Asia is the key battleground for wealth management firms, and they know what is at stake setting goals to nearly double assets under management and boost revenues by 60 percent by 2025 compared to 2021 levels, according to our research.
But to realize their ambitious growth goals, firms would need to focus on keeping existing affluent clients and attracting new ones. They also would need to retain their existing relationship managers (RMs) and even recruit new ones—and do so in a market that is already facing a shortfall of qualified RMs.
Our investor survey revealed some interesting insights in regard to client preferences:
First, a majority of investors (40 percent) want to validate opportunities with their RM but take the final decision themselves when it comes to investing.
Second, more than three-quarters of investors describe their four core priorities as being access to a range of investment products and solutions that fall within an advisory wrapper; safekeeping of assets; access to financial planning and advice; and access to market data and research.
Third, when it comes to products, our research found that nearly three-quarters of investors intend to hold digital assets like cryptocurrencies and crypto funds by the end of 2022, and they want wealth managers to offer more exposure to this asset class. Yet few firms are currently planning to do so.
The penetration of ESG investing is likely to more than double to 70 percent in 2022. Clients want more targeted ESG investment solutions—which many firms are targeting.
And finally, even though most investors were happy with the returns they achieved in 2021, roughly 30 percent of investors we surveyed plan to leave their current wealth management provider in 2022.
Few affluent clients in Asia left their wealth management firms in 2021, but more expect to in 2022
Enabling relationship managers will be key
In short, this is not the time to be complacent. Some wealth managers have already started to transform and build next-generation advisory into their proposition. Success in the future, however, will also require that firms empower RMs in key areas so that they can meet the needs of their existing clients and attract new clients. Empowering RMs could also help firms to retain existing RMs and attract new staff. Failing to help RMs, conversely, may hamper firms’ ability to reach their 2025 goals (for more on this, see our in-depth RM report).
"We have made significant investments over the years into our advisory processes and overall digital capabilities, including MyImpact, our online tool to guide clients in their sustainable investing journey"
In short, in order to succeed in wealth management in Asia, firms would need to transition to provide next-generation advisory. This requires that they:
Recalibrate their advisory proposition and internal capabilities
Assess their sales processes and behaviors (like moving from sales-based advisory to advisory-based sales)
Tackle talent- and change-resistance
Take a structured approach to build successful transformation-management capabilities
Of these, transformation management is likely to be the major challenge. Many firms know “what to do” yet struggle over “how to do it”—with nearly half treating transformation as an extension of business-as-usual according to our research. It is not. Instead, firms should create a dedicated transformation function that runs a holistic suite of programs.
Firms that succeed in the transition to next-generation advisory are far likelier to be the winners—and to attain their ambitious 2025 goals in attracting and retaining the most valuable clients; becoming those clients’ primary bank; and hiring and holding on to the best RMs.
Being the primary bank connection would be crucial to success: 42 percent of investors surveyed intend to consolidate their wealth over the course of 2022 and 2023, and 77 percent say their primary bank will be the beneficiary of this consolidation.