Trend Analysis - 08 August 2018

Wealth management in Asia: Rapid growth amidst regulatory proliferation management

Business Development Director Irene Lee recently presented at the Hubbis Asian Wealth Management Solutions Forum in Singapore.  Irene shared some insights with Hubbis into wealth management trends in Asia.

As the market in Asia faces the challenges of tightening regulations and intensifying global and local oversight, Irene shares her thoughts with Hubbis on:

  • Asia's wealth management assets outstripping historic centres
  • The China effect
  • Singapore and Hong Kong as wealth management centres
  • Regulation and its impact on Asia's HNWIs

There are immense challenges facing wealth advisers and their clients as both seek to incorporate the new regulations such as the Common Reporting Standard (CRS) and the Automatic Exchange of Information (AEOI).

The recent and projected evolution of both Singapore and Hong Kong as private client wealth management centres in Asia is also closely linked to regulatory demands, both globally and locally.

The creation of tax compliant tools for estate planning can only be achieved with professional advice and services from reputable jurisdictions and by paying close attention to the new world of regulation and compliance.

Asia’s wealth management assets outstripping historic centres

The IMF has recently highlighted its projection that Asia will contribute two thirds of global growth this year. However, there are always uncertainties ahead. “What is certain is that change is coming,” she cautioned. “Asia’s HNW individuals and their advisers must adapt strategies and plan ahead. For those who do not, failure beckons.”

Looking at the world’s total offshore wealth, the numbers look very encouraging, especially for Singapore and Hong Kong. “The world’s offshore total wealth stands at US$10.3 trillion,” she noted, “with Switzerland at the top with $2.4 trillion, but with Singapore already at $1.2 trillion and Hong Kong at $0.8 trillion. Both are set to grow at more than twice the pace of Switzerland in the next several years.”

The China Effect

The massive wealth generation in China is playing a role in shaping the future of Asia’s wealth industry. Traditionally, China’s HNW individuals have preferred Hong Kong as their overseas conduit for investments. “However, due to changing banking practices, tax transparency agreements, synchronisation of internal systems between China and Hong Kong resulting in greater transparency of the Chinese clients using Hong Kong entities to the mainland authorities, resulted in these clients looking more towards Singapore.

Two years ago 71% of mainland Chinese HNWIs preferred Hong Kong, this has decreased to 53%. Concurrently, Singapore now has 20% of Chinese HNWIs preferring Singapore, up from around 15%. “The wealthy Chinese are gravitating towards Singapore, in part, out of fears of China’s tightening grip on Hong Kong,”.

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