Asia private banking debate: Great opportunities in Asia

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By:
Chris Wright
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Asia offers a unique client set of young entrepreneurs; it also offers the challenge of new generations inheriting wealth with different expectations from their predecessors. That is a great opportunity, but it requires private banks to be nimble, thoughtful and technologically adept.

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EXECUTIVE SUMMARY

• Wealth management is becoming more about partnering with clients

• Some national markets are still about wealth creation; others are transitioning to wealth preservation

• Banks in the region are working more often with family offices

• Investment aims are also evolving, with younger HNWs looking at alternatives as well as CSR, ESG and green

• Banks must also meet younger customers’ expectations on technology

Chris Wright, Euromoney: Asia differs from the rest of the world in the requirements it makes of private banking. Clients are more commonly entrepreneurs and younger than in Europe or the US. How does a private bank serve such a client base? Does the private bank have to be linked to the investment bank in order to advise entrepreneurs?

Tan Su Shan, DBS (TSS, DBS) Asian clients are creating wealth, and a lot of their net worth sits in their business. If that business is listed, then they are liquid; if not, then it is the job of their wealth management partner to help them find other liquidity solutions – or hedging solutions, or wealth transmission, or wealth succession solutions.

So it’s not just the investment bank. That comes in if there is a deal to be done, an M&A situation; but that’s not an everyday requirement. You need to provide long-term, corporate banking, industry sector expertise, so you can help clients to continue to create their wealth.

The better you understand the wealth creation process, the better you are positioned to be their wealth management partner.

Euromoney: Is it challenging to bring all those parts of the bank together?

TSS, DBS We have the advantage of our Goldilocks size: not too big, not too small. If you can get your sector expertise, your country expertise and your product expertise into a room with the customer, you should be able to solve a lot of the situations you need to solve.

Kam Shing Kwang, JPMorgan Private Bank (KSK, JPM) Families go through different stages in their wealth – in Asia many are going into their second and third generation – and they have different needs through those stages. Ideally, you want to help them through the entire cycle, through multiple generations. There is a spectrum of needs they need along the way.

One end of the spectrum is very specialized advice, which might focus on one area of their liquidity, or pure asset management, to preserve the wealth they have created. The other end of the spectrum is where you cover all their needs. We want to walk clients through the wealth cycle through multiple generations. So it is very helpful to be a universal bank – both private bank and investment bank.

Euromoney: In your experience, which is the more commonplace end of that spectrum?

KSK, JPM It depends on the market. In Hong Kong, I personally speak to three generations of some families, and with the second and third generations they are focusing on sustaining the wealth that the patriarch has created. But in markets like China and Indonesia, they are very much in the wealth creation mode. Often they want to diversify out of their home market.


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Euromoney: François, Credit Suisse has set great store on the connection between its private and investment bank, particularly in Asia. How does it work in practice, trying to get two disparate bits of banking to come together?

François Monnet, Credit Suisse (FM, CS) Let’s be clear, it’s very, very hard. They are different people in different cultures. If you are in investment banking, you are probably very much transaction-driven. If you are in private banking, you are going to be relationship-driven. 

You need to start with a very strong strategic statement. We started our journey more than 10 years ago, inviting the investment community and media to track our performance on collaboration. That is a statement.

Secondly, you need to make sure that there is something for everyone along the value chain in origination. That is a complex set of incentives, which needs to be clearly stressed. We have a team called the One Bank Collaboration Team, which meets key clients to activate conversations and take their objectives to the various departments of the bank. Then you need front-to-back alignment to make sure there is first-class service.

For three years now in the Asia-Pacific division we have had what we call Wealth Management and Connected business, which brings together private banking, underwriting and advisory and financing under a single CEO Asia-Pacific, Helman Sitohang. With that, you are no longer just talking about collaborating but integrating the bank. Then you can say you are truly holistic in serving your client.

The last point is who is taking the decisions. A lot of banks have vertical reporting lines to their headquarters in the US and Europe, but decisions in the context of Asian needs must be taken in Asia. That is why we have a division in Asia, fully accountable and close to market. 

Euromoney: Presumably you’ve got to pay people differently if you want them to work together?

FM, CS Since 10 years ago, relationship managers originating a capital markets transaction get part of the transaction’s revenues directly allocated to them, with an end-of-year indication of the incentive attached.

