ASIA is on the fast track to become the world’s wealth centre. Its allure as the destination for business and investments has made it a magnet for new wealth inflows from within the region and globally.
The International Monetary Fund has upgraded its estimate for 2023 growth in emerging and developing Asia from 4.9 per cent to 5.3 per cent, which is more than triple the expected pace of expansion in the United States and more than seven times that of Europe.
A report by HSBC Global Research sees wealth in Asia excluding Japan outstripping the US by 2025. The number of millionaires in the region is also poised to jump from roughly 30 million to 76 million by 2030.
HSBC has positioned itself to capture the region’s growth in wealth, says Lavanya Chari, the bank’s Global Head of Investments and Wealth Solutions for its global private banking and wealth business. “Asia’s acceleration contrasts with slower growth in the West, and we believe it is a great time to invest here.”
HSBC has continued to widen its private banking presence in the region, launching its services in India in July this year. According to HSBC Global Research, the number of adults in India with a net worth of at least US$250,000 is expected to reach close to 60 million by 2030, while the number of millionaires is estimated to surpass the 10 million mark.
Chari says India has an attractive growth environment, which is a large factor behind Asia’s upturn.
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The launch in India demonstrated the bank’s commitment to building a leading wealth management business in Asia through its wealth solutions expertise, extensive international network and access to commercial banking, global banking and markets capabilities.
Chari emphasises the other factors leading to Asia’s upturn including China’s reopening and road to recovery, as well as opportunities in Asean. “Asean used to be a fraction of some larger economies, but now it has overtaken many of them.”
In the Asean region, the economies that likely see the highest GDP growth in 2024 are Vietnam (6.7 per cent), the Philippines (5.6 per cent), Indonesia (5 per cent), Thailand (4.1 per cent), Malaysia (4.7 per cent) and Singapore (2.7 per cent), according to HSBC Global Research.
“With the strong fundamental growth in the domestic economy across Indonesia, Malaysia and Vietnam, and Singapore being a hub for finance, wealth and asset management, the opportunity set is very compelling,” says Jeffrey Yap, South-East Asia Head of Investments and Wealth Solutions for HSBC’s global private banking business.
Chari echoes this: “We are bullish on the Asean opportunity.”
Singapore, in particular, has been growing in prominence as a wealth hub. The team considers the country to be a “linchpin” hub connecting international and regional onshore markets.
Yap says the country’s hub serves as a “corridor” for investment flows from Asean, North Asia and the Middle East.
“Singapore is among the fastest growing international wealth centres. It’s up there with Hong Kong and Switzerland,” he adds.
Elevating client experience
As banks’ digital capabilities grow, they are increasingly leveraging new technologies to attract more clients and better serve the needs of their existing clients. Demand for advice-based relationships has also been rising in Asia as the macroeconomic environment becomes more complex.
HSBC Global Private Banking is committed to enhancing the experience for its clients and is investing significantly to transform its digital capabilities. In Asia, it has invested more than US$100 million in its core private banking and digital platforms from 2021 to 2022. This investment is having a significant impact in how clients are interacting with HSBC.
Currently, two-thirds of HSBC private bank’s clients are digitally engaged. The improvements the bank is making is increasingly being recognised within the industry with the bank winning several awards recently, including for Customer Facing Digital Capabilities (South-East Asia) in the WealthBriefingAsia Awards 2023.
Whilst clients welcome the digital improvements the bank is making, the ability to engage directly with HSBC’s relationship managers and investment counsellors remains a key priority for clients.
“Clients like to have sophisticated portfolios and risk analytics combined with a human touch when it matters,” says Chari.
An example of how the bank combines sophisticated analysis with the human touch, is the bank’s Prism Advisory service - introduced in Hong Kong and Singapore in November 2022. This is a hybrid service using institutional-level portfolio analytics powered by Aladdin Wealth technology, an industry-leading investment and risk platform from BlackRock, combined with the human expertise of HSBC’s investment advisers.
