Asia's rich turn to independent wealth advisers

Asia's rich turn to independent wealth advisers

SINGAPORE - When the value of his US$20 million portfolio plunged in the 2008 global financial crisis, luxury car enthusiast Gerard Tan followed a growing trend among Asia's elite investors by turning to an independent adviser for help.

His bank had put most of his cash in volatile emerging market bonds, which were hammered by the financial turmoil.

Mr Tan, who asked that his real name not be used, kept his money in the bank, but engaged the services of an adviser unrelated to the institution in order to stem the losses.

Six years after the crisis, a growing number of Asia's millionaires are turning to independent wealth advisers, who offer professional advice for a fee much like doctors and lawyers do.

Without pushing clients to buy financial assets, they offer an alternative to wealth managers working for private banks, which traditionally generate revenues on commission.

Banks put the focus on selling and this can sometimes lead to risks being overlooked in favour of revenue, according to analysts.

"My positions were restructured and portfolio risks were managed," said Mr Tan, who owns a range of high-end cars.

"I feel a lot more comfortable now about my market exposure," added the self-made businessman whose assets are now worth more than US$40 million.

An exporter of manufactured goods in his 40s, Mr Tan had heard about independent wealth advisers being quite popular in Europe and readily agreed when approached by a friend to try a Singapore-based firm.

"The concept and acceptance of independent wealth managers are certainly on the growth trend," said Justin Ong, Asia-Pacific asset management leader at consultancy PriceWaterhouseCoopers (PwC).

This growth "is due to the demand for more transparency and also objective client service," he told AFP.

Most of Asia's investing public still favour commission-based selling, but the ultra-rich and "more sophisticated families" are more open to objective advice from independents, Mr Ong said.

He added that while Asia's wealthy still prefer to invest in property, stocks and bonds, "passion" investments such as yachts, wines or private jets are preferred by a niche segment.

Capgemini and RBC Wealth Management say that the total assets of Asia-Pacific's 3.68 million millionaires were US$12 trillion in 2012 and were expected to reach US$15.9 trillion by 2015. That beats forecasts of US$15 trillion for North America.

More of the rich in the US and Europe take independent advice than those in Asia because family businesses in the West can date back 200 years or more, according to Mandeep Nalwa, chief executive of Singapore-based Taurus Wealth Advisors.

Independent advisers manage around 30 per cent of the assets of the rich in the US and Europe, but the figure is just under 3 per cent in Asia, where most family businesses are still run by their elderly founders, he added.

But the low base also means there is room to expand for both private banks and independents as the region mints more millionaires, and founders of family businesses hand over management to their children.

Mr Nalwa said that the 2008 crisis helped Asians realise the value of independent advice.

"The biggest affliction of the wealth management industry is a deficit of trust. Clients make a lot of money when the financial markets move up, but when a crisis comes, they give back most of it to the market," he told AFP.

"That deficit of trust is caused by a push towards selling product rather than giving advice."

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