Private Wealth
ISSUE 02 2013
Interpreting today’s trends. Envisaging tomorrow’s.
Forecasting
Top three trends to watch in 2013 Infographics
Upward swing in the UK wealth market
Country focus
Australia: focus on expats
Mobile wealth management Interview with Alessandro Tonchia, founder and director of Finantix
introduction | Issue two
Welcome to issue two of Private Wealth Insight – our magazine for professionals in the private wealth management sector Each edition will highlight Datamonitor’s latest research into the essential issues affecting your industry. We’ll bring you a selection of topical feature articles written by members of our expert analyst team, based on our recently published research. Senior Analyst Matia Grossi begins this edition by looking in detail at the outlook for the UK wealth market. After a period of sluggish performance the good news is that the market is poised to return to growth, driven in part by renewed interest in unit and investment trusts. Further change in the dynamics of the typical HNW client meeting is the top trend to watch in the year ahead in our Analyst Ed Felmingham’s opinion. Managing this shift in client behavior should be a priority for wealth managers, as well as ensuring compliance in an increasingly hostile regulatory environment. Andrew Haslip, Head of Asia Pacific Content, provides an in-depth view on Australia and explains why, with 28% of the average HNW customer base being made up of migrants, wealth managers in Australia need an expat strategy if they are to continue the success of recent years. The role of mobile technology in wealth management is one of the hottest topics in the industry, and is already changing the relationship between HNW clients and their advisors. To get a fresh perspective on the latest developments in this area, Head of Content Helen Allingham discusses this with Alessandro Tonchia of Finantix. I hope you enjoy and find value in these insights. We’d love to hear your feedback and any suggestions you have for future issues of Private Wealth Insight. In the meantime, please continue to access your Datamonitor Financial service for the latest research and analysis. If you do not have a subscription, get in touch to request a free demo, or visit our website: datamonitorfinancial.com. Thank you for reading, and enjoy.
Kieran Hines Content Director, Private Wealth Management and Consumer Payments We actively encourage feedback from our readers, so if you have any comments or questions, please contact us at enquiries@datamonitorfinancial.com
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Private Wealth Insight
Issue two | contents
ISAs - Cash 9% ISAs - Stocks and Shares 8% National Savings 5%
Bonds 2%
Inforgraphics
Forecasting
Upward swing in the UK wealth market
Top three trends to watch in 2013
page 4
page 8 Deposits 39%
Equities 14%
Unit trusts / OEICS 23%
Investment trusts 1%
% variation compared to 2012
160%
150%
Country focus
Interview
140%
Australia: Focus on expats
Mobile wealth management: The new normal
130%
120%
page 12
110%
page 16
100%
90% 2012 Deposits
2013
Unit trusts / OEICS
National Savings
2014
Investment trusts
ISAs - Stocks and Shares
Equities
ISAs - Cash
2015
2016
Bonds Total
EDITORIAL Editor Giovanni Musio Art Editor Kazimierz Kapusniak CONTRIBUTING WRITERS Helen Allingham, Andrew Haslip, Matia Grossi, Edward Felmingham ABOUT Datamonitor Financial At Datamonitor Financial, we deliver intelligence-led insight and data on financial services markets, competitors and consumers. Our robust forecasting methodologies, proprietary databases, and the experience and knowledge of our in-house analysts help clients to make better strategic decisions in the areas of Private Wealth Management, Cards & Payments, General Insurance, and Retail Banking. Our research on private wealth management will help you identify new market opportunities, track competitor activity and develop tailored propositions for the HNW individual.
Get in touch To find out more about Datamonitor Financial get in touch at: e: enquiries@datamonitorfinancial.com t: EU: +44 20 7551 9201 | US: +1 212 652 5353 | AP: +61 2 8705 6900 w: www.datamonitorfinancial.com tw: @DatamonitorFS in: Private Wealth Management Insight DISCLAIMER While every care is taken to ensure the accuracy of the information contained in this material, the facts, estimates, and opinions stated are based on information and sources which, while we believe them to be reliable, are not guaranteed. In particular, it should not be relied upon as the sole source of reference in relation to the subject matter. No liability can be accepted by Datamonitor LTD, its directors, or employees for any loss occasioned to any person or entity acting or failing to act as a result of anything contained in or omitted from the content of this material, or our conclusions as stated. The findings are Datamonitor’s current opinions; they are subject to change without notice. Datamonitor has no obligation to update or amend the research or to let anyone know if our opinions change materially.
