New Wealth, New Opportunities: Building an Operating Model for Asia’s Wealth Market

As the fastest-growing wealth region in the world, Asia is a promising opportunity for the wealth management industry. Accenture discusses how firms can build effective operating models in the area.

Wealth in Asia is growing at double-digit rates, with Indonesia and Thailand leading the pack. By 2050, the region is expected to be home to the four wealthiest markets in the world: Singapore, Hong Kong, Taiwan and South Korea. As the number of high-net-worth individuals in Asia grows, so too does the competition for their portfolios. Local, regional and global banks are all vying for a piece of this booming business.

Accenture reveals six factors that are affecting the wealth management industry in Asia, then identifies seven features of an efficient and profitable operating model for the region’s wealth management firms.

Recognizing that Asia is the fastest-growing wealth region in the world, Accenture set out to identify the principal challenges and opportunities for wealth management firms hoping to boost their business in this promising market.

This report draws on quantitative market analysis, insights from the Accenture Research team and in depth interviews with leaders from local, regional and global banks operating in the region. Markets covered in the study are Hong Kong, Indonesia, Malaysia, Singapore and Thailand.

Asia is the fastest-growing wealth region in the world—and a promising opportunity for local, regional and global wealth management institutions. Consider the following statistics:

• In 2011, Asia Pacific surpassed Europe and North America to become the largest high-net-worth region in the world.
  
  
• Asia Pacific has 3.37 million high-net-worth individuals.
  
  
• An estimated 17 percent of Singapore’s resident households are millionaires.
  
  
• One in every 10,000 Singaporean households is classified as a centa-millionaire—putting Singapore second only to Switzerland in terms of super-wealth per capita.
  
  
• The total value of private wealth in Asia, excluding Japan, is approximately $14 trillion—and only $3 trillion of that is captured by the wealth management industry.

Accenture has identified six key factors that are affecting Asia’s wealth management industry:

• Regional hubs, such as Hong Kong and Singapore, are drawing foreign investment faster than traditional wealth centers, such as Switzerland.
  
  
• Growing personal wealth, combined with political liberalization, is attracting more players to the region’s wealth management market.
  
  
• Evolving investor behavior is increasing demand for differentiated products, innovative distribution channels and better relationship management.
  
  
• A shortage of qualified relationship managers has resulted in fierce competition for skilled staff, and renewed interest in employee compensation, training, skill enhancement and leadership.
  
  
• New regulations concerning investment taxation, transparency, investor protection and capital requirements are creating complex reporting requirements.
  
  
• Operational and technological challenges can impact profitability and contribute to employee dissatisfaction.

Accenture believes that wealth managers can improve their chances of success in Asian markets by ensuring their operating models incorporate seven key features:

• Tailored value propositions that reflect investors’ different needs and behaviors.
  
  
• Diverse service portfolios featuring “sticky” products that can help wealth managers establish long-term client relationships.
  
  
• An integrated and innovative multichannel distribution strategy that increases digital sales and optimizes cost-to-serve ratios.
  
  
• Advanced analytical tools that provide deep insights into customer needs, relationship manager performance and profitability.
  
  
• Talented wealth managers that possess the technical acumen required to create bespoke client solutions, and the soft skills required to build and sustain strong client relationships.
  
  
• A holistic regulatory approach with strong data centralization, transparency, compliance reporting and governance.
  
  
• Efficient operations and a robust technology platform made up of modular and flexible technology.