Q1: Private banks in Asia have faced a number of challenges in 2024, from uncertainty around interest rate cuts in the US to volatile markets and geopolitical tensions. Considering this background, how did you safeguard AUM and revenue streams in 2024, while also attracting net new assets? What will your strategy be in 2025?

I feel fortunate that our economists and market strategists called interest rate and inflation moves, both in the US and the Philippines, correctly in 2024. In August 2024, we conducted a webinar specifically advising our clients to lock in rates, especially in US dollar markets. As a result, many of our clients positioned into higher duration and higher credit quality instruments ahead of the September cuts. Many of them also rotated into US dollars before the generalised weakness in emerging markets currencies (including the Peso). We will continue to be vigilant for our clients in 2025. It is this vigilance that ultimately rewards us.

Q2: How are you advising clients in terms of investment opportunities in 2025? Which markets and asset classes will provide the best opportunities? And how can clients balance leveraging these opportunities while managing risks to their portfolios?

While we look at a broad range of investment opportunities for our clients, we focus primarily on two things. First, we evaluate the money managers that we allow onto our open architecture platform and make sure that they continue to perform well for our clients. Second, when we are asked about specific bond and stock investments, we look very hard at the underlying earnings power and credit quality of the investments. We help our clients make sure their investees have the ability to consistently perform, compounding their earnings, no matter what market conditions may bring.

Ultimately, the quality of an investment’s earnings stream is what mitigates risk. Not the volatility of its price. If a company with a strong competitive edge and proven earnings power sees a drop in its stock price, that’s not risk. That’s a buying opportunity. At BDO Private Bank, we see tremendous opportunities to invest going into 2025. We see strong growth potential in the US markets, given the earnings momentum of companies there. We also see significant opportunities in technology infrastructure, healthcare, and other sectors that may benefit from increasing productivity driven by AI. One has to be selective, to be sure, but we see many opportunities.

Q3: China’s announcement in 2024 of a series of monetary and fiscal stimulus measures has helped re-energise the world’s second-largest economy, bringing optimism and momentum to the market. What opportunities has this created for your bank? How would you advise clients when it comes to investing in China?

China is also a dynamic market that deserves focus. The level of China’s engineering prowess, as well as the depth of its industrial supply chain, is unparalleled globally. Combine this with the hypercompetitiveness of its industries and the result should not surprise us: China will produce world-class companies across many sectors, not just in EVs or alternative energy, where they are getting a lot of attention now.

Just as with any market, we would advise our clients to look selectively for well-priced opportunities in China, especially at companies with a proven track record not only in their core business but also in protecting the interests of minority shareholders. Over time, these companies will prove to be good investments.

Q4: In 2024, the private banking industry witnessed organisational restructurings, leadership reshuffles, as well as heavyweight departures. Looking forward, what are the priorities for your private bank in terms of attracting and retaining talent across the front, middle, and back office? What measures do you have in place for managing personnel transitions?

We at BDO Private Bank are fortunate to have had more than our fair share of stability. Our leadership transitions are part of long-developed and communicated plans, not a reactive filling of gaps. Our senior officers have served for very long times. Furthermore, we take very seriously our succession planning and talent development and retention programmes, so that our key personnel understand their career paths.

Our mantra is very simple: We don’t treat our employees any differently than we treat our clients. We want them to experience intellectual growth, financial success, and – most importantly – a sense of purpose and satisfaction that comes from being part of a team where members value each other’s contributions.

Q5: The wealth management industry is increasingly subject to oversight and regulation, with this issue once again being brought into the spotlight with high- profile compliance breaches in the last couple of years. How are you addressing regulatory challenges while minimising the impact on clients?

We have a very constructive relationship with our regulators and see their efforts as having a positive impact on our clients. We are fortunate, so far, not to have suffered from major compliance breaches, but we are hypervigilant against these possibilities.

One thing about BDO Private Bank is that we are not shy about doing things well above the regulatory standard. For example, our Capital Adequacy Ratio stands well above 30%. We will maintain this ratio well above the stipulated Basel minimums, if only because we wish to be viewed at the highest standard of financial strength and safety. The term “margin of safety” is often used in investing, to ensure that when we manage money we more than compensate for the risks we take. That principle also applies to our regulatory integrity.

Q6: The Middle East, in particular the United Arab Emirates, has come onto the radar of many private banks as clients increasingly seek global diversification. What potential opportunities do you see in the region for private wealth clients, as well as in the Middle East-to-Asia wealth corridor in general? How else are you adapting to clients’ increasing requirements for global services and offerings?

Our focus is the Global Filipino and, as such, the more critical wealth corridors for us are the US, Europe and Australia corridors, less so the Middle East. In servicing clients in these corridors, we offer access to investments in these markets. Furthermore, to the extent that our clients also require planning around ownership and transfer of assets across these borders, we are able to provide them access to good tax and legal advice.

Q7: Much hype has been made about the transformative potential of artificial intelligence. What opportunities does AI present to your financial institution, and how does it fit into a broader strategy of technological upgrade and digitisation?

AI is extensively used across our organisation. As a firm, we use a lot of Microsoft applications and, as such, have access to Microsoft Copilot to help accelerate research, collaboration, and communication. Within BDO Private Bank, we also have developed our own AI tools to hone our analysis and recommendations for clients. The convenience and speed that these tools offer to our relationship managers are significant.

Notwithstanding all this technology, we are quick to emphasise that AI is just a means to an end. At the end of the day, our people must take strong ownership of their output. We don’t delegate to machines what is our ultimate professional responsibility.

Q8: With wealth clients being increasingly sophisticated, tech-savvy, and time-conscious, they are demanding more expertise and capabilities when it comes to discretionary portfolio management offerings. How is this reflected in your long-term approach to DPM in Asia and efforts to deepen client penetration of these solutions?

We take a very disciplined approach to DPM. We treat our private wealth clients very similarly to our institutional clients who also hire us for discretionary mandates. We focus sharply on understanding our clients’ sensitivities and their risk appetites. We also work hard to make sure that our investment managers have a clear strategy to invest within the limitations of such risk appetites while delivering alpha. If we are not confident we can deliver the outperformance, we don’t chase the mandate. The market has evolved such that cost-competitive index (and sub-index) products are widely available, and we use them.

Q9: Trillions of dollars of wealth are expected to be passed down to the next generation of clients in Asia over the coming years, bringing into the spotlight services targeted at next-generation clients. What is your bank doing to ensure it captures the full potential of this opportunity, whether via content, outreach, or solutions like family office and wealth planning?

I think BDO Private Bank has the most significant tax and legal capabilities for advising clients on how to plan their estates or protect their assets. We are highly knowledgeable of the Philippine civil code; furthermore, we have a strong understanding of the tax corridors most frequented by the Global Filipino, particularly to the US, Europe, and Australia. I would even venture to say that we have helped clients address issues involving assets not in the Philippines.

Capturing the full potential of the estate and asset planning opportunity takes “one-client-at-a-time” patience. We are prepared to have that conversation at a time and place that a client wants to have it, not when we want to have it. We are lucky at BDO that we do have a lot of opportunities to be good listeners. The opportunities arise not only as we solve problems at the family level of the private bank, but also at the corporate level as we collaborate with colleagues in our institutional and retail bank.

That’s the power of being a client of BDO. When you bank with one of us, if you so wish, you bank with all of us. And we find ways to solve our clients’ most challenging problems.