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infographics | UK wealth market
Infographics
Upward swing in the UK wealth market Matia Grossi Senior Analyst, Private Wealth Management
Since the financial crisis liquid assets held by affluent individuals in the UK have gone through a stormy period, with growth rates swinging massively from one month to the next. The ups and downs of the stock market have seen investors limiting their direct exposure to the volatile equity market, while at the same time collapsing interest rates have taken their toll on holdings in deposits and fixed-income products. However, Senior Analyst Matia Grossi notices that recent upswings in the stock market are luring return-starved investors back into equities.
The UK wealth market will stagnate in 2013 The UK’s wealth market is expected to remain flat in 2013, before starting to grow again in the years to 2016. The poor performance of the wealth market in 2013 will largely be due to a return to “normal” levels in the stock market after its stellar performance in the second half of 2012 and the first half of 2013. This is in many ways to be expected given the continuous and increasing uncertainty surrounding much of the eurozone; the recent situation in Cyprus, for example, has revealed the fragility of political stability in Europe, and is likely to be only a precursor to much bigger problems in Slovenia, Italy, and even France. Other products that have proven more popular with UK investors, such as cash ISAs, are expected to continue to grow, with balances increasing the most among the major savings and investments products. The popularity of cash ISAs is due to a combination of their tax-free status, capital-protected nature, and relatively high returns, with banks attempting to attract new customers without compromising liquidity, as in the case of bonds. However, the cap of £5,760 (for the 2013–14 tax year) per capita allocation is a strong limiting factor to the weight of cash ISAs in terms of overall allocations, especially for wealthy investors.
The total UK wealth* market will remain flat in 2013 Source: UK Regional Wealth Markets Analytics
£1.98tn
£2tn
2012
2013
1.25% Growth rate *Affluent holdings only. Affluent refers to individuals with more than £30,000 in onshore liquid assets and includes both mass affluent consumers and high net worth individuals.
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Private Wealth Insight
UK wealth market | INFOGRAPHICS
Deposits dominate, limiting growth
ISAs - Cash 9%
The broad UK retail savings and investments market is still dominated by traditional, low-risk asset classes, namely deposits, which accounted for 39% of the total retail savings and investments market in 2012. The near-zero interest rate set by the Bank of England is penalizing investors and eroding the underlying value of cash and deposits. This in turn is limiting their overall contribution to the market, which also significantly declined from their 2008 peak of 51%.
ISAs - Stocks and Shares 8% National Savings 5%
Bonds 2%
Equities 14%
Deposits 39%
Investment trusts 1%
Unit trusts / OEICS 23%
160%
% variation compared to 2012
150%
140%
130%
120%
110%
100%
90% 2012 Deposits
2013
Unit trusts / OEICS
National Savings
2014
Investment trusts
ISAs - Stocks and Shares
Equities
ISAs - Cash
2015
2016
Bonds Total
Private Wealth Insight
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infographics | UK wealth market
Access the dashboards through your subscription
UK Regional Wealth Markets Analytics UK Retail Savings, Investments, and Pensions Analytics
Request a free demo
enquiries@datamonitorfinancial.com quoting INSIGHT02.
Source: UK Retail Savings, Investments, and Pensions Analytics
Total savings and investment market, UK (GBPtn)
Although growth in 2013 will be limited, Datamonitor now has a more optimistic outlook compared to its 2012 forecasts. This is thanks to the strong stock market activity in late 2012 and early 2013, which resulted in a robust performance from unit and investment trusts. Our expectation is that they will continue to outperform previous forecasts in the period to 2016. This same trend is also resulting in a push from deposits into higher yielding unit and investment trusts and equities. Consequently deposits are expected to underperform compared to previous forecasts, a trend which has been compounded by a worse than expected GDP forecast and stagnating real wages.
