Article first published in The Business Times on 21 August 2024.

With some of the fastest growing economies set in Asia, the region has become the forefront of global wealth creation. Personal financial assets in Asia-Pacific are expected to increase by an average of 7.8 per cent yearly over the next five years, much higher than the global average of 5.3 per cent, according to a 2023 report by Boston Consulting Group.

The ultra rich are also flocking to Asia. In its latest Wealth Report, Knight Frank said that Asia’s wealthy population is set to grow faster than any other region in the world, from 165,400 in 2023 to 230,000 by 2028.

Vincent Magnenat, Asia regional head and global head of strategic alliances at global wealth and asset manager, Lombard Odier, believes as wealth creation grows in Asia, wealth will also be increasingly managed onshore.

“Coupled with shifts in the regulatory landscape, we see that a mix of both onshore and offshore services will be a defining feature of private banking in Asia in the years to come,” the limited partner at Lombard Odier says.

To stay relevant to the needs of High Net Worth Individuals (HNWIs), Lombard Odier’s key business strategy involves partnering with leading onshore financial institutions in the region, through a Strategic Alliance model, for HNWIs to access global solutions that also complement the services and offerings of local financial institutions.

“Specifically, HNWIs are able to access Lombard Odier’s leading global investment management platform to invest in international markets locally through their local financial institutions, which will present major opportunities for them to invest and grow their wealth,” explains Magnenat.

“As the region’s wealthy population evolves, their needs and desires become more sophisticated, hence the need to provide both offshore and onshore wealth management solutions,” says Magnenat.

A past study by Lombard Odier and its Strategic Alliances across Asia-Pacific found that one of HNWIs’ key concerns is how they can access global opportunities locally. These include investment opportunities, business opportunities, or deep knowledge of other markets.

There is also a growing appetite among the wealthy for access to personalised wealth management, family services and the ability to access global opportunities locally.

To that end, local financial institutions will have to provide more sophisticated product offerings and solutions to meet the needs of an increasing number of wealthy individuals, says Magnenat.


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Megatrends in wealth and asset management

HNWIs are experiencing megatrends in the wealth and asset management space, says Magnenat.

Firstly, Lombard Odier believes the future of private banking will be a mix of onshore and offshore banking as more of them opt to keep their wealth onshore.

Secondly, Asia will also see a “great wealth transfer”, with some 70,000 HNWIs from Asia set to pass on around US$2.5 trillion to the younger generation over the next decade. This will have a major impact on issues such as wealth and succession planning, says Magnenat.

Thirdly, there is clearly an increasing recognition of the importance of issues around sustainability as an investment conviction. For instance, a Lombard Odier study found that HNWIs see this as a genuine investment opportunity, with 77 per cent of respondents saying sustainability can help deliver superior returns.

Wealthy individuals are also witnessing a rapidly changing macro environment. HNWIs are aware that an investment approach taken a year ago will not provide the same advantage in market opportunities today.

“We need an evolving client proposition for an evolving world, and HNWIs have shown interest to access new asset classes such as private assets,” says Magnenat.

Forming strategic alliances with local institutions

To cater to the evolving preferences of HNWIs in Asia, Lombard Odier is beefing up its partnerships with local institutions through its unique Strategic Alliance model to offer such individuals more choices.

He stresses that Lombard Odier chooses its Strategic Alliances very carefully. The Swiss bank identifies the right partners who share Lombard Odier’s vision of future wealth management – in aspects such as the need for a stringent asset allocation approach, and the importance of expertise.

The Strategic Alliance model is a “triple win”, says Magnenat.

Local partners can provide their clients with access to Lombard Odier’s global expertise and investment offerings. They can also raise their wealth management and private banking capabilities.

On its part, Lombard Odier can leverage its Strategic Alliances’ networks and insights into their local markets.

“Most importantly, the region’s leading families and entrepreneurs are able to engage with a leading bank in their home country while gaining access to our global investment management platforms and family services expertise,” says Magnenat.

One such collaboration is with Thailand’s Kasikornbank, which expanded its Strategic Alliance with Lombard Odier in February this year to further focus on sustainability. Under the sustainability alliance, Lombard Odier acts as a partner to assist in formulating strategy and developing sustainable investment offerings and services to the Thai HNW market.

Meanwhile, the sustainability alliance strengthens Kasikorn Asset Management’s position as a leader in sustainability in Thailand.

It also raises the bar of the Thai mutual fund industry to a world-class level, accelerating the transition to a more sustainable economy while seeking to deliver strong returns to investors.

In April, Taipei Fubon Bank and Lombard Odier, announced that they will be continuing an extension of their Strategic Alliance for another five years, which was forged in 2018.

And most recently in June, Lombard Odier’s Japanese entity also signed a new sustainability alliance with Japan’s Mizuho Financial Group, on top of its existing collaboration.

With this expanded alliance, Mizuho will broaden its areas of cooperation with Lombard Odier beyond wealth management and family service expertise to include sustainable investing – gaining access to Lombard Odier’s comprehensive range of sustainability strategies with tailored solutions for its clients.

Lombard Odier will act as strategic adviser and partner to Mizuho and bring its global sustainability expertise to the Japanese market, with the aim of establishing systems in sustainability, and offering sustainability solutions for HNWIs in Japan.

In return, Lombard Odier will tap into Mizuho’s strong network and knowledge to gather insights on sustainability within the Japanese market Lombard Odier will also jointly develop sustainability-related investment strategies and expand its presence in the Japanese market.

The firm’s other Strategic Alliances also include Mizuho Securities (Singapore), UnionBank Private Banking in the Philippines, and JBWere in Australia.

As an independent, high-end, pure-play investment house, Magnenat says that Lombard Odier provides a comprehensive offering of discretionary and advisory portfolio management and wealth services closely aligned with its global house views.

Lombard Odier provides a comprehensive offering of discretionary and advisory portfolio management and wealth services closely aligned with its global house views.

The firm delivers its value proposition to the region’s entrepreneurs and leading families directly through its three offices in Singapore, Hong Kong and Tokyo, as well as through its Strategic Alliances.

Its long history and founding as a family business means it also has first-hand understanding of its clients – many of which are leading families and entrepreneurs themselves.

Says Magnenat: “Our family offices and related wealth planning services continue to be a unique proposition to our clients, where we add value from an advisory perspective as well as from an investment angle.”
 

Source: The Business Times © SPH Media Limited. Permission required for reproduction