Independent asset managers (IAMs) are emerging as the biggest disruptors to the private banking industry, according to Bank of Singapore’s Leong Guan Lim, who is aiming to significantly grow the lender’s financial intermediaries, family office, and wealth advisory (FFWA) business by 2026.
The FFWA platform was created at the beginning of this year as part of CEO Jason Moo’s restructuring. Lim, who was previously global head of products, took on the role of global head of FFWA in January 2024.
An ex-UBS veteran, Lim wants to grow Bank of Singapore’s FFWA business by 50% by 2026. This comes on top of the bank’s single-family office client base, which grew nearly 30% from 2022 to 2023, and revenue from the financial intermediaries business, which increased by over 25% during the same period.
The FFWA unit comprises over 100 staff globally. While all three segments are crucial, Lim dedicates 80% of his time to the IAM business: “So far, the biggest focus for me in my unit today is the IAM business following the re-org last year. There is vast potential given the expertise we already have and the growth in this area we’ve achieved over the years,” he told Asian Private Banker.
“Even banks that pride themselves on being highly digital aren’t close to the level of offerings and accessibility that fintech companies provide.”
Bank of Singapore now manages the IAM business through a specialised unit, making it much more institutionalised. The unit features relationship managers (RMs) and investment consultants dedicated exclusively to IAMs. It is developing products tailored for this market and offering technology as a core component.
“A large number of them (IAMs) are not at a scale where they can build their own technology. Therefore, as their advisor, we are also their product and technology provider,” Lim explained.
On the other hand, the wealth advisory business includes services like insurance, wealth planning, philanthropy, and trust management, while the family office team assists clients with areas like tax incentive structures and family governance.
Biggest disruptors
Lim believes “the IAMs are our biggest disruptors in Asia today” for private banking. While IAM penetration remains in the single digits, it has risen significantly over the past six years. In Switzerland, IAMs handle about a third of the private banking business.
The growth of IAMs is driven by evolving industry dynamics influenced by supply and demand factors. On the supply side, many private bankers in Asia have 20 to 30 years of experience.
This means they have sizable client books, developed deep, trusted relationships, and often become their clients’ primary advisors. “At the same time, with the IAM model, the clients can trust the advice of the IAM, but they also have strong financial stability from their partner banks,” Lim added.
In addition, “the client also has the option to receive advice from someone they’ve worked with for the last 15 years, for example,” while gaining access to the IAM’s various banks, multiple house views, and investment advice.
Private bankers enjoy greater freedom and flexibility without being tied to a large bureaucracy. IAMs are less restrictive and base recommendations on their own criteria. RMs also often benefit from improved pay-out ratios.
“Given their books and experience, IAMs may be a more attractive career option for them,” Lim explained. “So, we can either look at them as a threat or an opportunity. I tend to look at it more as an opportunity.”
While VP Bank has closed its EAM business in Hong Kong and HSBC has shut down its EAM desks in Singapore and Hong Kong, BNP Paribas Wealth Management has opened an EAM desk for Asia, UOB has strengthened its desk, Deutsche Bank has rebooted its EAM desk in Singapore, and Indosuez Wealth Management has launched a desk in Dubai.
“This will be the next critical phase, though it may not happen immediately.”
“We need to be able to add value and grow together. On my side, we try to scale by covering costs so that we can afford to share the fees with them (IAMs),” Lim continued. Bank of Singapore recently held its inaugural Global Financial Intermediaries Conference in Phuket, highlighting its focus on financial intermediary clients as a key growth area.
Consolidation and DPM
Over the next three to five years, Lim is expecting significant consolidation in the IAM industry as firms try to build scale and enhance discretionary services – a sentiment that appears to be widely shared.
Smaller businesses managing US$500 million may struggle to support research teams and portfolio managers, making consolidation essential. Additionally, scaling up involves handling complex technology and compliance requirements.
The key question moving forward, according to Lim, is whether IAMs’ discretionary platforms can outperform those of established private banks. Clients will likely assess if their IAM’s platform is more robust and offers superior services compared to major banks.
“This will be the next critical phase, though it may not happen immediately. Currently, scale is crucial in the industry, and while there are niche players that manage global allocation portfolios for clients, I don’t think there are many,” he said.
Not fintech
Lim believes that if fintech were set to disrupt private banking, the industry would already be out of the game. The technology offered by fintechs today far surpasses that of any private bank.
“Even banks that pride themselves on being highly digital aren’t close to the level of offerings and accessibility that fintech companies provide,” he said. “If technology alone were the key, fintechs would have eaten our lunch. But they haven’t, because the value of [personalised] advice and client relationships is still extremely important.”
