Pierre Vrielinck, head of global Asian markets, BNP Paribas Wealth Management shares his views with Asian Private Banker in the ‘Final Word’, a ten-part series where the industry’s leaders share their thoughts and opinions on key issues around industry trends, business performance, investment solutions, regulations and compliance, and technology.
Industry Trends | What is the state of Asia’s talent pool and did your firm pay significantly higher for new talent? What is your view on private banking talent development in Asia?
The shortage of experienced bankers is still a growing concern in the Asian private banking industry. Our strategy has always been to onboard talents with the right skills and mindsets — regardless of whether they are internal or external — and equip them with our wide product offerings that can enable them to drive business.
Technology has transformed the entire private banking workforce in the last few years and is expected to continue having a profound impact in the future. Private banks need to reassess talent strategies and take into account the changing needs of clients who demand improved technology infrastructure and agility. We have to think out of the box to onboard talents with skill sets not only from the traditional sector but also from technology startups. We firmly believe that attracting, retaining, and developing talents are critical in order to compete in this environment.
Investment Solutions | Though continued geopolitical uncertainty and volatility pose a challenge for DPM performance, will this ultimately prove to be a boon for the discretionary business, converting clients from trade to delegation? In these same market conditions, how critical will the alternatives business be for private banks in Asia moving forward?
Our historical returns show that DPM provides better performance than achieved by self-directed clients in both attractive and poor market conditions, as behavioural biases often plague the average investor’s performance across the cycle. These biases lead to destructive market timing and overconcentration are heavily mitigated through DPM. In a year like 2018, when almost all markets are in negative territory (at the end of October), we’ve actually seen our largest ever inflows into DPM across all different types of mandates.
On alternatives, we see growing interest in private assets, such as PE and RE, rather than in hedge funds, which have delivered subpar performance. On the private side, clients increasingly recognise the value provided by specialist managers who earn attractive illiquidity premiums over the cycle, and add further value through the active management of portfolio companies or properties. Although the importance of private assets should grow at a good pace, Asian clients are, in general, far from adopting a Yale-styled endowment asset allocation focused largely on illiquid assets.
Investment Solutions | Ten years on from the GFC, how has your product shelf evolved and how has clients’ perception of structured products changed since then?
On the back of increased investor sophistication and need for more customised solutions, our product shelf has evolved substantially in terms of breadth and depth. For example, investors were previously only given selected products to trade in brokerage with relatively larger minimum sizes. Now, they can easily participate in smaller-sized trades across a range of products electronically.
As for structured products, Asian clients are now much more knowledgeable and controlled in their use of leverage and we see them used as an instrument to express a view or as a tool to hedge overall portfolios.
Meet 2018’s industry leaders in the full round up of of Asian Private Banker‘s the Final Word 2018.