Rich Asians' trust in wealth industry rising
Rich individuals in Asia have the most trust in the wealth managers among their peers globally and are the most demanding when it comes to digital services, found the latest Asia-Pacific Wealth Report from RBC Wealth Management and Capgemini.
While 79.4% of high-net-worth (HNW) respondents globally said they trusted wealth managers, that figure was 85.5% in Asia, up 7.6 percentage points from 2012.
But they are not all happier with the performance of said wealth managers (see figure 1). While HNWIs in China, India and Hong Kong were the most satisfied among Asian HNWIs with their wealth managers, satisfaction among respondents in Australia, Japan and Singapore has declined this year. Still, 67.7% of respondents in Asia said they were satisfied, compared with 66.3% in the rest of the world.
Poor returns do not necessarily result in dissatisfaction with wealth managers, the report found.
“Companies have successfully separated client satisfaction from market return volatility,” said David Wilson, global head of strategic analysis at consulting firm Capgemini.
Meanwhile, Asia-Pacific investors are now demanding more interaction through digital channels, he added.
Eighty-two percent of HNWIs expect most of their wealth management relationships to be conducted through digital channels in five years, compared with the global average of 61%.
The global finance industry has been slow to embrace digital delivery of services due to regulatory constraints, but Asia is likely to spearhead progress on this front, said Barend Janssens, head of wealth management for emerging markets at RBC WM. That is because demand for such services is highest in the region.
HNWIs in Asia are also more likely to ditch their manager if they don’t receive the digital services they want. Eighty-three percent of Asian HNWIs would consider leaving firms that lack integrated digital services, versus 62% in the rest of the world.
“Asia-Pacific wealth management firms will need to offer a deep, multi-channel experience that takes into account regional variations in order to meet these high expectations”, said Jean Lassignardie, chief sales and marketing officer at Capgemini.
Asia was the only region where HNWIs viewed digital contact as more important than direct contact with their wealth manager, the report found.
As last year, Asia led the way in terms of growth in the number of HNWIs globally. The region’s HNWI population grew 17% to 4.3 million in 2013, compared with 13.5% growth in the rest of the world. Its wealth grew 18.2% to $14.2 trillion. China and Japan drove that expansion, with their HNWI populations rising 17.8% and 22.3%, respectively.
The wealth of Asian ultra-HNWIs, defined as those with investable asset of $30 million or more, grew at about twice the rate of that of their peers in the rest of the world last year (20% versus 10%). The compound annual growth rate is 14% for 2008-2013.
In terms of asset classes, property remained more popular than equities this year from last among Asian HNWIs, whose allocation to real estate was 23%, versus 19.5% for investors outside the region (see figure 2).
The average Asia allocation to equities fell to 21.7% this year from 22.3% in 2013, while fixed income exposure grew to 18.2% from 16.7%. Cash and cash-equivalent allocations were flat.
Chinese HNWIs’ allocations barely changed year-on-year in 2014. They allocated 22.7% to equities, 20.2% to real estate, 19.8% to fixed income and 15.2% to alternatives.
As well as demanding more digital services, Asian HNWIs said they are more focused than most on socially responsible investing (SRI). Eighty-one percent described SRI as important, compared with the rest of the world’s 59%.
That was especially true in emerging markets, where SRI interest is being driven by a lack of social-welfare infrastructure.