TSS, DBS We have it on bankers’ scorecards to collaborate – not just for my colleagues but for others who don’t work in my part of the business. 

But we are very much part of the bank. I don’t think at DBS a private bank could exist on its own as a standalone because our value proposition is not just bringing a private-banking solution, it’s bringing a whole bank – from a credit card to your mortgage or an M&A transaction or a real-estate investment trust (Reit). We should really be business-unit agnostic.

Euromoney: Let’s get some country-specific perspectives. Yang Gang, in China do entrepreneurial clients need their private bank to be an investment bank as well?

Yang Gang, China Construction Bank (YG, CCB) Our main private wealth clients are entrepreneurs and they are mainly in the first generation of wealth creation. They place most focus on the development and transformation of their enterprise, and they want to follow the trend of globalization and internationalization to keep enterprises healthy and strong. They pay more and more attention to global markets while considering wealth preservation, development and inheritance.

At China Construction Bank, the private banking and investment banking sides work closely with each other to meet the all-round needs of our clients – not only their personal wealth but the management of their enterprise and their overall governance. 

In the CCB private bank services model, each private banking client has a ‘1+1+1+N’ team. They have a private banking manager, a wealth adviser sitting in the private bank centre and they also have one customer manager that sits in the nearest bank’s network to give them instant service. “N” stands for corporate business experts, investment banking experts, trust experts and so on that come from CCB group, subsidiaries and the market. 

Meanwhile, we are very proud of our asset management ability, trust services and other subsidiaries of CCB. Using them all, we provide an integrated solution that leverages all the different parts of the bank and helps our clients to develop their wealth.


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Euromoney: Amit, what do you see in the needs of private wealth clients in India?

Amit Shah, IIFL Asset Management (AS, IIFL) In India, we don’t have the traditional form of private banking that goes back three or four generations. There are probably 100 to 150 families with lineage, but every other business represents first-generation wealth. Most of them are hardcore entrepreneurs who roll up their sleeves, go in to their factory, office or shop and work nine to nine, if not more. 

The typical age of these investors is between 35 and 45, and they are all reasonably technology savvy – they created wealth in an era when technology had advanced and they advanced with it too.

In the current climate, entrepreneurs want someone who will stand by them in a similar spirit. They are not too worried about a private bank’s brand; they want full transparency and someone who can come in and be an educator and guide rather than a bank that provides everything in-house. 

Therefore, the concept of one bank, common in most markets, isn’t prevalent in India. In our case, when we go to an investor, our proposition is to provide open architecture where we aggregate the best options to suit investors’ requirements. Our philosophy is to be aligned with the interests of the client – to be a partner to the entrepreneur and ensure the relationship manager is aligned to the client’s thought process too. 

As a result, the suite of services – advisory, investment bank, lending arm, broking arm, transactions arm – can all be cost centres to create a unified framework for clients’ goals. The relationship manager has the best knowledge to source the right products, and if they are not available in-house, our open architecture grants access to third-party products and the best managers across a wide variety of platforms and asset classes. 

Euromoney: You’ve worked all through this industry – Kotak Mahindra, Citi. When you look at wealth management in India, are groups moving to the model you describe?

AS, IIFL In India, fortunately or unfortunately, the industry never evolved. In fact, it just erupted. Seventeen years ago I worked with Citi. Back then in investment advisory, mutual fund selling was considered a very high-end job. That’s the advice that people wanted. Today, high net-worth clients are looking at putting 10% to 15% of their money into private equity, which is at the highest risk-return end of the spectrum. 

The good thing is, when the industry erupted and new players came in, we all co-created systems and processes that were aligned to these changing requirements. 

There is a funny statistic: the number of millionaires being created in India is one of the highest in Asia, yet a lot of global private banking players in India are exiting. It doesn’t sound right, especially in a market that is growing so phenomenally. It’s because it is a very competitive market – and the complaint global players have is that Indians don’t like to pay. But I disagree. For an optimal proposition, investors are willing to pay 45 to 50 basis points, and that’s in line with private banking elsewhere in the world.

If you approach India with a typical global model, it’s very difficult to do business as most of the wealth created is new generation wealth with a very different perspective. If you sit with the clients, understand their requirements, go back to the platform, prepare a nice product for them and be very transparent, you can be successful.

