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Wealth Management

Digital assets: Unclaimed territory in Asia

June 1, 2022 3-MINUTE READ

RESEARCH REPORT

In brief

  • Digital assets are already a top-five asset class for affluent investors in Asia.
  • According to Accenture research, nearly three-quarters of wealthy investors in Asia intend to hold them by the end of 2022, up from half in 2021.
  • Despite this, two-thirds of wealth management firms in Asia have yet no plans to provide a digital assets proposition for their clients.
  • While offering a digital assets proposition might not be easy, current demand from clients is mostly around support for self-trading and advisory.

Digital assets: More than byte-sized

Digital assets—a term that covers cryptocurrencies like Bitcoin, as well as stable coins, crypto investment funds, security tokens and asset-backed tokens—have become a mainstream investable proposition in recent years in Asia: They are now a top-five holding for affluent investors in the region—behind only equities, fixed income, cash and real estate—according to Accenture research.

Our latest research also found that 52 percent of affluent investors in Asia already hold digital assets, and 73 percent intend to do so by the end of 2022. In contrast, most wealth management firms in Asia do not offer clients yet a digital assets proposition—and two-thirds of firms currently have no plans to do so.

Accenture estimates that digital assets are a US$54bn market opportunity in Asia, with transaction fees comprising US$40bn and the rest shared between advisory fees and custody fees. Even those wealth management firms in Asia that currently do offer such a proposition mostly target only the US$7bn custody element.

“We would need to be able to provide an informed view on key crypto coins, which requires specialized research capabilities. In addition, we are currently exploring a compliant offering for suitable clients. This entails educating and training both relationship managers and clients on the risks, suitability and mechanics of digital assets.”

— SACHA WALKER, Head of Strategy and Business Operations APAC, Julius Baer

Why the reluctance?

The reasons for not offering digital assets today may vary. Some firms may have adopted more of a “wait and see” approach; others might not believe in the asset class itself or feel that setting up a digital assets proposition is too complex given regulatory and operating model factors. While there are obstacles, some firms have shown that these could be overcome. One consequence of wealth management firms not engaging on digital assets is that clients seek advisory information online from very different sources, which could result in a far less reliable basis of information.

38 percent of investors interested in digital assets use online forums and social media to glean investment advice

 

 

Source: Accenture’s Asia Affluent Investor Survey, Q1 ’22

The way forward

Wealth management firms in Asia should consider offering some form of a digital assets proposition as their clients look for exposure to different types of digital assets; Relationship Managers (RMs) would like to offer this as well; and the revenue opportunities of doing so could be sizeable. This is even more important given the interest for this asset class among next-generation clients who stand to inherit large sums of money over the next years.

Crafting an approach to offering digital assets starts with knowing what clients want.

Which digital-asset services do clients want?

Source: Accenture’s Asia Affluent Investor Survey, Q1 ’22. Figures may not sum due to rounding

A digital asset offering would also require giving RMs what they need. RMs told us in our survey that they want to be able to provide insights and data for their clients, and improved tools so they can better engage with customers in an advisory capacity.

When creating an operating model to offer digital assets, firms should formulate a strategy so they can build a sustainable and scalable digital assets proposition. This could be done e.g., through setting up an in-house capability group with responsibility to design and manage the process—with all efforts underpinned by a culture of experimentation and rapid iteration.

“Build or augment an internal digital assets capability while focusing on a ‘minimum viable product’ proposition could allow firms to test and learn.”

— NICOLE BODACK, Managing Director – Capital Markets, Growth Markets

Building a digital assets proposition will take time and effort, yet successfully doing so could position firms to deliver what clients want: the opportunity to invest in a fast-growing asset class in the way they want.

About the Authors

NICOLE BODACK

Managing Director – Capital Markets, Growth Markets Lead

Soichiro Muto

Managing Director – Capital Markets, Growth Markets Lead

DAVID WILSON

Associate Director – Wealth Management Lead, Growth Markets

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