Fong Seng Tee, CEO, Pictet Wealth Management Asia shares his views with Asian Private Banker in ‘The Final Word’, a year in review by the region’s private banking leaders as they share their thoughts and opinions on key issues around industry trends, business performance, investments, regulations, and technology.
Industry Trends | What is the single biggest challenge and the single biggest growth opportunity for your business today?
In our opinion, the increasing sophistication of clients is the biggest challenge but also the biggest growth opportunity. Clients’ profiles have evolved over time, and they are changing what they are asking for in terms of offering and products.
With a higher level of sophistication among clients, we see a stronger demand for alternative investments in the region, particularly for private equity and real estate. This is an area where Pictet Wealth Management can bring a different value proposition, with expertise in these asset classes dating back more than 30 years.
We have also observed a trend amongst UHNWIs to embed responsibility or ESG more holistically throughout the management of their wealth. On the back of Pictet’s 20 years of expertise in responsible investments — with SRI and environmental strategies launched in the late 90s — we have created a dedicated multi-asset responsible investment offering which combines different approaches available on the market today, spanning ESG integration and active ownership, sustainability themes, and impact investing.
Business Performance | Productivity and efficiency matter more than ever in this environment. Over the past year, what key steps have you taken to improve both the productivity and efficiency of the business and, to date, what has been the impact?
Pictet Wealth Management Asia’s five-year growth plan mainly revolves around the strengthening of specific services dedicated to Asian clients. We are currently growing our headcount to service Pictet Wealth Management’s target markets. A new team of 15 bankers and investment professionals joined in November to strengthen the coverage of the Greater China region.
In addition, a new family office team with five experts based in Hong Kong has joined Pictet Wealth Management this year. They will draw on Pictet’s long- standing family office expertise to help wealthy Asian families pass wealth on to the next generation.
With higher levels of sophistication among clients, and a stronger demand for alternative investments in the region, Pictet has extended its existing real estate franchise with the launch of a direct real estate strategy in early 2019. Investing in direct mid-cap property assets in smart and gateway European cities, the strategy has raised EUR 550 million, with client demand outstripping availability at this stage. Asian investors represent more than 25% of the total subscriptions.
2020 will see the launch of a new advisory offer in Asia to be implemented by Q2, encompassing four different mandates with diverse levels of involvement of the client, access to research and to single-asset class specialists.
Investments | What are the key investment themes that your private banking will focus on in 2020?
2020 will be a year where identifying segments of superior and sustained growth, in a global deceleration context, will be key. It will be essential to select quality assets that are still mispriced and add layers of tactical approach to navigate the recession seen in industrials while services and consumption remain healthy. Active management delivered strong alpha this year, and further active arbitrages will be important for next year. The US will remain the key market, with growth still above the historical trend and the Fed resuming its easing policy after a pause, but will be at the mercy of an uncertain presidential election. Europe will struggle to exit its sluggish path but the valuation gap with the US and the strong support of the ECB will make positioning in high yielding quality assets worth considering. EM giants will all, with different patterns, regain some ground — China in 1H20, India more towards 2H20, and Brazil along the year. With positive real interest rates and still good growth and cashflow, EM should regain some favour.
Regulations | How has your private bank responded to regulators’ increased emphasis on building proper banking culture?
These are interesting times for the private banking industry. On the one hand, clients are wanting ever more, including services that deliver the latest in innovation. On the other, regulators are pushing for greater compliance and rules around transparency. Those who can reinvent themselves and play by the new rules will be able to spearhead the consolidation process. Indeed, we believe there is no need for regulations if bankers and other financial stakeholders do the “right thing” for the industry and for their clients. However, in an eagerness to constantly increase business, there are outliers who feel the need to break the rules.
To respond to clients’ and regulators’ demands, Pictet WM Asia is implementing a global five-year growth plan to cover market strategies, products, and strengthening of services as well as back office operations and compliance.
Technology | If we can agree that effective private banking relies on banks having a deep understanding of client needs and behaviours, how are you leveraging tech and data to deepen this understanding?
In our view, technology will enable us to focus more on providing clients with value added services, freeing up time by streamlining administrative tasks. New technologies will increase the capacity to deliver the banks’ knowledge and intellectual property to clients in an efficient, tailored, and easy-to-understand manner. This enables them to better appreciate the solutions bankers bring to the table and allows for more informed and effective discussions.
Pictet Wealth Management’s digital offer revolves around two solutions: a web- based platform with a 20-year track record, used for all banking and reporting needs, and an app — built 3 years ago — which includes reporting, messaging, research, and client validations. We are now in the process of rolling out a third solution covering the specific needs of advisory clients.
While we believe new technologies will make our bankers more effective, precise, and targeted in the way they work, we ultimately don’t believe technologies will ever replace them. Wealth management is highly personal, and it takes extensive discussion and interaction, person-to-person, to develop the relationship and nuanced understanding necessary to tailor solutions to each client’s or family’s specific needs.
Meet 2019’s industry leaders in the full round up of of Asian Private Banker‘s The Final Word 2019..