Although AUM often typifies the success of a private bank, Bank of Singapore says that, above all, its priorities lie in adding value to client relationships by helping clients locate and assuage pain points.
“We have a saying here: ‘AUM is vanity, revenue is sanity, and bonus is the RM’s reality’,” said Robin Heng, global market head for the Philippines, Australia, Indonesia, Thailand, and Indochina at Bank of Singapore, while still recognising that AUM serves as a benchmark to take stock of the work that has been done vis-à-vis the competition.
“AUM is a reflection point, but it’s not the strategy that we build,” Heng told Asian Private Banker. “Our strategy is focused more on the interaction and engagement with customers across different businesses.”
“What’s more important is the details of what we are currently doing to add value to what we bring to our customers — each and every one of them. When you do it well, it all adds up and then you have a nice AUM,” Heng explained.
An opportunity area Heng identified for value-add is that of wealth protection and succession planning, as the world draws nearer to what is purportedly the largest intergenerational wealth transfer in history.
“The first thing we do when broaching the subject of wealth transfer is to put forth to our clients the notion that they should manage their wealth like a business,” Heng said, highlighting a need for Asian HNWIs to engage in a paradigm shift.
By this, Heng means for clients to set up a trust or family office, and to get an external professional to help ensure there is “proper accountability and responsibility” in family governance.
Such commercialisation and professionalisation of wealth planning represent a divergence from the traditional method of bifurcating business management and investment management, according to Heng, who sees the offshore booking centre of Singapore as a supportive environment for the growth of the family office business.
Working through the pain points
Culturally, wealth transfer tends to be a sensitive or even taboo topic in various Asian countries — where there are many first- and second-generation wealth creators — given its inextricable link to the concept of death. This may dampen the propensity for members of the younger generations to bring up the subject for fear of being perceived as unfilial “money grabbers”, Heng explained.
Further, the pain point of wealth transfer appears to be particularly pertinent in Asia, where only 39% of family offices have a succession plan in place, according to the ‘Global Family Office Report 2018’ published by UBS in partnership with Campden Wealth Research.
The value of the private banker, then, lies in taking emotion out of the equation and offering dispassionate advice on identifying objectives in wealth creation and preservation and aligning these objectives with succession planning and generational transition.
“What the banker can do is to reach out and help the patriarch through this journey by giving them guiding principles, sharing stories about different families, and about what different families go through,” Heng said.
“It’s not an easy journey — sometimes it takes more than 10 years,” he added. “So we like to start early and the best way to start is to see wealth creation, preservation, and transfer as a journey.”
Bank of Singapore’s plans for family office services are also situated squarely in its wider strategies for Southeast Asia, in which its core markets are Indonesia, Malaysia, the Philippines, Singapore, and Thailand, with an eye towards frontier markets with young and fast-growing populations like Vietnam and Myanmar.