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IN 2002 a working group of top finance industry professionals proposed the development of Singapore as a regional hub for wealth management.
At that time that much had to be done: trust laws needed to be brought up to speed, as well as the tax treatment of some assets. Today it would seem that Singapore has surpassed even the original committee’s vision in terms of wealth management.
A survey by PwC found that wealth management practitioners expect Singapore to eventually surpass the traditional wealth centres of London and Switzerland.
Ng Kok Song, adviser and chair of global investments at the Government of Singapore Investment Corporation (GIC), had a key vantage point more than a decade ago in the remaking of Singapore as a wealth management hub. He was tasked with looking into a major challenge – the training of much-needed client advisers and wealth managers. At a time when poaching was rife, the lack of a broad and deep bench of talent was a bottleneck to growth. He helped to found the Wealth Management Institute (WMI), with the backing of GIC and Temasek.
In this edition, we cast the spotlight on Mr Ng, founding chairman of WMI. He shares his take on the challenges that the Singapore wealth sector has weathered in the recent past. The 2008 financial crisis, for instance, has left a major impact on the industry which today still grapples with its aftermath in terms of client risk aversion and a lingering mistrust of financial advisers.
Still, Mr Ng is confident that the sector will continue to grow. In 2013, the asset management industry – of which private banking is a part – managed over S$1.8 trillion in assets, compared to around S$570 million a decade ago. “As long as there is global economic growth, there will be wealth creation in addition to existing wealth which has to be managed properly,” he says. A disproportionate amount of new wealth is likely to be created in Asia, he adds.
He offers insights as well into the important issue of retirement security, and the outlook for emerging assets.
In this edition, we also look into insurance for the high net worth, where there is growing demand for jumbo life insurance in the form of universal life policies. Instead of income replacement, these policies serve a different set of objectives for the wealthy. One objective is the creation of liquidity upon death. The policies may also be used as a wealth structuring tool should a wealth owner desire to equalise his or her bequests for the children. And of course, the policies may serve to create an philanthropic gift.
In our Roundtable, experts share their views on technology stocks, which have been in the limelight of late, thanks to the outsized response to Alibaba’s initial public offer. Stuart O’Gorman, director of technology investment at Henderson Global Investors, says tech stocks have dramatically outperformed non-tech stocks over the last 20 years. Technology, he adds, historically trades at a premium to the overall market. The current premium is low relative to history, and presents value, he argues.
In real estate, Alice Tan of Knight Frank writes that commercial property demand is well supported and the stock of properties with a relatively smaller investment outlay remains tight. Despite this positive backdrop, the imposition of the Total Debt Servicing Ratio has been a dampener and this is reflected in declines in transaction volumes. Still, she says there may be early signs of a pick-up in interest in this sector.
In our Asset Manager column, we speak to Lee King Fuei, Schroders Singapore head of Asia equities, on the sustainability of dividends in Asia. Investing in stocks that pay dividends, he explains, brings a host of benefits. Dividends are paid out of cash generated by earnings; they therefore signal growth and prudent capital management. Dividend returns, he says, are highly correlated to growth in Asia. The trend among companies to pay dividends is sustainable, he argues. New tax laws in South Korea, for instance, are aimed at getting companies to pay more dividends.
Meanwhile on a lighter note, Rahita Elias looks into the options for those looking for bespoke Christmas presents for their loved ones. It’s not too early to begin speaking to your choice of a luxury concierge service, particularly if you seek something unique. Elsewhere, Tara Loader Wilkinson, Wealth-X editor in chief, has her pulse on the market for superyachts, where demand is picking up. Which superyacht hotspot is likely to vie with Monte Carlo and St Tropez?
We hope your wealth journey remains rewarding.