Euromoney: The Monetary Authority of Singapore talks about a striking level of growth in family offices in Singapore – and it’s not a uniquely Singapore story. We are seeing growth in number, sophistication and scale. What does this mean for you as advisers to them?

KSK, JPM It is certainly a phenomenon. Among the clients we work with, I would say more than 80% of them have some form of family office, although the scale can vary from one single staff member to a fully fledged professional office. It is a very encouraging trend, when you consider it is a reflection of increasing sophistication and professionalism in our clients’ attitude to wealth management. 

We work with family-office clients using teams of specialists – relationship managers, investment specialists, asset class leaders – who can talk to clients in terms of portfolio construction, people who can work on trusts and estate planning.

TSS, DBS There are two big trends I see. The first is that there is ubiquity among the deal flow. Last week I saw a client from Saudi Arabia, a family office from the Bay Area and a family office from China, and they were all looking at the same deals. That commonality of deal flow is interesting. 

The network of family offices is getting tighter and tighter. They are all meeting each other. And if the first generation don’t know each other, then the next generation will. So if you are able to add value to their deal network, then you win your place in that network. 

The second is that, as wealth transfer happens, the next generation are coming into their own and there is purpose to their investment: they want ESG (environmental, social and governance criteria) and private equity. They want to invest for profits, but they also want to invest for sustainability and impact.

FM, CS Asia is still only about 10% of world family offices, but we notice huge appetite to catch up with best practices, to leapfrog to what the Americans do. 

I also see this fantastic notion of: ‘What do we stand for as a family?’ It might lead, as Su Shan said, to more socially responsible activities, but it also leads to cross-generation views in terms of time horizon and preservation of wealth.


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Euromoney: Yang Gang, is the sophistication of family offices growing in China?

YG, CCB The family office is playing a more important role in China. Because wealth accumulation is speeding up, the number of ultra-high net-worth clients is increasing faster than general high net-worth customers. 

With the accumulation of wealth and sophistication of the businesses they are running, they have a higher demand for investment banking and other complex service needs, so the allocation of wealth is becoming more and more complicated. Ultra-high net-worth clients place growing attention on property, artwork, philanthropy, trust and green finance investment rather than merely financial products. Since almost all ultra-high net-worth clients in China have enterprises or corporates; corporate banking as well as investment banking services are being highly emphasized. 

And since quite a lot of companies are privately owned by family members of ultra-high net-worth clients, they need a family office to take it all into account and to manage those assets in an all-round way. The structure of a family office is a must.

Although construction of a family office requires a lot of resources and the cost is very high, China will definitely have more and more family offices providing professional and wide-ranging services that are targeting those clients’ needs.

Euromoney: What patterns do we see in the way high net-worth people in Asia want to invest their money?

FM, CS Firstly, we are targeting entrepreneurs, and always part of their money is in their business.

When it comes to financial assets, everyone in Asia is rich from real estate. I do not know any client with a decent amount of wealth without a significant position in real estate.

Then it depends which market you are talking about. In Singapore, the sophistication is such that the penetration of alternative investment could be as much as 20% to 25% of assets. In other markets like China there will appear to be a low penetration of alternative investments, but that’s because they are doing it directly rather than through the bank. 

The region is not homogenous: there is a passion for equity in north Asia, for fixed income in the Philippines, for FX in Indonesia. 

KSK, JPM Geography and cultural differences can play a part. But for the most part, it’s dependent on the different stages that families go through. During the stage of wealth creation, risk appetite will generally be strong, with higher expectations of returns. During the stage of preserving wealth, it is different.

Euromoney: Are alternative assets under-represented in Asia?

KSK, JPM Clients in the wealth-creation stage are interested in private deals, as opposed to just investing in public markets. They have a background managing business and like the idea of deals that could support that business.

If you are looking at private equity funds as a percentage of their portfolio structures, it may not capture the entire spectrum, because if you include some of the acquisitions they make it could be a totally different number.

People tend to generalize on risk-return profiles by just focusing on financial portfolios. We tend to try to encourage clients to look at it much more holistically. Client wealth goes into a few buckets – the operating business, the financial portfolios, human capital, philanthropy – and you get a much better sense of their interests when you put all of that together.

There is certainly a demand and supply issue with private equity. There was a time when it was only really available to institutional investors and it was hard for private individuals to access that. But the market has evolved a great deal; it has become a lot more mature and the product range has grown a great deal. I would expect participation to grow.