Stronger than expected unit and invest trust performance is driving market growth 0.60 0.54 0.48 0.42 Total new forecast
0.36 0.30 0.24
Total old forecast
0.18 0.12 0.06 0 2011
Retail unit trusts and investment trusts, UK (GBPtn)
However, forecasts are more optimistic than in 2012
2012
2013
2014
2015
2016
0.60 0.54 Unit trusts and investment trusts new forecast
0.48 0.42 0.36 0.30 0.24
Unit trusts and investment trusts old forecast
0.18 0.12 0.06 0 2011
2012
2013
2014
2015
2016
0.60
Retail deposits, UK (GBPtn)
0.54 0.48 Retail deposits new forecast
0.42 0.36 0.30 0.24
Retail deposits old forecast
0.18 0.12 0.06 0 2011
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Private Wealth Insight
2012
2013
2014
2015
2016
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Feature | Trends to watch
Forecasting
Top three trends to watch in 2013 Edward Felmingham Analyst, Private Wealth Management @EdwardF_DMFS
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Price sensitivity from clients and intrusive regulators will demand a rethink of traditional wealth management concepts in 2013. Strong market performance is encouraging investors into equities, but other options are out there too. Datamonitor Analyst Edward Felmingham examines three key trends that will develop in the 2013 wealth management arena.
Private Wealth Insight
Trends to watch | Feature
Trend 1: The HNW client meeting will change Same advice, more action As clients become increasingly involved in their financial lives – whether through self-directed investing or by undertaking economic research they wish to apply to financial decisions – use of client time in the price-sensitive advice environment will change in 2013. With high quality economic research and forecasting available online, on handheld devices, and through TV and podcasts, the ability of high net worth (HNW) investors to develop their own opinions and strategies for wealth management is greater than ever. Datamonitor’s 2012 Global Wealth Managers Survey shows that 65% of participants believe their clients want more control over their investments. Conversely, participants were sat on the fence regarding whether clients saw value in paying for advice. Financial advice is never going to be free, and regulation such as the Retail Distribution Review (RDR) in the UK or the Future of Financial Advice (FoFA) reforms in Australia is encouraging individuals to shop around for their advice, so how should advisors demonstrate value? As HNW investors increasingly develop their own investment views, they want to act on them, and look to their advisor as an instigator. Without a credible system to interpret, to (most importantly) test, and if appropriate to implement these views, advisors will find themselves unable to satisfy the demands of their clients. The Black Swan platform is the newest product from Sage, a Swiss financial software vendor. Aside from
providing asset allocation analysis that takes possible extreme events into account, the platform is also optimized to allow client input into investment decisions. Predictions on economic variables, whether from the advisor or the client, can be inputted into the platform and future performance is instantly adjusted. By working on a tablet computer, such functionality gives a new purpose and value to client meetings. Granted, not all clients are the same, and some do not seek the financial knowledge others wish to apply to their investments. To cater to varying investor traits, there is another option that is already gaining traction in the retail banking sector: customizable packaged accounts. Can this be adapted to financial advice?
Advice packages with customizable features on the horizon The Barclays Feature Store allows retail customers to customize what benefits they receive from their Barclays current account. Possible features include mobile banking, insurance add-ons, and text alerts. Such a model could be applied to financial advice, whereby fees are customizable both by payment options and expected service. A self-directed investor may wish only for pension advice on an hourly rate and a simple system to choose just that will be popular. Adding the option to receive text alerts on performance and portfolio adjustments, or optional access to research publications, and the “one-size fits all” problem that can undermine the value of advice will subside.
