Arjan de Boer, Indosuez Wealth Management
Asian investors trade more actively than counterparts in the rest of the world and generally prefer putting money in products with a short investment horizon, de Boer told FSA.
However, the return of volatility and geopolitical tensions has brought investors in Asia to the sidelines, which creates opportunity for wealth managers to offer their discretionary portfolios, he said.
Currently, Indosuez WM, the private banking arm of the French bank Credit Agricole, runs a discretionary business in Asia that is less than the industry average of 8% of total assets, de Boer said, but he did not share the exact number. He added that the aim is to reach the industry average.
“Market volatility always provides a good moment for us to talk about longer-term investing. If investors actively trade structured products and equities, all of a sudden they realise they are spending much more time monitoring it during a volatile market.
“This is when the interest in managed solutions, such as discretionary portfolios, increases because there is someone looking at [the portfolio] day-to-day on your behalf,” he explained.
Another driver of discretionary in Asia is the second generation of wealthy families taking over. Comparatively, they have less emotional attachment to their wealth and are more open to professionals managing the wealth, he believes. That can translate into more discretionary mandates, de Boer said.
For high net worth clients with investable assets of more than $1m, Asia’s industry average of discretionary assets is around 8-9%, which jumped from 2% ten years ago, according to de Boer.
Although the ratio of assets in discretionary portfolio is close to 30% in Europe and in North America, Asian investors will put more money into managed portfolios in the coming years, he believes.
In terms of technology, de Boer said the human element is most important in private banks and emerging investment technology such as the robo-advisor is more suitable for retail clients.
“The reason why private banking exists is the human element. The fact is that a client at almost all times can go to his or her banker, who in many cases becomes a friend of the clients’ family.
“The bankers advise multiple generations of a family. The human touch is probably the most important in the private banking industry.”
He added that the bank developed a mobile application to provide clients with in-house research and a digital dashboard that displays the client’s portfolio. “It is not that we do not modernise. But the delivery of service will remain human.”
In December 2017, Indosuez Wealth Management completed the acquisition of the private banking divisions of Credit Industriel et Commerial in Singapore and Hong Kong. The bank’s total assets under management at the end of 2017 was €118.3bn ($138.09bn) and the AUM in Asia accounts for 10%, according to its annual report.