INDUSTRY
Singapore IAMs under pressure to consolidate and retain lean structure for profitability The IAM scene in Singapore has entered a new growth stage of late, boosted by supportive regulatory developments and the rising need of HNWIs — especially those from Asia — for diversification across geographies. But IAMs are constantly battling with two opposing forces: on the one hand, they have to achieve the “economy of scale” with sufficient AUM and fewer private banking relationships. On the other hand, they are compelled to keep their organisational structure lean and expenses low. “The key test is AUM — an IAM starting with AUM short of S$200 million will find it difficult to maintain, unless its AUM quickly rises to about S$300 million or more,” said David Toh, CEO of Sinopartners, an IAM services provider based in Singapore. Toh asserted that S$300 million is the minimal threshold for a potentially successful IAM business. Most IAMs started their business with
cornerstone clients that are able to provide the IAMs with a significant amount of AUM,” he told Asian Private Banker.
The raison d’être of IAMs With sufficient AUM in the first place, running an IAM business can bring advantages not seen at private banks, argued Toh. For instance, IAMs that are larger in size can directly deal with investment banks and are effectively cutting out a lot of services traditionally offered by private banks. The IAM model enables a better alignment of interest between the business and the clients. “IAMs no longer have to stick to one bank and can invest in funds marketed by various banks with the better product offering and better prices,” Toh pointed out. “Whereas a bank has its own KPIs and agenda that may not necessarily align with [the IAM] client interests.” 47