The changing HNW client meeting Traditional financial advice model
Action: Asset allocation, tax planning, inheritance planning etc Fact find/situation update
Addition to traditional financial advice model
Client input: • Economic predictions • Market opinions • Personal research
Guidance and advice
Interactive verification and testing of client input using intelligent portfolio management tools
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Feature | Trends to watch
2013 wealth management regulation timeline so far Europe
Asia-Pacific
Americas
World
JANUARY 2013 UK: RDR launched China: CBRC sets three-month deadline for Chinese banks to meet wealth management regulatory compliance India: SEBI releases Investment Advisers Regulations
february 2013 US: US Treasury and IRS release final FATCA regulations UK: Isle of Man signs UK FATCA Switzerland: Switzerland signs Model II FATCA agreement with US EU: European Commission releases proposals for Fourth Money Laundering Directive
MARCH 2013 UK: Jersey signs UK FATCA Singapore: MAS releases proposals following FAIR
May 2013 EU: European Parliament to vote on proposals for fund managers to create key information documents aimed at better informing retail investors Brazil: Brazil signs reciprocal tax information exchange deal with the US
June 2013 July 2013 Global: Effective launch date for AIFMD Level 2 Australia: Mandatory compliance to FoFA reforms to begin
august 2013 September 2013 UK: Publication of UK thematic review on anti-money laundering and anti-bribery and corruption systems and controls required for asset management firms
China: CBRC tightens rules on wealth management products
october 2013 April 2013
november 2013
UK: FSA transfers power to the Financial Conduct Authority, Prudential Regulation Authority, and the Financial Policy Committee
december 2013
Cayman Islands: Cayman Islands signs FATCA Model 1 intergovernmental agreement
Global: Final month before FATCA comes into force in January 2014
Norway: Norway signs FATCA Model 1 intergovernmental agreement Luxembourg: Luxembourg announces end to banking secrecy by 2015
Trend 2: Compliance will become pro-active and pre-emptive “Anticipate a view” before being told to “take a view” The EU Fourth Money Laundering Directive, the RDR, FATCA, the FoFA reforms, the Financial Advisory Industry Review (FAIR): clearly the global wealth management industry is under fire. While I am far from the camp that bemoans increased regulation as restricting innovation and business operations – for example, there is a substantial opportunity to be had from the fallout of FATCA in the UK – it would be naïve to think that 2013 will be anything less than a brutal year during which the approach to regulatory compliance will dictate the success or failure of global wealth managers. Transparency of not only compliance but also of processes and continuous review will be paramount. In the UK, the incoming FCA’s buzz-phrase is “ability to demonstrate.” Wealth managers have already cited the need for greater regulatory
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financial capital, but increased regulatory intellectual capital is just as important to be able to not only act on regulation quickly, but also to innovate and anticipate challenges and weaknesses in processes that would otherwise incur hefty, very public, and reputation-damaging fines imposed by intrusive and newly severe regulators.
The compliance job market will continue its talent scuffle Nobody can afford to define regulation as an impediment to business in 2013, and the compliance job market will develop accordingly. Granted, the demand for high quality compliance personnel already soared in 2012. Between 2011 and 2012, the average salary for a compliance officer in London in a product advisory role with six+ years of experience increased from £85,000–150,000 to £90,000–180,000 according to Robert Walters. The salary for a global head of compliance in London
Trends to watch | Feature
Expected global HNW asset allocation over the next two years Source: Datamonitor’s 2012 Global Wealth Managers Survey
increased from £180,000 to £225,000, or by 25%. However, in 2013 compliance recruitment will take on a new angle. Regulators are out to prove themselves and are looking for blood. Publicity of regulatory compliance and appropriate company ethos is at the top of every bank’s 2013 strategy, and high profile regulatory appointments will be the first step to demonstrating such philosophies. The appointment of Hector Sants, former FSA chief executive, as head of compliance at Barclays at a time when the UK bank is struggling under the frivolities of past practices is a case in point. Couple this with the increased responsibility that compliance officers are expected to bear in the post-crisis financial services world and further rising salaries and a fight for top talent look unavoidable.
