Multi-family office firms in Singapore are turning to more creative ways of working with relationship managers (RMs) who want to leave but cannot due to increasingly bureaucratic processes found at private banks, Simon Hopkins, chairman of East West Private Wealth, tells Asian Private Banker.

“The sad reality is that, unsurprisingly, private banks are making it increasingly difficult for RMs to leave the bank and transfer out their clients’ assets,” he said.

“The answer is therefore to hire RMs who continue to work with the existing private banking custody provider on an agreed fee split, or to hire [individuals] who have already left the bank and can continue to advise their clients from a new firm,” Hopkins added.

Under the split-fee model, private banks share client custody and trading fees with external asset managers (EAMs) for bringing in business.

His comments follow a growing list of wealth planning heads and senior executives who have recently left private banks for independent wealth managers, with some calling the move a “chance to stand behind your own decisions” and an opportunity to work under a fee model that “aligns well with clients’ interests.”

This, as EAMs bemoan lengthy onboarding timelines and source-of-wealth checks in Singapore. Such processes often delay the time it takes for an RM to leave a private bank, giving the employer more time to retain talent.

This is despite calls from the city-state’s regulator in late May to cut onboarding times down to a month.

Transaction fees falling out of favour

While transaction fees are still common in the region, they are falling increasingly out of favour among Asian HNW clients, who expect advisors to help them save on costs, Hopkins said.

“Many Asian clients are reluctant to pay explicit fees; they expect intermediaries to save them money in the market, and that’s effectively how they compensate them – through the savings achieved via negotiation,” he said.

At the same time, if regulators were to ban transaction fee models, this would put some independent firms out of business: “This model is still very common in Asia. Regulators have tried to change it, but it created such an uproar that it risked a very disruptive shakeout,” he said, adding that many broker-type intermediaries rely on buying and selling financial products.

“In the EAM world, some people leave banks and join independent firms, but they are again expected to extract the highest possible fees from their clients,” he said. East West Private Wealth manages roughly S$1 billion in AUM (US$775 million) and follows an advisory fee model.

Middle East pools of wealth

Hopkins’ firm is the multi-family office arm of Milltrust International Group, an asset management firm, of which Hopkins is also CEO. East West Private Wealth partnered with Abu Dhabi-based investment advisory firm Almha Capital in late 2024 to tap into two growing pools of wealth in the region.

“First, the indigenous wealth which has traditionally found its way into the private banks of Switzerland. Second is the international wealth that is historically managed in the DIFC in Dubai and is housed within a handful of local banks,” he said.

Such international wealth, he added, “has come from other, often less stable, regional or African nations, from non-resident Indians and more recently from Russians.”

Talent is also more accessible and affordable compared to Singapore, he added. “Hiring is less of a challenge, and the cost of hiring a smart, young analyst, or indeed an experienced banker, is a fraction of what it now costs in Singapore,” he said.

The devil is in the details

With an increasing number of MFOs eschewing private credit investments, Hopkins said that such decisions should ultimately boil down to careful manager selection and due diligence – a key lesson he picked up earlier on in his career.    

“You must conduct proper research on the managers you’re allocating money to and understand where the returns are derived from,” he said.

Hopkins, who was CEO of London-based hedge fund and asset management firm Fortune Group up until 2010, attempted to perform due diligence on American financier Bernie Madoff’s fund over two decades ago amid rising suspicion, but was shown the door.

“I went with my colleague Frank Casey to see Madoff, along with Harry Markopolos, a quant analyst who demonstrated that Madoff’s returns were mathematically impossible,” Hopkins shared.

Madoff ran the largest Ponzi scheme in history, paying older clients with new investors’ money instead of investing it. “They were never able to explain how the returns were derived,” he said.

In the same vein, Hopkins shared how the firm recently performed due diligence on a promising private credit manager who boasted an attractive track record.

“But in my interactions, they were never prepared to disclose the underlying credits in the portfolio,” he said.

“At many private credit funds we look at, [if] we can’t see the commensurate risk in the portfolio, through full disclosure, we won’t invest,” Hopkins said,