singapore and 14% in Hong Kong. In Switzerland this share only amounts to 8%.

• Popularity of shares varies in AsiaThe proportion of assets (excluding cash) invested in shares is 61% in Hong Kong but only 47% in Singapore.

• Swiss tend to back bondsThe share of assets (excluding cash) invested in bonds amounts to 18% in Switzerland. In Hong Kong this share is just 14%, and only 13% in Singapore.

• Low diversification also common in Asia67% of interviewees in Singapore do not have sufficient diversification, i.e. less than four asset classes. In Hong Kong this group accounts for 45%, and in Switzerland for 53%.

Key Considerations for Success in Distribution

• Performance is key, but advisory, information sharing and process is increasingly important as part of client delivery

• Due to competition in Asia, there is a need for innovation and thematic for selling . Key themes in 2013 – RMB, High Yield Income

• Impact of local regulatory and market changes have created need for ground level support, frequent feedback on product performance, fund updates, specialist speakers

Market Trends – How and What is selling, Big versus Focus

Service Expectations – Helping Private Banks sell

• Response time and quality of materialsPrivate banks expect superior information delivery. Either be the first out of the gate or offer specific analytical value that private banks are willing to wait for.

• Technical knowledgeWith more complex investment themes, local staff needs to have the technical knowledge and communicate it in a simple and tailored way. Asia sees greater needs for product specialists and advisory across vehicles.

• Local presenceLocal staff, language ability and access is key for private banks in Asia, especially with an ever increasing complexity in bridging local, regional and global demands.

• Understanding of needsAs private bankers develop a greater understanding of their clients, asset managers need to better understand the needs of multiple relationships, including gatekeepers, platforms and advisors.

• Brand and exclusivity matter, especially for private banks in AsiaOne of the biggest success factors post-crisis with private banks in Asia has been around brand equity.