Regaining trust a top priority
Kathryn Shih, chief executive at UBS Wealth Management, Asia-Pacific, believes the restoration of investor confidence and trust are overriding priorities for the wealth management sector.
"I believe that investor confidence will continue to return as a result of day-to-day communication and the knowledge that their adviser is with them for the long term. Our aim is to help our clients build and preserve their wealth. The relationships we build form the very foundation of the firm and are the cornerstone of our future," Shih says.
"Our four-step advisory approach continuously seeks to help clients review asset allocation and risk profile.
"After agreeing to an asset allocation strategy, in line with the clients' risk profile and expected return, we seek to achieve their investment objectives through our research-based advisory approach."
Speculation at the end of last year by some market watchers that Beijing, Shanghai and Shenzhen were tipped to spearhead wealth growth, while Hong Kong was likely to face a tough year, may not be as accurate as first thought.
As a result of the global financial crisis, Hong Kong's high-net-worth individuals suffered an estimated 60 per cent reduction in their wealth early last year, mainly due to the near 50 per cent drop in market capitalisation.
Kenny Ho, Asia-Pacific head of products at Julius Baer, says many investors had recouped losses as the Hang Seng had rebounded by about 50 per cent. "The most visible signs are that investors are a lot smarter about paying attention to their overall asset allocation. They are also avoiding investment products where their assets are locked in for a long time, preferring to invest in more liquid products," Ho says.
He has also noticed that investors are looking for safe institutions to invest with. "As a pure-play private bank that focuses on sustainable investment strategies, we avoided the toxic investments that caused damage to many investors' portfolios," he says.
Enid Yip, Bank Sarasin's chief executive officer, Asia, also believes client confidence is strengthened when they are provided with well-researched investment options provided by reliable organisations. "These are still testing times. Investors are seeking safe, secure homes for their assets. Clients are now focused on capital preservation," Yip says.
"Clients are also looking for a fully dedicated service, in which time is spent and value given. While some of the big players have a natural bias towards providing their own products - this is part of their strategy to drive revenues. We are fully committed to an open-architecture platform. We provide a client-focused, tailor-made services model, rather than a large sales-oriented product model. This strategy creates a strong basis of trust based on long-term stability."
Despite the resurgence in economies and markets, Joanna Chu, Barclays Wealth's head of North Asia, acknowledges the trust between banks and their customers has been badly damaged. "I believe we can restore client confidence through performance of the bank, performance of our bankers and performance of our clients' portfolios," she says.
"Despite the financial crisis, Barclays Wealth globally managed to increase the assets we have under management. Throughout the events of the financial crisis, clients are increasingly realising the importance of doing business with financially sound and strong institutions."
In a move designed to improve public confidence in financial institutions, the Securities and Futures Commission has issued a consultation paper seeking feedback on Proposals to Enhance Protection for the Investing Public. The proposals aim to improve protection for the investing public through a series of reforms and education. Welcoming the proposals, Angeline Chin, chief executive of the Institute of Financial Planners of Hong Kong (IFPHK), says they are a step in the right direction.
She says the IFPHK endorses a sound regulatory reform that improves sales processes, makes marketing material more factual to consumers and offers appropriate levels of disclosure. "Many of the suggested reforms appear to be moving us in this direction."