Since its launch, Prism Advisory has seen significant interest from clients, says Chari, with clients attracted by its more sophisticated and data-led approach and wide range of features. For example, HSBC investment advisers can now access over 3,000 risk factors monitored by Aladdin, allowing them to measure the level of risk in a client’s portfolio daily.
Overall, the work the bank has done to enhance its digital propositions and technology has allowed HSBC’s relationship managers to spend less time on administrative tasks and focus on serving clients better, says Chari. Whilst an increasingly data-driven service helps the bank to accurately pinpoint the best solutions for customers, Chari says that high net worth individuals (HNWIs) still care deeply about human relationships.
“This does not imply we don’t need digital enhancements. We absolutely need to make these improvements to meet the evolving needs of our clients - just not at the expense of that critical human touch,” concludes Chari.
Catering to clients’ needs
Offering tailored solutions enables HSBC to act on key trends that interest HNWIs, who are looking for long-term and wide-ranging solutions.
Such trends include alternatives such as hedge funds, private equity, real estate and infrastructure debt.
Yap says alternative assets were once made almost exclusively to institutional investors; but private banking clients have started accessing such alternative assets in the last five years or so.
“We aim to serve our clients in a holistic manner,” Chari says, adding that clients should look across various asset classes to create a diversified portfolio.
HSBC has over the past year worked to improve the range of investment opportunities and channels available to different clientele types. For example, the range of products and services that is available for family offices has since been expanded to cater for their specific needs.
Safeguarding clients’ futures
HSBC is also the leading adviser to South-east Asia’s ultra-rich families with more than 75 years of experience in wealth planning across generations and geographies through its trust business in Singapore.
Succession planning is not a new space. Following the Covid-19 pandemic, however, client perceptions have changed. Succession planning is less of a taboo topic, and the bank now sees more clients in Asia becoming comfortable addressing this traditionally difficult topic.
HSBC Global Private Banking’s trust administration offering has been a core aspect of helping families protect their wealth, says Chari.
“Given the nature of this business, and the trust the clients have placed in us, we support them from a very early stage with investment matters, liquidity investments, insurance protection and philanthropic ambitions.”
Through these areas, HSBC’s wealth planners and trust relationship managers are able to advise clients through different life stages, from day-to-day living to unique life events, with succession planning being a key part of their work.
Yap says: “When we discuss with clients around investments, and environment, social and governance (ESG), there is also a conversation about legacy planning and wealth being passed on. This is where our trust administrative services come into the discussion to provide a long-term solution for our clients.”
Supporting a green future
HSBC Global Private Banking has also made strides to reach the bank’s aim of reducing emissions, in line with a 1.5-degree pathway.
Chari says ESG is a topic close to her heart and she works closely with her team to support clients throughout their ESG journeys.
Clients are interested in ESG but do not want to invest in it blindly. “They want to be educated in ESG, in order to understand how they can invest and what the impacts might be,” says Chari. The bank emphasises thought leadership to help its clients to learn about this area.
At HSBC Global Private Banking, adopting an ESG-enhanced approach helps clients invest in companies with bigger ESG investment intentions. The bank also offers thematic products in this area, enabling sustainable investing via themes such as renewables, water conservation and the circular economy. The bank’s impact solutions allow clients to deliver change as part of an intended investment outcome.
The mix of approaches has given clients different ways to view their portfolios and identify which areas they do not want to be exposed to, based on their own sustainability goals and financial objectives.
Yap says it is important that the client-facing team is equipped to discuss ESG with clients, as some clients may not know where to begin. The team may use a questionnaire to work out what customers’ ESG preferences are, which can then be used to tailor specific solutions.
Chari believes that HSBC’s clients benefit from the bank’s position as a “strong, universal bank” with a wide range of wealth products to choose from when building diverse portfolios.
“We are a global bank and our ability to offer international solutions is a significant advantage for our clients,” she says.
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