Euromoney: We are seeing an evolution in private equity in Asia. Traditionally the big shops were in the US, but often big deals now involve Chinese names like Hillhouse. Does it become more appealing when there are more home-grown names involved?

KSK, JPM Totally. There is no doubt that emerging markets are presenting more and more of the private market opportunity, and that allows broader participation of investors and families.

Euromoney: Su Shan, what is the attitude of investors from Asia to investing in Asia?

TSS, DBS It depends on where they come from, but we have seen some home country bias. Asia is demographically, geographically and technologically going to create more wealth than ever before. Three out of the top five economies in the world by GDP will be in Asia in the near future. 

I don’t think Asian investors will veer very far away from Asia. There will be some diversification and some hedging, but there is still this sense of: ‘My home country is my motivation and I’m going to benefit from whatever growth my country is offering.’ This is so especially in the big domestic economies of China, India and Indonesia.

Wealth management is being democratized. When ETFs [exchange-traded funds] are being offered at eight basis points, for private banks to justify 50 to 80 basis points you’ve got to do something different. We are living in an age of massive disruption in every sector, and companies and entrepreneurs realize that they need to figure out if they are being disrupted themselves. 

If I’m in real estate; the way people live, work and play is going to be very different in the next eight to 10 years. If I’m in the automobile sector, and there’s going to be self-driving cars, or if I’m in oil and gas, renewables are coming in. I have to look at my wealth creation and think: ‘OK, what should I do?’

Increasingly, Asian families who are creating wealth are looking at alternative businesses that could help or diversity or hedge their risk. That’s the value a private banker should bring to the table. How we justify our fee will evolve. Being able to stay relevant in a time of tremendous change is key.

Euromoney: Amit, in terms of disposable wealth, what’s popular in India now?

AS, IIFL Unfortunately, there is no capital account convertibility in India, so essentially if an Indian has $100 million, he can’t even invest $5 million outside of India. Therefore, diversification has to be limited to the investment product and not currency or markets. 

In the last four to five years, we have seen alternatives or AIFs pick up in a very big way. In India, hedge funds and their equivalents were not allowed until six years back, and this nascent industry has grown leaps and bounds. On every incremental dollar coming in, we are seeing at least 25% to 30% of that money going into the alternative space.

Most Indians, even if they were allowed to invest outside of India, would not do so aggressively, as the growth they see in India no other developed market offers. You see the same thing in other markets like Brazil: their internal growth is so strong, the only money they will invest outside Brazil is in US treasuries. 

India is in a similar phase where returns across all asset classes have been high over long periods of time. On a five or 10-year perspective, they are still making-high teen compounded returns consistently. The economy, on a nominal basis, is growing at 10% to 12%, which doesn’t look under threat. 

Another interesting pattern is Indian entrepreneurs investing in other entrepreneurs. 

The challenge every entrepreneur faces is that they only have bandwidth to run their own business, but if the country as a whole is growing, how do they participate in that? So direct private equity investment has become very large in India now. As in the west, there are forums created by high net-worth individuals in India who collectively evaluate these opportunities and invest in the businesses. India is now also seeing professionals turning into entrepreneurs and private equity funds backing them. 


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Euromoney: China is of course another country with capital controls, but it is also undergoing a gradual process of openness. How does that affect the way people in mainland China want to invest?

YG, CCB China as the second largest economy in the world has developed at a high speed for the past 10 years. Customers, whether home or abroad, are somewhat return driven. Where they could get higher returns, their wealth would follow that trend. However, there is another determining factor: safety. Clients look closely at the safety of the asset. The whole economic environment is stable, so people will remain positive about holding domestic assets. 

Although they intend to put more assets in China domestically, they will also look at overseas opportunities, such as the Asia-Pacific area. As well as the sustainability of the economy, clients also look at the maturity of the legal system, culture and government regulation environment while searching for overseas investment targets or destinations.

As I’ve mentioned, most of our clients are entrepreneurs. They have one vital characteristic: they always put their enterprises first. Entrepreneurs like to invest in their own industry when they have strong ambitions and confidence in it. For example, if a client is running a business in petroleum, he will not be invested in high technology because he is not familiar with that. He is more interested in investing in the upstream and downstream of his own industry, in businesses that relate to his own enterprise. When he considers M&A, he will first consider the structure of his own enterprise and its long-term development and how it will be affected by that acquisition.