Question: Thinking about your onshore HNW’s current asset allocation, do you anticipate demand increasing, decreasing or staying the same over the next two years? Net increase or decrease in allocation -20% Cash or near cash
-10%
0%
10%
20%
30%
40%
-12.1%
Equities
38.8%
Bonds
Trend 3: Other options will exist beyond equities Equities will remain popular as strong company fundamentals offset eurozone shakiness The strong start to the year for global stock markets has encouraged private investors to stabilize or increase exposure to investment funds and direct equities as losses made in previous years have been balanced by large short-term gains. Intermittent dips in markets are still encouraging investors into long-term equity positions as bullish investors are pushing selected markets upward; the S&P 500 was close to an all-time high as of the end of March 2013. Additionally, with prevailing strong company fundamentals, any impact from Cyprus or the wider eurozone will be muted, further attracting equity exposure. Indeed, some investors are removing funds from banks in light of the Cyprus deposit raids and heading to equities to take advantage. However, there is a limit on how exposed to equities a portfolio should be before lack of diversification becomes an issue, alongside a limit on how far company fundamentals can offset rising contagion from the eurozone debacle. Datamonitor’s 2012 Global Wealth Managers Survey shows that wealth managers around the globe expect an increasing exposure to equities to be near-matched by rising exposure to commodities and alternative investments.
Private equity will rise in popularity as the role of the private investor becomes more important In 2013 the private equity market has to tackle economic volatility alongside unwillingness by banks to lend for investment, but opportunities are still available and the industry is still growing, driven by deals in Asia Pacific and North Africa. Financing is a new challenge, and fundraisers are seeking to broaden their funding options as involving banks becomes
Property
Commodities
Alternative investments
12.5%
28%
27.2%
increasingly expensive. The HNW individual comes into play here, similarly to how the retail market has become an important source for corporates to issue debt, most prominently in the UK through the launch of the Order book for Retail Bonds in 2010. In short, private equity wants more funding options and HNW individuals want more investment options. Numerous global wealth managers already offer dedicated private equity advisory teams for HNW customers, and 2013 may well be the year more firms create investment clubs and/or online portals for private equity investment opportunities. For further information, read the report: 2013: Trends to Watch in Global Wealth Management Access the report through your subscription
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Private Wealth Insight
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Country focus | Australia
Australia
Focus on the expats Andrew Haslip Lead Analyst, Asia Pacific
Australia, riding the wave of a developing Asia, is one of the world’s more attractive markets for private wealth managers, but it comes with its own unique challenges and opportunities. Our Lead Analyst for Asia Pacific Andrew Haslip examines why wealth managers in Australia need an expat strategy.
@AndrewH_DMFS
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Private Wealth Insight
Australia | Country focus
C
Among affluent Australians (those with more than A$50,000 in onshore liquid assets), almost 60% manage their own investments
ompared to any wealth market in Europe, Australia truly is the “Lucky Country.” The market is growing, the number of HNW individuals is rising, the financial markets are well-developed and open to foreign entry, and the outlook for the economy is rosy. However, the market comes with its own challenges, and winning new business is far from easy. Wealth managers will need to be targeted in their search for additional clients, and there is no more attractive group than Australia’s ample affluent migrants.
Mining may be driving the recent wealth boom, but there is plenty of old money First generation entrepreneurs, family businesses, and earned income all represent important sources of amassed wealth among Australian HNW individuals. However, the majority of HNW individuals in Australia have inherited their wealth, and wealth managers have had to cater to the particular needs of that segment. Large prominent family offices such as the Myer Family Company have developed as a result. However, these services are not exclusive to just the old money of Australia; for example, entrepreneurial HNW individuals that are looking to pass on their businesses and wealth to the next generation may also be looking to the family office model, giving typical private
banks and private wealth managers targeting non-inherited wealth more competition.
Australian investors are skeptical about professional advice While the Australian wealth market is well-established, the penetration of professional advice into the investor class is not high. Among affluent Australians (those with more than A$50,000 in onshore liquid assets), almost 60% manage their own investments. Reasons for this vary, but the losses caused by the global financial crisis, local investment scandals, and high fees all feature prominently when such individuals have been asked why they don’t use wealth managers. So achieving growth in the Australian market is not simply a matter of scooping up the assets of a rising affluent class; wealth managers need to rebuild trust and reputation among a highly skeptical client base. Offshore centers need to highlight their
Around what proportion of your onshore HNW client base accumulated their wealth through the following means? Source: Datamonitor’s 2012 Global Wealth Managers Survey
Earned income First generation entrepreneur Family business
Asia Pacific
26%
23%
22%
24% 5%
Inheritance Other
Australia
21%
21%
21%
32% 5%
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country focus | Australia
Affluent Australian sources of investment advice Source: Datamonitor’s Financial Services Consumer Insight Survey 2012
4%
4%
13%
20%
20%
58%
Wealth manager
Other
Family and friends
Bank
IFA
Self-directed
Chinese migrants account for 38% of Australia’s resident expatriate HNW
product specialisms and investment expertise.
