As European countries slowly start to relax their lockdown restrictions, we have looked to the experience in Asia to see what lessons can be learnt. We interviewed 25 leading Wealth Management executives in Asia, the summary of our findings are:
- Most firms have remained resilient, with increases in trading revenues offsetting drops in AUM and lower ad valorem fees in the short term
- Approaches to delivering an ongoing service have varied, with most firms retaining at least some in office presence
- Clients have cut back on luxury spending and travel, but have been increasing their demand for Wealth Management, with particular interest in both hedging strategies and opportunities to acquire cheap assets
- Looking forward to the “next normal”, a digitally enabled front office experience becomes even more important for clients, employees and firms
Firms' initial focus was on operational resilience, with most using some combination of home working and splitting teams across main and secondary/business continuity planning sites. Some organisations and geographies had technological and hardware challenges with this transition, while for all managing concerns around client confidentiality and cyber risk in remote settings was a top priority. As Asian countries relaxed lockdowns, the first step was to de-risk traditional working patterns. This included changes to:
- Dress codes
- Working hours to avoid rush hour travel
- Reducing travel
- Hygiene standards and protection in the workplace.
In the longer term, we agree with the words of one COO: “The industry needs to become more digital, more technology driven, and more agile. In this regard, we can all learn from FinTechs." This stretches across the whole value chain, from prospecting, through onboarding, advice and execution, all the way to reporting. Many clients have had positive experiences from a more digital experience during lockdowns, and we think this creates opportunities for wealth firms to invest in new propositions and service models, better serving their clients and supporting their talent in the “next normal”.
Based on over 25 conversations with industry leaders in the APAC region, our study found that the wealth management business model has proved its resilience. However, we noted clear differences in the way APAC firms handled the crisis. Most wealth managers applied a somewhat traditional approach, many still partially working from the office and relying on conventional communication technologies. Investment managers, FinTechs and digital leaders, on the other hand, mostly enabled location independent ways of working through digital tools granting secure remote access for employees.