Nowadays the internet and the virtual economy have become more popular investment destinations and a very hot topic. Clients are paying a lot of attention to it, but they are being rational: they do not just invest in popular sectors but will think about the structure of their own family assets.

Euromoney: Regulation is highly relevant here. I understand that some of the wealth management products, guaranteed products, which were often difficult to understand, are being seen less?

YG, CCB The whole environment for domestic law and regulation is improving, in terms of what products financial institutions are authorized to offer, who could be qualified investors and how wealth management products could be sold. That is to say, clients must meet certain criteria before they could access certain products and some sales processes have to have video and audio recording to guarantee clients’ rights. 

As a player, we know that the government, as well as the supervision agency, is trying its best to improve the entire system for investors and clients so as to create a fair and sound wealth management market for both domestic and international institutions. 

Euromoney: If we accept that the long-term direction is for greater openness and access for foreign banks in onshore China, what’s the potential for you handling onshore Chinese wealth?

FM, CS Obviously this is an enormous opportunity and it looks like we are at a defining moment in market circumstances.

Three things. These wealth management products with guaranteed returns are quickly becoming obsolete as a solution to investors, which places international players on a more level playing field.

Second, access to ownership and the granting of licences is opening up very visibly. We do have a footprint in China and are thinking about exercising this call option to upgrade ourselves towards control, which wasn’t possible before.

Third is expected return. Five years ago, it would have been 15% or they would laugh at you. But we just ran an investment seminar in China where we asked 100 people to choose their expected return for the next six months, and 80% of them were in the brackets zero to 5%, and 5% to 10%, with an average of 6% or 7%.

The question will be deployment and the acquisition of scale. If we just do what we do, it means we are going to meet one client at a time and deploy our full range of capabilities for a holistic service. And if we do it well, with a serious commitment, and if we can find the next 600 relationship managers who still do not exist, and if we have the stamina to continue to take the early losses, by the end of a certain period we are going to cater for maybe 5,000 to 10,000 clients. 

The question is how we are going to define winning. It will have to combine the traditional way of providing services to very high-end clients who happen to be onshore and global, with a platform network associated with people who can provide access to clients faster, otherwise it will be extremely difficult to compete. 

Also our global standards are probably putting us at a competitive disadvantage as we enter the market, as we have a cost base likely to be higher than the local standards, in order to meet those global standards.

So it’s not an easy exercise. But it’s not about deciding whether you want to do it. This is the second worldwide economy, growing faster than anywhere. It’s a question of a smart strategy, proper timing and building knowledge on local people.

Euromoney: Kam Shing, I know JPMorgan seeks a majority-owned mainland joint venture on the securities side. How does that feed into offering onshore private wealth advice?

KSK, JPM The risk is actually understating the opportunities in China. [It is]} the second largest economy in the world, and by some measures you could expect it to overtake the US; there are one to one and a half billionaires being minted in China every other week; and of the top 20 unicorns, 14 are in China. So the potential is immense.

Today, we don’t have an onshore presence for the private bank, but it is in the public domain we are applying for a securities licence and we already have an asset management capability through our joint venture in Shanghai. The one thing that will stop us will be regulation, but as market deregulation develops, we will certainly be looking for opportunities.

Euromoney: Does a securities licence allow you to advise on wealth in China or is there a suite of licences you need?

KSK, JPM There are multiple licences that will be required if you want to offer a holistic range of products.

TSS, DBS China has Glass-Steagall, so you have securities and banking licences. I’m very bullish on the onshore scenario myself. I often talk about the four Ds of wealth management. One of them is the democratization of wealth management and another is domestication of wealth management. (The other two are digital and data.) There is increasing wealth onshore; our acquisition of ANZ’s wealth management businesses in Taiwan and Indonesia has given us the scale to open onshore private banking in those markets.

In China, the dominance of the top local banks is clear, and we have seen the growing role of the technology companies – the big techfins, I call them. The product platform will evolve there and it’s a matter of training people, which won’t take long with a very smart hard-working population.

As foreign banks, you have to play to your strengths: there’s no point in trying to fight with the local stronghold. But ecosystem partnerships can work. In the past, we have had partnerships with Postal Savings Bank of China on consumer finance, with local asset management companies, potentially with local insurance companies. One has to be a little more creative when you look at going into big geographies like China, Indonesia or India. And the Greater Bay Area offers tremendous opportunities right now with its connectivity to Hong Kong. 