Wealth managers struggle to interest HNW individuals in discretionary mandates
HNW preferences for the different styles of asset management vary considerably in Australia, and wealth managers should be prepared to accommodate diverse client needs. This is a product of the lifestyles and professions that characterize Australian HNW individuals. Those that sourced their wealth from entrepreneurial activity and earned income will most likely be time-constrained and thus favor advisory asset management. In particular, first generation entrepreneurs tend to be reluctant to relinquish control completely. However, their busy lifestyles leave little time for managing their finances on their own.
Expats represent a significant proportion of the Australian resident HNW population, accounting for 28% of Australian HNW individuals (or 7,691 individuals), which can be attributed to the country’s relaxed visa conditions. In 80% of cases, these are long-term expats who have been resident in the country for
over five years – immigrants rather than transients. Nonetheless, expat clients are likely to have different servicing needs, especially with regards to their long-term plans for residence and domicile and the financial planning associated with this. In Australia, Chinese migrants constitute the largest expatriate community and are expected to grow significantly in number over the next few years. Indeed, data from Datamonitor’s 2012 Global Wealth Managers Survey show that Chinese migrants account for 38% of Australia’s resident expatriate HNW population, and hence represent an attractive segment. However, wealth managers looking to target Chinese expats will have to compete with Chinese banks, which have an advantage due to their familiarity with this segment. In November 2012, the Australian government introduced a Significant Investor Visa category, according to which applicants need to invest at least A$5m ($5.3m) in government bonds, managed funds, or unlisted private companies to qualify for permanent residency in Australia. These visa changes, which
Australian HNW individuals show strong demand for advisory mandates
Expats are an important part of Australia’s HNW community
The HNW migrant market is set to explode and become the single greatest source of new clients
Source: Datamonitor’s 2012 Global Wealth Managers Survey
Source: Datamonitor’s 2012 Global Wealth Managers Survey
Please rate on a four point scale the current demand from your onshore HNW clients for the following service (1 = low demand, 4 = high demand)
What proportion of your resident HNW client base is formed of expatriates (i.e. HNW’s originally from another country)?
3.3
2.6
1
2
3
4
21%
28%
Asia Pacific
Australia
2.7 Discretionary asset management Execution only asset management
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Advisory asset management
Australia | country focus
The majority of HNW expats in Australia come from Asia Source: Datamonitor Offshore Deposits and Funds Database
UK 15% Canada 1%
US 2%
China 35%
Germany 2% Italy 3%
Hong Kong 21% India 3%
Singapore 17%
South Africa 2%
have been designed to attract wealthy investors, will lead to an increased influx of Asian HNW migrants over the coming years. Datamonitor believes that this will attract Asian banks seeking to capitalize on the growing wealth of this segment.
While Asian clients are not known for a love of discretionary asset management, Australia’s expats will be more interested than the locals For wealth managers looking to grow their discretionary mandates, the Australian market has been a challenge, and Asia Pacific in general has been hard going for wealth managers keen to grow this aspect of the business. However, Australia’s top expat HNW individuals are keener on the service than locals are. HNW individuals from China, Hong Kong, and the UK all show significantly more demand for discretionary asset management than Australians, and will more readily see the value of such a service. Moreover, demand for discretionary asset management is rising among all the major sources of Australian HNW expats, making them particularly desirable as a source of new mandates.
