Wealth in Singapore: HNW Investors 2018
The local HNW segment is older than their global peers, highlighting the need for wealth preservation and efficiently passing on wealth through the generations via trusts or simple inheritance planning. Other opportunities include repatriation of offshore assets and high demand for tax planning due to changes brought about by the OECDs Common Reporting Standard (CRS). One of the main challenges is the dominance of advisory asset management, which is more time consuming than offering discretionary mandates.
This report analyzes the investment preferences and portfolio allocation of Singaporean HNW investors. The report is based on our proprietary Global Wealth Managers Survey.
Specifically the report -
- Profiles the average Singaporean HNW investor in terms of their demographics and explores the expat opportunity in Singapore.
- Analyzes which wealth management mandates are preferred among Singaporean HNW investors and how demand will develop going forward.
- Examines the allocation of Singaporean HNW investors portfolios into different asset classes and how this is expected to develop in the future.
- Analyzes HNW investors propensity to invest offshore, preferred booking centers, and asset classes, as well as Singapores standing as an offshore center.
- Analyzes wealth and investment management product and service demand among Singaporean HNW investors.
- Half of male HNW investors are older than 60, compared to 40% of female investors. This is high for the region.
- Singapores large expat population is transient, meaning wealth managers must be able to effectively convert them to offshore clients when they leave.
- Wealth managers that reach out to the expat segment with a one-stop service proposition will have an advantage over specialized boutiques.
- After years of waning, commodities and property will grow again in HNW portfolios.
- Offshore wealth is a crucial business line vulnerable to disruption from the rollout of CRS.
- Few providers currently offer impact investing, despite dramatic growth in demand from the next generation of investors.
Reasons to buy
- Develop and enhance your client targeting strategies using our data on HNW profiles and sources of wealth.
- Give your marketing strategies the edge required and capture new clients using insights from our data on HNW investors preferences for the various styles of asset management.
- Tailor your investment product portfolio to match current and future demand for different asset classes among HNW individuals.
- Develop your proposition to match the product and service demand expressed by Singaporean HNW investors and react proactively to forecasted changes in demand.
Table of Contents
1. EXECUTIVE SUMMARY 2
1.1. Singapores wealth market is dominated by foreigners 2
1.2. Key findings 2
1.3. Critical success factors 2
2. OVERVIEW 9
2.1. Singapore is a crowded market, requiring a targeting strategy customized to a diverse array of HNW investors 9
2.2. Demographics: Professionals employed in the financial services industry represent a lucrative target market 10
2.3. Expats: Wealth managers in Singapore cannot afford to ignore the expat opportunity 11
2.4. Investment style preferences: A lack of time drives uptake of advice 12
2.5. Asset allocation: Commodities and property will be on the rise 13
2.6. Offshore preferences: A good investment track record and a wide range of products can entice wealth home 14
2.7. HNW product and service demand: Wealth managers should lead with tax planning and develop an impact investment offering 15
3. AN OLDER HNW BASE SETS SINGAPORE APART FROM THE REST OF ASIA PACIFIC 16
3.1. Family office strategies are an effective way of developing relationships across generations 16
3.1.1. Singapore will see a wave of retirement before the rest of Asia 16
3.1.2. Family offices are an established feature in Singapore 17
3.1.3. Local private banks are explicitly aiming to grow family office business 18
4. A WIDE SERVICE OFFERING IS A MUST TO SEIZE SINGAPORES SIGNIFICANT EXPAT OPPORTUNITY 19
4.1. The transient nature of the Singaporean expat market means being able to transfer an onshore relationship to an offshore one is critical 19
4.1.1. Singaporean HNW expats are transients rather than immigrants 19
4.1.2. Job transfer is the number one reason for HNW investors moving to Singapore 20
4.2. UHNW and HNW investors migrating under the GIP are big business, but so are those who do not quite meet the threshold 21
4.2.1. The GIP investor is not a volume play on the market, but is still key 22
4.3. The complex needs of expats make them an attractive segment, but a wide service offering is a must to appeal to these clients 24
4.3.1. Providing tax advice can help bring expat offshore holdings to Singapore 25
5. WEALTH MANAGERS IGNORE ROBO-ADVISORS AT THEIR PERIL 27
5.1. Time is precious but control is even more important, meaning Singapores HNW investors strongly favor advisory mandates 27
5.1.1. Discretionary mandates are sold rather than bought in Singapore 27
5.1.2. Increasing discretionary wealth allocations means alleviating fears around lack of control 28
5.1.3. Bank of Singapore and OCBC have been able to grow their discretionary AUM 29
5.1.4. An advisory relationship allows for more efficient relationship building 29
5.2. Currently low demand does not mean wealth managers should ignore robo-advice 30
5.2.1. A targeted strategy is key to succeed in the HNW space 31
5.2.2. Miss Kaya is a local robo-advisor tailored to female investors, who are often ill-served due to the male bias in wealth management 31
5.2.3. CONNECT by Crossbridge Capital is a robo-advisor geared to the needs of HNW investors 32