Euromoney: You mentioned the acquisition of the ANZ businesses and the accumulation it gives you of an onshore presence in Indonesia and Taiwan. What have you learned from bringing those in?

TSS, DBS I learned a lot about the tremendous cross-selling capabilities of digital technology, with very easy onboarding. In India, we rolled out DigiBank, where you can open an account in 90 seconds. As a private banker, I’m very grateful for the retail exposure we’ve had in the last six years: it’s enabled me to receive the tremendous, exponential capability that technology can bring. And the same technology should apply very democratically, whether you are wealthy or not. I think the future for wealth management in those domestic markets is very bright.

Euromoney: Let’s turn to impact investment and the extent to which it is part of the mindset of investors in this part of the world. Yang Gang, you said green investment is a big theme in China.

YG, CCB As the world becomes smaller with highly developed technology, investors in China are deeply influenced by the concept of ESG and are paying more attention to green investment. Facing up to the challenges of a new era, CCB takes social responsibility as its corporate mission. The three strategies of the group – home rental, fintech and inclusive finance – help in the sustainable development of society, and to ensure every act of philanthropy goes to the people who need it most.

Especially in private banking, on one hand we are looking for public welfare and charity projects to participate in to fulfil our responsibility and to cultivate our clients. On the other hand, it is about our customers’ demands. They want to pay back to society with their wealth and they need their private banking manager to find programmes, products or projects that allow them to do so. In this way, they can contribute to the social wellbeing and sustainability of society. 

Examples are charity trusts that allow donations for the ‘Water cellar for mothers’ initiative, and a cochlear implantation and rehabilitation programme named ‘Love is not silent: Hearing aid construction for the future,’ for children in poverty. 

AS, IIFL In India, green investment is picking up among the younger generation, but for the older generation it’s still just a good boardroom discussion. 

One of the key reasons is there is no structured format of green investment. In the global developed markets, there are funds and professionals who do it, but in India it is still developing. As an asset manager, we have offered a couple of funds targeted at global investors who are investing in India, but within India we are not coming across situations where even institutions would want to go that way.

My view is it will be three to five years before a structured format emerges.

In India, regulation requires every corporate listed in India to spend X amount from their top line for CSR [corporate social responsibility], and that is very close to impact investment, so at that level investment happens. But funds being run or active investments by Indian investors with their private wealth – they are still missing.

Euromoney: The international houses offer a range of opportunities – socially responsible investment funds, impact investing, screening portfolios on ethical grounds – but in practice are clients in Asia taking up that opportunity?

TSS, DBS We did the first women livelihood bonds over a year ago and, I’ll tell you, it was really challenging as we were early in the impact investing space then. I invested in it myself, as did some of my colleagues, and we were just about able to close it then. 


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Euromoney: You’re doing the second tranche now?

TSS, DBS We are. But the more interesting thing was that when I opened my emails this morning I was happy to see that our ESG outperformance note, which we launched three months ago, is performing well and we are onto our third tranche. That means our teams are able to go out and evangelize, to say: ‘This is what ESG means.’ If two thirds of the MSCI index have some kind of ESG component to them and the next generation of wealth all have ESG in their investment criteria, it will become a self-fulfilling prophecy. And as more money goes into ESG-compliant companies, they will surely outperform. 

So we can say: ‘We have a fully principal-protected outperformance note, with no downside risk – would you like to take a look?’ If we show you a product that looks good and has strong returns and long-term impact, would you invest in it? It’s an easier conversation to have than even a year ago. 

Euromoney: If the bonds were a hard sell, why were they a hard sell?

TSS, DBS It shouldn’t be a hard sell, that’s my point. Now you have a wealth transfer to millennials, who want self-actualization, they want to leave an impact. Companies attract people by having a purposeful mission – if you want to attract and retain good talent, you need to show you have good purpose in what you are trying to do in life. So as more money chases companies that do good, the multiples of those companies will expand.

KSK, JPM Some trends in other areas could be relevant. In the world of investment, the biggest players are still institutions; they still control the bulk of the assets and their direction will drive the industry trend. 

But hedge funds are driven by demand from private clients – they want absolute return, not benchmark return, so they drive that trend. And I think ESG will also be driven by private individuals, not from the institutional side. The reason impact investing is growing much slower than we would like is because institutions are not doing their part and it will be up to private clients to push it. They want it, but it’s supply and demand; there aren’t enough products. 

