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Asia’s UHNWIs prefer discretionary mandates: survey

A vast majority of them also believe that the sustainability trend is "here to stay", according to a Lombard Odier study.
Silhouette of businessman sit on chair and hold a cigar, looking the harbor of Victoria at Hong Kong, Asia.

Editor’s note: This article was first published on ESG Clarity Asia.

More UHNWIs in Asia are starting to prefer discretionary mandates, according to a survey conducted by Lombard Odier to 150 UHNWIs in Hong Kong, Indonesia, Japan, Singapore, the Philippines, Taiwan and Thailand.

Survey findings reveal that 58% of the participants indicated that going forward, they will most likely choose discretionary mandates, of which 44% would combine it with some advisory mandate.

“The need for advice from UHNWIs has increased with the world becoming more complex. In this context, discretionary mandates are favoured by UHNWIs,” the report said.

The survey findings coincide with observations made by the private banking sector in the region, in which clients are starting to appreciate discretionary portfolio management (DPM) services, especially after the market volatility caused by Covid-19, according to a panel of private banking executives who spoke during Fund Selector Asia’s DPM and Family Office Asia Forum.

“The challenging market environment that we all went through during the first quarter was quite unprecedented, and that opened the eyes of a lot of investors who were quite sitting comfortably over the last eight-to-10 years,” Paras Gupta, DPM head for Asia at UBP, said during the virtual event.

In relation to the pandemic, the Lombard Odier survey noted that 81% of participants think that there will be more digital and less physical human interactions following Covid-19.

In addition, 87% of participants indicated that a bank’s degree of digitalisation will matter going forward, which speaks to UHNWIs’ desire for banks to offer IT-related banking services and new ways of communicating as next steps in the evolution of banking.


Separately, the survey also found that UHNWIs in the region are starting be more interested in sustainable investments.

An overwhelming 89% of the participants believe that the sustainability investment trend is “here to stay”, according to the survey.

The study added that more than half (55%) of the participants are expecting an acceleration of measures to combat climate change.

 “The main concern among UHNWIs interviewed is whether countries globally will be able to coordinate themselves in their effort to fight climate change. The mismanagement of a country’s natural resources and its consequences are also a concern,” the report said.

However, some investors are learning more about sustainable investing. According to the report, only around 61% of the participants have taken sustainability into consideration when making investment decisions.

 “The exact definition of sustainability and how to take it into consideration in particular when investing raised some interesting questions from UHNWIs,” the report said, adding that UHNWIs in the region conveyed that they have a desire to better understand the options available to them when it comes to sustainable investing.

Some investors also continue to be sceptical about the benefits of sustainable investments, with around 46% of them stating that sustainability will not generate superior returns.

Other key findings include that half of the respondents have not structured their family governance, of which only 36% indicated that the pandemic prompted them to consider putting a structure in place.

“The findings illuminate the expectations and roles that private banks play in this new reality – the ability to leverage technology as a conduit in building relationships and providing enhanced service offerings, quality investment advice and discretionary offering, and the ability to facilitate extra financial services, including finance, more engagement and guidance topics such as sustainability, and a strong expertise and understanding in managing and protecting wealth through generations,” said Jean-François Aboulker, head of UHNW offering for Asia at Lombard Odier, said.

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