6. STRONGER PROPERTY AND COMMODITIES DEMAND PLAYS TO SINGAPORES STRENGTHS 34
6.1. A lack of capital appreciation opportunities will see demand for bonds and equities moderate 34
6.1.1. All asset classes should see more demand, reflecting continued wealth market expansion 34
6.1.2. Wealth managers need to refresh their commodities offering to tap into HNW client interest 35
6.1.3. Property will return to prominence in Singaporean HNW investment portfolios 36
6.2. HNW investors in Singapore are becoming more risk-averse 37
6.2.1. Commodities investing among HNW individuals is driven by the desire for hedging 38
7. ASIAN OFFSHORE HNW WEALTH DOMINATES SINGAPORE 40
7.1. Offshore wealth is primarily Asian, but Singapore attracts funds from around the world 40
7.1.1. Offshore HNW AUM is concentrated from Greater China, although India is rising 40
7.2. Providing offshore investors with access to real estate investments is a must to be able to compete in Singapores offshore market 42
7.2.1. Stability and well-developed financial markets make HNW offshore clients crucial to private banking business volumes 42
7.2.2. High returns in the S-REIT sector should prompt continued investment 43
7.2.3. Wealth managers can play up the stability of the market to attract the cash element of the Asian offshore portfolio 43
7.3. Unlike many offshore centers, CRS implementation is less of an issue for Singapore 44
8. WEALTH MANAGERS MUST FOCUS ON IMPACT INVESTING 46
8.1. Wealth managers need to close the service gap for impact investing 46
8.1.1. Less than a quarter of wealth managers offering impact investing 47
8.1.2. LGT Impact Ventures shows how private banks can leverage impact investment demand 48
8.2. CRS will create a major issue but also an opportunity 49
9. APPENDIX 52
9.1. Abbreviations and acronyms 52
9.2. Supplementary data 52
9.3. Definitions 54
9.3.1. Affluent 54
9.3.2. HNW 54
9.3.3. Liquid assets 55
9.4. Methodology 55
9.4.1. GlobalDatas 2017 Global Wealth Managers Survey 55
9.4.2. GlobalDatas 2016 Global Wealth Managers Survey 55
9.4.3. Level of agreement calculation 55
9.4.4. Service level of demand score 56
9.4.5. Forecast level of demand calculation 56
9.5. Bibliography 56
9.6. Further reading 57
List of Tables
Table 1: Cash and near-cash products: importance of asset allocation drivers 52
Table 2: Equities: importance of asset allocation drivers 53
Table 3: Bonds: importance of asset allocation drivers 53
Table 4: Property: importance of asset allocation drivers 53
Table 5: Commodities: importance of asset allocation drivers 54
Table 6: Alternatives: importance of asset allocation drivers 54
List of Figures
Figure 1: Female HNW investors are more prominent in Singapore than the rest of Asia 10
Figure 2: Expats represent a more significant opportunity in Singapore than in the wider region 11
Figure 3: Maintaining AUM as the lead wealth manager is a constant struggle in Singapore 12
Figure 4: Investors will be more exposed to property and commodities in the coming years 13
Figure 5: The limited size and range of companies on the SGX requires that investors look offshore 14
Figure 6: Impact investments are expected to take off, reflecting Singapores slightly younger investor demographic 15
Figure 7: An older HNW client base is focusing investment priorities on retirement 17
Figure 8: Singapore has less opportunity to tap into intergenerational wealth transfers than other markets 18
Figure 9: Singaporean HNW expats are more likely to be transients, giving wealth managers a short period of time to build an enduring relationship 21
Figure 10: The GIP process can be a lengthy route to permanent residency in Singapore 22
Figure 11: NRIs are a key expat market for DBS, with the bank leveraging its presence in India and Singapore 24
Figure 12: Expats in Singapore generate a lot of profitable business volume for wealth managers 25
Figure 13: Investment opportunities beats even Singapores attractive tax regime as the reason to invest via local wealth managers 26
Figure 14: The majority of Singaporean HNW wealth is held via advisory mandates, which is more than double the global average 28
Figure 15: HNW investors are opting for mandates based on convenience 29
Figure 16: The advisor-client relationship is the single most important retention tool in Singapore 30
Figure 17: Miss Kaya aims to be a financial hub for modern, affluent Asian women 32
Figure 18: CONNECT combines elements of automated and human-led investment advice 33
Figure 19: Singaporean HNW demand for commodities and property is set to take off 35
Figure 20: Schroders sees the stars aligning for strengthened commodities prices 36
Figure 21: Property prices in Singapore are rising once again, spurring investor interest 37
Figure 22: It is increasingly risk-off in Singapore and Asia Pacific, in contrast to the rest of the world 38
Figure 23: The growth of commodities is due to the conservative impulse rising among investors 39
Figure 24: Singapore is a popular regional booking center among Asian HNW offshore investors 41
Figure 25: Asias giants are Singapores main offshore clients in the HNW market 42
Figure 26: Property and equities dominate the Asian offshore portfolio 44
Figure 27: Wealth booked into Singapore is drawn to the stability and better returns on offer 45
Figure 28: Offering impact investment and tax advice are the two key areas of opportunity 47
Figure 29: Demand significantly exceeds supply when it comes to impact investing 48
Figure 30: Even smaller private banks can create compelling impact investment propositions for clients 49
Figure 31: Tax planning has not been the priority in Singapore it has proven in other financial hubs 51
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