Asia Pacific is vastly outpacing the rest of the world in accumulation of personal wealth, but that doesn’t mean that private bankers in the region are having an easy ride in boosting their business.
Twenty nine percent of ultra-high-net-worth clients in Asia Pacific have relationships with more than five wealth management companies, according to a report from Ernst & Young, well above the global average of 17 percent.
Competition has been driving down the fees.
With many clients seeking to consolidate their assets, managers vying for a bigger share of the pie will be hard pressed to offer better pricing and prove themselves in terms of securing higher returns for their customers.
Sixty-two percent of firms experienced falling margins, compared with just 18 percent in North America, the EY report noted.
Margin erosion is partly due to fee decline and partly a result of rising costs, primarily compliance related spending.
The rise of robo-advisers is another notable trend that could drastically change the landscape and practice of wealth advisory service in the region.
DBS, Credit Suisse and Standard Chartered are all said to be investing heavily in digital or artificial intelligence platforms that can offer analysis, research and investment ideas on the cheap to tap the mass affluent market in a low-cost way.
Customer feedback seems to support the shift to automated advisory services as only one third of clients surveyed for the report expect personal interaction to remain the primary channel.
Wealth managers in Asia hence have to brace for a future of more competition, both from fellow humans and smart robots.
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