HSBC thrives on changing wealth management needs to deliver growth

WEALTH management is evolving at breakneck speed. Even as the global economy continues to be mired in uncertainty, the investment needs of the affluent have shifted - not least due to the rise of digitalisation and a focus on environmental, social and governance (ESG).

But Jeffrey Yap, HSBC's head of investments and wealth solutions in Southeast Asia, is keeping pace with the changes - and sees opportunities for growth in the bank's private banking business.

Across all client segments - from the mass affluent to the high net worth (HNW) and ultra-high net worth (UHNW) individuals - Yap says he has witnessed an increase in the usage of self-directed channels as well as an increasing preference for thematic investment solutions and opportunities, and discretionary offerings such as robo-advisers.

Clients are also looking at opportunities in the Metaverse and exploring alternative asset classes such as semi-liquid funds, he adds.

"We see increased interest in private banking clients taking up discretionary mandates," Yap says.

To stay on top of the changes, HSBC offers Discretionary Portfolio Management (DPM) services. In essence, this allows clients to delegate their investment decisions to professionals with the relevant qualifications and experience.

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"DPM is designed to give our clients a peace of mind and free up their time to focus on other pursuits," Yap says. "With discretionary portfolios, we believe in playing the long game - by investing and staying invested - as it is impossible to predict market movements or fluctuations accurately."

"Time in the market rather than timing the market is the best way to ensure our clients do not miss out," he adds.

The results of HSBC's discretionary business speaks volumes of its success. Assets under management (AUM) for the segment has been increasing steadily over the years, particularly for its core DPM offerings.

Even in periods of heightened volatility, such as with the recent risk-off sentiment, the all-weather, globally diversified, multi-asset solution has remained resilient. "In fact, while the discretionary business has generally been challenging for the industry, we have seen net inflows in our core DPM offerings in H1 2022," Yap says.

At the same time, he notes that the Covid-19 pandemic has accelerated clients' adoption of digital tools and channels. According to EY's 2021 Global Wealth Research Report, nearly two-thirds of Asian wealth clients have indicated that they would increase digital usage over the long term.

The trend of increasing digital adoption has been seen from clients across the wealth continuum and across age groups - especially among next generation (next-gen) clients.

"We noticed and reacted to that trend, and have since adapted and embraced the fact that we need to adopt a digital-first approach for core delivery of solutions as we move forward," Yap says.

Thriving on changing needs

To cater to changing investment needs, HSBC has recently created an Investments and Wealth Solutions (IWS) unit within its wider Wealth and Personal Banking (WPB) business.

The team is responsible for the development and implementation of best-in-class wealth products and solutions, securities-based lending and market insights. These will be made available to WPB clients across the Personal, Premier and Global Private Banking segments.

The unit covers a wide range of investment products and services, including discretionary, advisory, and alternatives - including hedge funds, private equity and real estate. It will also encompass equities, fixed income, structured products, mutual funds and exchange-traded funds (ETFs), securities-based lending, trust and investments, foreign exchange (FX), commodities and insurance solutions.

"The IWS Southeast Asia team is staffed with seasoned investment and product professionals that constantly look to innovate and bring unique investment ideas, product features and solutions to our clients," Yap says.

The team also brings a vast amount of experience across private banking, wealth management, investment banking and asset management, he adds.

Supporting the new unit are industry veterans, each with more than 20 years of experience. Ishan Sarkar leads IWS Southeast Asia's capital market business, while George Lam helms the ETFs, funds and discretionary business, and Roseline Fong heads the insurance and financial planning business.

As part of its digital transformation, HSBC has also launched a "click and trade" for structured products - the first of its kind in the industry.

This allows HSBC's private banking clients and relationship managers to access digitally - at their convenience - real-time pricing from a large liquidity pool of providers.

"Increasingly, clients want to be able to connect, engage and execute with us on their terms - with convenience and total security - wherever they are. They want a bank in their pocket that complements human-led expertise," Yap says. "That's why everything we do today goes mobile first. Our model is people plus technology."

Over the last 12 months, Yap says HSBC has introduced many enhancements and new digital features to its clients across the wealth continuum.

For example, the bank in August last year introduced HSBC GPB Chat, a client messaging platform for private banking clients in Asia Pacific to conveniently and securely connect with their relationship managers and investment counsellors through their preferred digital channel of choice, including WhatsApp and WeChat.

Another key digital development was the launch of a new online trading platform to give private banking clients in Asia direct access to trade and manage their cash equities, ETFs and structured products using their mobile phones.

"Our clients now have the ability to track and analyse investments in real-time and review trade portfolios at their convenience. Having access to up-to-date quotes and price charts gives our clients the ability to make more informed investment decisions," Yap says.

"These are just some of the many features we brought to the market since the formation of IWS," Yap adds.

Opportunities in sustainability investing

One of the biggest changes for private banks, however, has been the rise of ESG and sustainability-related investments.

"Wealth Management is becoming more sustainable and impact-focused. Increasingly, societies around the world expect banks to nudge new behaviours among customers and partners," Yap says.

"As a global wealth manager, we have a role to play in empowering our clients to make a positive change in the world through sustainable investing and wealth value creation, by providing access to solutions as well as education and networks that give rise to new opportunities," he adds.

The way Yap describes it, the period between 2020 and 2022 has been a "watershed period" for sustainability investing.

He sees 3 key factors that are driving this change: the commitment by governments across the world to net zero carbon emissions, technological innovation in the sustainable space, and a shift in opinions by institutions and investors, who are recognising the urgency for investing for a sustainable future.

"Clients are looking at investments that are aligned to their belief systems while not sacrificing returns," Yap says. "This has all led to strong inflows and interest into ESG equity and bonds funds in the last 2 years. We believe this is not a fad but a multi-year and multi-decade long trend."

He notes that ESG investing is gaining momentum in Singapore, where investments into ESG funds have grown 4 times year on year from HSBC's retail wealth customers and 6 times year on year from its private banking clients.

He adds that, in the bank's survey of its wealth management clients in Singapore, almost half indicated that they believe their portfolios will comprise solely of sustainable investments in the next 3 to 5 years.

"We are ramping up our ESG capabilities in Singapore, where there is a vibrant sustainability ecosystem, progressive policy, and growing awareness and demand among investors," Yap says.

"In terms of ESG themes, we are seeing increasing interests among clients in renewable energy, biodiversity and sustainable food themes. The quality bias - which portfolios with ESG features tend to have - bodes well in the current market," he adds.

As a banking and wealth partner, Yap believes it is critical for HSBC to be able to service the changing needs of its clients holistically and across all wealth stages.

And as one of the few banks with a relevant position in all major international wealth hubs and international corridors, he believes HSBC is well placed to deliver financial services to clients with international needs.

"Wealth management is more than just investing. In Asia, where entrepreneurialism drives much of the wealth creation, personal, family and business matters are entwined," Yap says. "It is essential for us to have a wide range of wealth and corporate banking solutions that can help clients grow their business and meet their personal financial needs, be it for retirement or passing on their wealth to the next generation."

"No bank is better placed to capture the international wealth opportunity in Singapore than HSBC," he adds.