FM, CS We took a veteran investment banker, put her in direct report to the CEO, and gave her the job of activating impact investing throughout the organization, because there is a significant amount of awareness, training and packaging to drive through. It has to be strategic in the organization. 

If you turn yourself into a family office and integrate the next generation, they are going to help the first generation to think differently. They are going to take a long-term view, and as soon as you do that you discover a need to have impact investing. We team up selectively as well – we partnered with a Singapore bank’s venture management arm to launch an impact investing fund, private equity, with a long time horizon – and we know this theme is here to stay.

Euromoney: One important theme is the role of women in this debate, both in terms of women as generators and controllers of wealth in this region, and the representation of women in the industry. What are the methods through which private banks adapt to the rising role of women as owners and directors of wealth?

TSS, DBS There is maybe a style difference between women and men investors. Women tend to more consultative, they want to find out what they don’t know before making a decision, and they tend to get advice from multiple sources. Younger women are very influenced by the communities they operate in. Millennial women listen to influencers they respect, so don’t try to sell them anything, let them decide among themselves who they want to follow and what they want to do, then help them invest. Being a partner, rather than telling them what to do, is very useful.

There is a trend where daughters are running the family office, and they see things differently. I went to dinner with a dad and daughter, 50 and 25, and I don’t think the daughter put down her phone for one minute. But I realized she was using our iWealth app and was trading with New York the whole time. So while her dad was engaged in human to human conversation with us, she was engaged in a digital conversation with our app!

KSK, JPM I think that’s generational, a trend for millennials. 

Euromoney: And is my demographic assumption – that the role of women in the management of wealth in Asia is growing dramatically – being born out in practice?

KSK, JPM Totally, though I think the perception that women weren’t playing a part is wrong. There are visible and invisible decision makers, and women have been invisible decision makers for the longest time. Wives, mothers – the matriarch has always been a tremendous influence, whether in the management of the business or the family wealth or the education of the children. But there’s no doubt they are playing a much more visible role now because people accept that daughters can take over a business now – and that’s a change, especially in China. 

YG, CCB We notice the proportion of female high net-worth individuals, as well as female executives, is higher than before. These phenomena could be associated with the development of social ideology and industry, which offers much more senior positions to females than ever before. 

There is no denying the fact that women are very independent and well educated in China. Increasingly, the first generation of entrepreneurship will be women. They can run a business using their knowledge and may well be decision makers owing to their all-round education and experience. 

My personal opinion is that women are more confident and more suitable in the management of assets, for they tend to take a big picture of the whole family’s wellbeing. They are also more tolerant and patient than men, to some extent. These characteristics help in making long-term investment. Therefore, we need to attach more importance to female clients.

At China Construction Bank we provide certain courses to female clients. We have studied their focus and have found that women clients pay more attention to the education of their children and their family. We will provide more specialized and suitable solutions to female clients.

According to research, in private banking, the number of women relationship managers is greater than the number of men. This happens in European and North American markets, and is also the case at CCB.

Euromoney: More female relationship managers than male – can any of the international banks say that?

FM, CS At Credit Suisse about 70% of relationship managers are women.

TSS, DBS DBS has more women than men generally.

Euromoney: In overall headcount?

TSS, DBS In overall headcount, but I wouldn’t be surprised in wealth management too. Where there are fewer women is in the technology department. We came up with a program hackathon called ‘The Hacker in Her’ to try to hire female engineers and it worked. We did one for engineers over 42 years old to get older engineers and that worked too.



Private banking debate participants

YANG-GANG-CCB-160x186
Yang Gang (YG) is deputy general manager, wealth management and private banking department, at China Construction Bank


Kam-Shing-Kwang-JPMorgan-160x186
Kam Shing Kwang (KSK) is chief executive officer, Asia, at JPMorgan Private Bank


Amit-Shah-IIFL-160x186
Amit Shah (AS) is co-founder and chief investment officer of IIFL Asset Management


Tan-Su-Shan-2018-b&w-dbs-160x186
Tan Su Shan (TSS) is group head, consumer banking and wealth management, at DBS


Francois-Monnet-2018-160x186
François Monnet (FM) is head of private banking north Asia and chief executive of the Hong Kong branch at Credit Suisse


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