Helping a New Generation of Asian Investors Build Sustainable Legacies

ASIA'S pioneering entrepreneurs are handing over their business empires to the next generation, who are increasingly concerned about building a sustainable legacy and having a positive impact on society. This paradigm shift was a key driver behind the inaugural BENCHMARK Private Wealth Awards, which sought to recognise visionary service providers rising up to meet the needs of this new generation of asset owners.

The awards, given out for the first time at a gala event in April, aim to raise awareness of responsible private banking and drive better practices in impact investing. They were organised by WealthAsia Media, which gives out a series of best practice awards in the financial services sector in the region. The company's flagship magazine, Benchmark, covers personal finance and investing issues in the region.

WealthAsia Group publisher and chief executive Elsa Pau says the awards aim to change the landscape of the private wealth management industry by promoting a higher level of trust.

"Investors and customers don't have as much faith in their bankers and asset managers in the wake of the global financial crisis," she notes. "Many private banks are operating in a black box - you don't really know what they're doing behind the scenes."

WealthAsia worked with various stakeholders - including the Family Business Network (FBN), PwC, MSCI and Asian Venture Philanthropy Network (AVPN) - to develop a new "user-driven" form of recognition for strong performers in the industry.

"These awards are not based on peers judging peers - it's not a rubber stamp, or dependent on how many tables you buy. We really want to get results that reflect the capability of these operators," Ms Pau says.

FOUR KEY PILLARS

Entrants were assessed on their capabilities in four broad areas: investment management, wealth planning and solutions, good governance, and digital. They were judged by an independent panel comprising high- net-worth individuals, consultants and representatives from family businesses as well as asset managers.

One key goal was to identify private banks offering top-notch investment platforms for the diverse needs of families and foundations. "Not every family has the same mandate or requirements," Ms Pau notes. "For example, many family offices do not really need discretionary management because they have their own teams. Instead, they need advice or sell-side research."

Banks were also assessed on their approach to sustainable investment and Environmental, Social and Governance (ESG) factors. "In the past, people would invest without limits - whatever makes the most money or generates the best yield. But this generation is very different. Investment committees now often have a mandate that prevents them from investing in anything that is unethical or harms the world," adds Ms Pau.

In addition, the judges looked at the robustness of a bank's governance procedures - for example, how staff are recruited and trained, as well as the bank's board structure. "It's not just about meeting regulatory requirements, but also proactively doing more to protect investors' integrity or money," she notes.

SERVING THE NEXT GENERATION

The needs of second- and third-generation asset owners were also an important consideration in selecting award winners.

Banks should be able to provide sophisticated advice not just about investing money, but also relationships between families and across generations - some of which might even involve cross-border considerations.

In addition, banks should also have capabilities to advise high net worth individuals and families about socially responsible investments with "clear and vigorous" ESG principles. "Succession involves millennials taking over the family money, as well as preserving the family's legacy," says Ms Pau.

"For instance, when it comes to philanthropy, we want to influence project committees to not just look at donating at one go, but setting metrics for the social return per dollar - how many lives can you change, how will the world get better? The second and third generations are increasingly moving in this direction."

Banks' digital capabilities also play an important role in serving the new generation of wealth holders. There is growing pressure on banks to stay ahead of the digital curve in communicating with highly mobile clients.

Ultimately, the awards aim to give a new generation of investors and wealth holders a platform to rely on when it comes to selecting the best service providers. "We've build very meticulous and stringent criteria with the help of our supporting organisations," she adds.