Wealth managers need to move fast on the migrant market Wealth managers will need to move quickly to capitalize on the
expat market, for foreign wealth managers are already targeting the growing affluent expat population. China Construction Bank, which opened its second Australian branch in November 2012, actively targets Australian-Chinese HNW individuals, leveraging its brand established in the Chinese mainland market. The bank’s decision to open its second branch in Australia represents a growing trend for Chinese banks to target wealthy Chinese migrants in the country, with ICBC also opening a branch in Melbourne in November 2012. Considering the size of the Australian-Chinese community, neither financial institution should encounter notable difficulties in building up their customer bases. These banks can use the familiarity that expats will have with the brand from their home market to grow quickly among target groups. Australian private wealth managers need to quickly establish their brand among the largest HNW immigrant groups if they hope to benefit from the rising tide of expats. For further information, read the report and access the interactive dashboard: Wealth in Australia: HNW Customers Access the report through your subscription
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Private Wealth Insight 15
interview | Alessandro Tonchia, Finantix
Interview
Mobile wealth management: The new normal Helen Allingham Lead Analyst, Private Wealth Management @HelenA_DMFS
Datamonitor Financial recently met with Alessandro Tonchia, founder and director of Finantix, to discuss the role of mobile technology in wealth management and the key developments in mobile wealth to watch out for in 2013.
to meet and interact in cafes, restaurants and so on. The model where you used to meet in a private banking suite is disappearing. People need more flexible arrangements, so the fact that you have all your knowledge and operational tools in something that you can have in your bag is very important. The second element is about customer experience: the fact that you can present multimedia information or record the conversation. Mobile provides a set of tools that allow you to capture things much better than if you were using print outs and a pen and paper. Clients now expect this interactive experience and multimedia delivery of information; they expect to have a digital copy of what was discussed on their device.
What is Finantix’s current mobile offering for wealth managers? What role can mobile technology play in wealth management? Alessandro Tonchia: It’s critical for two dimensions. The first is that wealth management is increasingly busy and mobile, with a lot of travelling by both wealthy people and relationship managers. There is also a social element in that people tend
Alessandro Tonchia: We have a multi-channel approach. We have had an online workspace for advisors, which has been available for the last 10 years, and we also have a portal that [end] clients can use in the traditional web-based environment. We were one of the first to move into the mobile and tablet space. With everything digital, relationship managers and clients have the same view of the world – the view of the portfolio that you have on your tablet is the same that your customer has on their mobile phone. It is important that you speak the same language, so it is important you have this multi-channel approach. We work for example with a large Brazilian bank that has both our wealth portal for clients and advisors and also the tablet version for both clients and advisors, so there is this nice symmetrical approach.
Southern European and Middle Eastern countries love the communication part… the fact that it makes the quality of the human interaction better
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Private Wealth Insight
Alessandro Tonchia, Finantix | interview
What has been the reception of wealth managers to the mobile and tablet channel so far?
What differences have you witnessed, if any, in the reception to mobile technology, by country?
Alessandro Tonchia: Enthusiastic. They are coming from a world where they either use a laptop, which doesn’t fit the communication style, or they use paper, which is not very efficient. Now they have their processes, their knowledge, and their tools in a tablet, which makes them appear more professional and it also helps them sell more.
Alessandro Tonchia: It’s hard to generalize, but what we see is that the southern countries, so Southern Europe and the Middle East, love the communication part. The fact that it is interactive, that they can show a video, that they can use it in a café, the fact that it makes the quality of human interaction better. We find that in the Anglo-Saxon world people really appreciate the process improvement, the fact they can engage the client in a different way and that compliance is built in. It’s the process view versus the human interaction view.
What resistance has there been to mobile technology in wealth? Alessandro Tonchia: There have been concerns about security, and a lot of legitimate questions are raised about data protection. In addition, IT has to adjust how to deploy it. However, in general, because the end users tend to have tablets and smartphones already, they accept the technology easily.
What are the practicalities that a wealth manager has to consider when looking to implement mobile technology? Alessandro Tonchia: The most important thing from a business point of view is how you change the nature of the
Private Wealth Insight
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interview | Alessandro Tonchia, Finantix
dialogue, so how do you organize client conversations in a way that they really leverage these new tools. On the one hand you can entertain the client with videos and briefings, but on the other hand you want to get more work done. So there is a culture change to consider and to think about how much you can get out of the system. In addition, now wealth managers can show interactive reports, media briefings and so on, they also need to think about their visual communication and digital content creation strategy and the practicalities of producing the relevant material.
