Hot money | cpjobs.com

Hot money

Published on Friday, 06 Dec 2013
Jon Dingley
Craig Lindsay
Peter Lee

More billionaires in Asia point to golden careers for wealth managers

As economies grow, the number of wealthy individuals also surges. In 2012, the global population of high-net-worth individuals (HNWI) increased by 9.2 per cent to reach 12 million. Their aggregate investable wealth increased 10 per cent to US$46.2 trillion and is forecast to grow by 6.5 per cent annually to US$55.8 trillion by 2015, with growth in Asia-Pacific as the main driver, according to the Capgemini World Wealth Report 2013.

There are now a record 2,170 billionaires around the world. Total billionaire wealth in Asia, with its 18 new billionaires in 2013, surged by almost 13 per cent, making it the fastest-growing region, says the Wealth-X and UBS Billionaire Census 2013.

“This increment in wealth creates significant opportunities for wealth management services in Asia-Pacific, including Hong Kong,” says Craig Lindsay, chairman of the Hong Kong Securities and Investments Institute (HKSI).

The wealth management industry evolved to assist HNWIs manage their wealth and fulfil their financial objectives. Historically, the wealth management market covers HNWIs with assets of over US$10 million. With the emergence of collective investment vehicles, the wealth management market has extended from the newly rich with US$1 million to US$10 million to the burgeoning double-income families with HK$1 million to US$1 million looking for long-term growth to finance their children’s education and retirement. 

Lindsay describes a wealth managers’ role as similar to that of a company CFO. “Besides [having] strong technical knowledge, the wealth manager has to be equally strong in people skills, as understanding the needs of clients and relationship management are essential for wealth management specialists to succeed,” he says.

There are an estimated 1,500 to 4,000 client-facing private bankers for the ultra HNWIs in the wealth management industry today, says Lindsay. With the continuing growth of China and the region, projections are this segment alone will need at least 1,000 more professionals to serve the burgeoning market.

Jon Dingley, managing director at the independent private wealth manager TTG (HK), sees an ever-increasing demand for wealth management as people get wealthier and as they become more aware of the different types of services available to them.

He also sees demand growing particularly from those nearing retirement amid the current low-interest rate environment. “Holding only cash is not a long-term solution, so alternative options need to be considered. An ageing population and the increase in cost of retirement – such as medical expenses – will also drive the interest for wealth management services.”

At present, the wealth management space is dominated by retail and private banks. However, Dingley expects independent asset managers (IAM) and independent financial advisers (IFA) to steadily grow their market share as their value become known to investors.

“In Europe, a large portion of money held with private banks is via the IAM channels, whereas in Asia, it is still in its infancy,” says Dingley.

Peter Lee, managing director of Veco Invest Asia and divisional president of Greater China at CPA Australia, reminds HNWIs that they should not expect every investment to be profitable. “That’s why you need to have a proper set of rules to guide people and help them to invest cautiously,” he says.

 “If you have HK$25 million, of course, you don’t want to put everything in one bank. We help our clients to manage and consolidate different bank accounts and to choose the right investment products,” says Lee.

Serving HNWI clients requires multi-disciplinary knowledge in varying depth and breadth. Wealth managers often wear different hats as investment adviser, business consultant, family counsellor, even personal friend.

At present, there is no certification or qualification required to be a wealth manager. Many are CFAs and CPAs with experience working as investment analysts or research analysts. Most firms provide in-house training programmes to continually upgrade their staff, but these are usually neither standardised nor publicly accessible.

To address this deficiency, the HKSI has launched the Certified International Wealth Manager (CIWM) professional qualification – a globally recognised standard that will provide wealth managers with a well-positioned qualification, as well as creating an exclusive platform for international networking.

“The CIWM programme supports the industry’s needs for highly qualified specialists and focuses on the holistic and long-term approach to client service,” Lindsay says.

It is jointly offered by the HKSI and the Association of International Wealth Management (AIWM) of Switzerland. The CIWM is also available in Switzerland, Germany, Italy, France, Luxembourg and the United Kingdom.

The HKSI conducts various training courses on valuation, portfolio management, relationship management, risk management, behavioural finance and other relevant programmes to upgrade the knowledge and skills of wealth managers. It stages events where prominent industry practitioners share their experiences with group members. It also launched a mentoring programme earlier this year.

Lee believes the wealth management industry is set for exponential growth in the next five years. He advises new graduates and prospective wealth managers to read up on family businesses and develop a well-rounded skill set. “They need a very sharp business sense. They should possess not just technical skills but, more importantly, they should have good interpersonal communication skills,” he says.

Dingley advises would-be wealth managers to gain as much experience as possible by working for a bank, an IFA or an IAM. “At the end of the day, your value-add is whether you can manage the portfolio better than your client. That includes understanding the client’s situation, such as risk profile, investment knowledge and specific needs.”

Lindsay prescribes a passion to serve clients. “Practitioners who do not have passion for wealth management and the desire to create a better and sustainable future for clients will find it difficult to progress in the profession,” he says.

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