In an increasingly knowledgeable client market providing sophisticated, high-quality advice allows providers of wealth management services to differentiate themselves.
Typically, most private banks aim to achieve “excellence” using a structured advisory process: assessing a client over a number of elements, including risk profile, and developing a customised solution.
In Asia, however, client advisers rarely follow this process for two reasons: it is a young industry and the current incentive structures for the front-line staff.
Although the last financial crisis was an exceptional situation, it has brought into focus the need for a comprehensive client analysis as a cornerstone of high-quality advice.
In order to deliver suitable services a constant learning process is required, driven by both providers of financial services and the clients.
High-quality advice in rising demand
The demand for high-quality advice is made more acute as Asian clients are usually highly hands-on in making investment decisions compared to their European counterparts.
They are also generally more willing to take risks and are more receptive to innovative products.
Despite Asian clients continuing to taking their own decisions, the need for advice still increases, especially for the initial risk assessment.
The Asian market has several notable features that differentiate it from more mature ones.
Firstly, the largest proportion of assets generally remain with the first generation, and for private banks that means the demand for wealth planning services will increase.
Secondly, there is generally little distinction between business and personal assets, therefore an adviser who can offer solutions in both areas adds more value to their clients and can obtain a larger share of their assets.
These factors place high demands on client advisers and other wealth management specialists.
A few years ago, Singapore’s Institute of Banking and Finance installed occupational groups and corresponding standards of competence for wealth management.
Even so, while the foundations for implementing these requirements had long since been established in the form of the Wealth Management Institute, supported by government subsidies for training, the implementation of these standards is only slowly making headway in the industry.
In addition to the quality standards of advisers, the sheer availability of the required number of these trained specialists remains a key challenge for the industry.
Correct, timely decision making
The opportunities for growth in Asia remain enormous.
To take advantage of this, major adaptations to systems, processes, and change management approaches are necessary in order to successfully develop a business in a sustainable manner.
The correct use of expert knowledge will play a central role in the quick development and sustained implementation of solutions in Asia.
Many private banks still work with the “everything for everyone” approach, with no clear differentiation for client segments.
Advisers often have too many clients to be able to really focus. Inadequate processes and a lack of suitable systems compound this.
Furthermore, advisers require continuous support in the provision of advice to their clients, especially for cross-border activities, where the requirements change constantly.
In addition to the necessary and continuous advanced training, advisers must also be able to rely on an efficient infrastructure to assess their client’s needs and to develop robust solutions.
This can be an important factor, especially in Asia, for companies who wish to retain existing and attract new advisers.
Central to any change is a universal vision carried by every employee, regardless of their level.
Resulting initiatives need to be incorporated within a uniform strategic framework to ensure resources are effectively used, employees are committed thanks to logical and consistent communication, and the interaction between the headquarters and the Asian management team is optimised.
A shared vision also helps convince clients about the benefits of an ongoing relationship, as opposed to a pure transaction-oriented business.
Mario Bassi is managing director and Asia head at Solution Providers Singapore, Management Consulting