8 July 2020 |

Pandemic makes China HNWIs consolidate PB relationships

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HNWIs in China are abandoning their usual approach to use multiple corporate and private wealth service providers because some overseas financial service providers cannot be reached during the COVID-19 pandemic, according to a global corporate service provider.

The recent volatility in global markets has provided entry points for HNWIs who can make rapid decisions. That ability, however, hinges on financial service providers being only “one call/one-click away”.

Over the last few months, private banks which have been able to stay connected with clients through digital means have been handsomely rewarded with a significant increase in client engagement time and transaction flows.

On the other hand, financial institutions that lack a local presence in China — and are harder to reach during the pandemic — have missed the opportunity to build more trusted relationships with clients.

Sherrie Dai, Vistra

Consolidating service providers
“It is important to stay closely connected to clients during these challenging times. Some clients who may have managed their assets located in multiple jurisdictions by themselves in the past, are now turning to us for local support and assistance — especially if they have encountered difficulties reaching their overseas financial institutions,” Sherrie Dai, managing director, North Asia at corporate service provider Vistra, told Asian Private Banker in a recent interview.

With communication with overseas banking branches becoming more difficult during the pandemic, Dai said some of her HNW clients are consolidating their use of service providers and appreciate the firm’s independent advice in the process.

“Before the pandemic, clients may have gone to multiple private banks for different services — investments advice, commercial lending, wealth planning, etc. — as private banks usually have their niche in specific areas,” she explained. “In the current environment, clients appreciate private bankers who can help them in multiple areas [and thus] reduce the need to travel and engage with multiple banks.”

“Due to the travel restrictions in force globally, it is has become harder to start new client relationships because we don’t have the personal interactions. Likewise, clients are less eager to look for new service providers during this time.”

Local offices carry the day
With global travel restrictions still showing no signs of being relaxed, Dai said it is essential for corporate and financial service providers to both have global connectivity and a network of local offices — especially to conduct business in large countries such as China.

“It is important to have local offices, as the branches close to our clients allow us to conduct certain processes in line with regulations,” Dai explained. “For instance, clients in the mainland China can sign documents at the local branch in the city where they live, and that could be shared internally with our offices overseas with the consent of the client.”

“COVID-19 has further demonstrated our firm’s ability to efficiently and effectively onboard clients as we can provide certified true copies of documents, drawing on the strength of the network of local offices. This facilitates, for example, the process of setting up an offshore structure without the need for local clients to cross the border for certified signatures.”

Over the last few months, Dai has seen more requests from HNWIs for assistance to consolidate businesses overseas, because the client is unable to travel overseas to be in the location. She pointed out that, when needed, the firm’s local advisory team can act for the business owner to deal with local HR issues. She added that since the start of the pandemic, there has been an increase in the communication and collaboration within the firm across jurisdictions in processing requests, such as those of the above clients.

The firm has actively reached out to clients to offer additional help. At the start of the COVID-19 pandemic, asset owners may have been oblivious to the change in value of assets held overseas under a trust structure, due to the lack of visibility. Dai said her firm provided timely updates on the valuation of such assets and shared insights into the local situation where the trust structure was located,and that was greatly appreciated by their clients.

A massive wake-up call
Perhaps the pandemic has reminded people of their own mortality and the importance of contingency planning. The COVID-19 pandemic has been a massive wake-up call for HNWIs, as it presents a few wealth planning considerations that people might not have thought through that deeply in the past.

As a result, there has been a surge in the number of wealth-planning inquiries from HNWIs. Bankers have noticed that conversations with clients have become more in-depth and productive since the start of the pandemic, touching upon issues such as the choice of permanent residency of HNW families, as travel bans imposed because of the pandemic do not apply to permanent residents.

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