Michael Blake, CEO private banking Asia, UBP 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?
The biggest challenge remains anticipating and responding to client needs in a fast-evolving world amidst global geopolitical and economic uncertainty. This requires agility and conviction. As a business, we need to be light on our feet to help our clients capture new opportunities. We also need to set a strong direction when responding to market trends, regulatory requirements, and tech innovation — to continuously refine our proposition so as to preserve and grow our clients’ wealth.
Greater China represents the greatest growth opportunity for us. We are seeing strong demand for bespoke asset management mandates, where private wealth clients benefit from the solutions offered to institutional clients, as well as increasing demand for family office advisory. The non-resident Indian segment, as well as the Singapore, Indonesian, and Thai markets, also provide excellent growth opportunities, so we continue to pursue a targeted pan- Asia growth strategy, driven by highly customised investment solutions — predominantly for UHNW clients.
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?
We continue to focus our business model on advisory solutions, which is leading to increased recurring revenues. A few years ago, around 70% of accounts were execution only. Today, that number has reversed and some 70% of the bank’s accounts are in advisory or discretionary portfolio mandates.
Our approach has been to focus on advisory mandates and empower our relationship managers with fee structures that make most sense to their clients — from a standard brokerage fee to an all-in fee schedule. The approach has been well received by clients and has led to an increase in recurring revenues, which now comprise around two-thirds of our revenue base.
Investments | What are the key investment themes that your private banking will focus on in 2020?
Amid a subdued growth outlook for global economies in 2020 and an environment of low (to negative, in some regions) interest rates, the key investment themes will include:
i. With a lower anticipated return environment within public markets, clients will look to increase private market exposure. This includes club deals where a number of clients typically come together and make a direct investment in a business, from commercial aviation to real estate assets. These tend to be longer maturity yield plays, less liquid investments, but which complement traditional portfolios.
ii. Increased demand for bespoke asset management mandates, where private wealth clients can benefit from the solutions offered to institutional clients. In the last 12 months, we have customised around half a billion dollars of investment solutions for private wealth clients, and we anticipate this momentum to pick up strongly in the coming year. UBP’s organisational set-up, where wealth and asset management work closely, positions us strongly to provide customised “institutional-grade” solutions.
Iii. A continued focus on investments along environmental, social, and governance standards will be key. As a global trend, sustainably invested assets continue to grow, not only because of increasing investor interest in ESG issues, but because ESG investing also offers client an opportunity to adopt a bespoke investment approach that is tailored to their specific interest and values.
Meet 2019’s industry leaders in the full round up of of Asian Private Banker‘s The Final Word 2019.