Initially, wealth managers were exploring options with small projects. Now some banks are starting to say they don’t need laptops anymore. Wealth managers don’t want their relationship managers to be typing long letters; they want them to be talking with clients. Initially mobile was a cute add on, now it is becoming the platform on which wealth managers are building their work managers’ stations for the next few years.
How has mobile wealth technology evolved since it was first launched?
Alessandro Tonchia: It depends on which area the wealth manager wants to roll out first. The easiest area to start with is sales, because it requires less integration, and there is an immediate benefit in that there is less paper. The second area where we are seeing a lot of interest
Alessandro Tonchia: It has matured a lot, in terms of style, ease of use, security, and integration with wider IT. More importantly, the understanding of people has also matured.
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Private Wealth Insight
What is the main functionality mobile wealth technology needs to include to make an impact?
Alessandro Tonchia, Finantix | interview
Wealth managers need to consider their visual communication and digital content creation strategy
is in the client account opening and onboarding process, which is paper and compliance intensive – it can sometimes take three to four weeks to open an account. With tablets everything can be done digitally, and include a compliance check while the client is in the meeting. There are a number of ways of reorganizing the checks, so that even though the account can’t be opened instantly the number of steps taken can be reduced. This also gives the client a better experience, because they don’t have to review lots of papers or sign lots of documents. The third area of functionality is client review tools, so these are for when the client is onboard and they want to review their portfolio and maybe rebalance it. This is the most complicated part, as it requires integration and the handling of sensitive data. Given this, we tend to advise wealth managers to look at sales first, onboarding second, and then client servicing, but everyone has their own priorities, so sometimes we see the opposite.
Are there any client types for which mobile is more popular? Alessandro Tonchia: The client review aspect is probably more suitable for HNW [individuals], as they want to review their portfolios more frequently. They have more complex portfolios and more decisions to make, whereas the mass affluent tend to have less moving parts, so the need for review is less frequent.
What is currently the biggest barrier to mobile adoption among wealth managers? Alessandro Tonchia: First, it’s the time needed for people to change their mindset; there is a cultural obstacle, but people are growing into the potential and they are starting to learn how to build business cases around mobile tools. The second barrier comes from IT, particularly in terms of security. That said they are becoming more comfortable with this and the ability to customize mobile solutions.
What’s next for mobile wealth management? Alessandro Tonchia: There are two areas where we are seeing market demand. The first trend is to do with better collaboration. Imagine a wife, a husband in a meeting with their private banker. Rather
than all leaning over one tablet, each person has their own tablet and has the same view as each other. If this scenario can be achieved, there is no reason, other than bandwidth, why this cannot be done remotely. We’ve had screen sharing for a while, but bandwidth is becoming fast enough so that you can now do this on apps. There is also the concept of “timeshift collaboration.” Imagine a client has some yen denominated investments and becomes nervous about them; they can post a note to their relationship manager to ask their opinion on the subject. The relationship manager could then loop in an FX specialist to write a couple of lines and provide a report. The idea is that there is now a common portfolio, so clients can make comments or ask questions, while the relationship manager can post articles to their client. It is a more organized form of collaboration. The second trend is information personalization. We are often flooded with information, so the question is how to make that information relevant again. One solution is to use semantic tools to filter information and point out items relevant to a client’s personal investment strategy. The idea is to prioritize the information that is timely and relevant given the client’s current financial situation. Wealth management and private banking is all about making the client feel that someone is thinking for them. The more you can personalize, the more you can create a better bond with the client. For further information, read the reports: Mobile Wealth Management: Defining the Market Opportunity Mobile Wealth Management: Sizing the Market Opportunity Mobile Wealth Management: Key Lessons and Case Studies These reports will be available soon through your subscription and the Datamonitor Research store
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Private Wealth Insight
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All the articles in this magazine are based on Datamonitor’s latest research into Private Wealth Management. For more information about any of these features, or the Datamonitor Financial proposition, please get in touch. www.datamonitorfinancial.com enquiries@datamonitorfinancial.com EU: +44 20 7551 9201 US: +1 212 652 5353 AP: +61 2 8705 6900