Putting Intermediaries First

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This is a sponsored article from VP Bank.

 

Buoyed by strong, double-digit annual growth in assets under management, increasingly embraced by regional regulators and encouraged by new structures like the Singapore Variable Capital Companies (VCC) Act of 2020, the intermediary space in wealth management is nowhere more dynamic than in Asia.

With a 27% annual increase in revenues and a 10% uptick in client numbers between 2018 and 2019, external asset managers (EAMs), independent asset managers (IAMs) and multi family offices (MFOs) are vigorously gaining market share in the region.

This dramatic increase in prominence made Asian Private Banker’s “Best Private Bank – Intermediaries” award all the more prestigious and hotly contested in 2020. One of APB’s key Awards for Distinction, whose selection process is widely recognised as the industry’s most rigorous and exhaustive, was honorably won by VP Bank. The win is testament to the Liechtenstein-headquartered global bank’s unparalleled, long-term dedication to servicing intermediaries.

In other banks, intermediary services can tend to be regarded as a small part of a much larger whole. For VP Bank, by contrast, with over 50% of its business coming from intermediaries, this client segment is a be-all and end-all.

As Reto Marx, Head of Intermediaries and Private Banking at VP Bank in Singapore, puts it pithily when asked to explain the strategy that led to the award, “You have to live and breathe intermediaries.”

The numbers tell the tale. Despite Covid-19, the bank was able to attract significant new EAM assets in 2020 and continues investing in hiring more on-the-ground personnel in Asia. Currently, VP Bank’s dedicated team of professionals in Asia is one of the largest intermediary teams in the region.

A long heritage of expertise in the intermediaries sector

In 1929, years before VP Bank was conceived by founder Guido Feger, he created his first business in Liechtenstein, a trustee company known today as ATU. VP Bank was then founded in 1956 with the express goal of providing comprehensive financial services for ATU’s clients, thus beginning a 65-year heritage of focus and expertise in the intermediaries sector.

VP Bank now has a global presence with more than 900 employees and offices in Vaduz, Singapore, Hong Kong, Zurich, Luxembourg and Tortola (British Virgin Islands). The VP Bank Group had client assets under management of CHF45.6 billion as of June 2020, a sound balance sheet and a strong capital base. It is listed on the Swiss stock exchange and is rated “A” by Standard & Poor’s on account of its outstanding financial strength.

The bank has grown rapidly in Asia since it debuted in Hong Kong in 2007 and Singapore in 2008, with its Singapore subsidiary acquiring full branch status in 2018. Through a partnership with Hywin Wealth since 2019 , VP Bank is further expanding its network in Greater China. Bolstered by significant changes in the regulatory landscape and an ever-increasing professionalisation of the industry, the bank’s expanding Asian footprint reflects its unwavering confidence in the long-term viability of the intermediary business in the region.

Explains Thomas Jost, Head of Intermediaries at VP Bank in Singapore, “When it comes to new entrants into the markets, there has been a shift in perception of how to do business with clients in Asia and a shift of clients in terms of what kinds of services they’re looking for. The growing need for independent advice, coupled with the continuous rapid growth of wealth in Asia, have convinced us that the Asian intermediaries market share is going to blossom over the next decade and potentially even overtake its European equivalent.”


Thomas Jost, Head of Intermediaries and Reto Marx, Head of Intermediaries and Private Banking at VP Bank Ltd Singapore Branch

Servicing intermediaries is no longer just about custody and execution

Necessarily, a shift in client demands on EAMs has led to the growing sophistication of the products and services that EAMs are able – and expected – to provide. Ten years ago, it may have been all about custody and execution – EAMs would simply execute trades they were told to do by their clients. With a maturing market, today more holistic wealth management service offerings are being provided by financial intermediaries, in tune with their European counterparts

For private banks who are tailoring financial solutions to EAMs, it is crucial to recognise that they can be diverse and idiosyncratic by nature.

Marx elaborates: “Intermediaries is not just one segment. We really have to understand them according to their individual identities: trustees, family offices (single or multi), traditional ex-private bankers who are running a smaller shop with the same credentials, fund managers and, at the upper end of the scale, there are the local banks, brokers and the insurance companies. Each of these needs to be addressed with a different service offering.”

As different as these segments are, they are linked by a fundamental set of criteria and expectations. Chiefly, according to VP Bank, these range from competitive pricing, digitalisation and sustainability requirements, to fast and flawless trading and execution.

Fast on-boarding is of particularly high importance to VP Bank. Explains Jost: “Something that most banks tend to forget is that speedy on-boarding is an opportunity cost for EAMs. If it takes six months to on-board a client, it means six months of no income for the EAM. But if it takes us only a few weeks , it means a faster lead time for the EAM to actually manage the account. This is why one has to move away from the manual processes that slow on-boarding down and towards more efficient systems.”

A bank-wide commitment to sustainability

As part of its Strategy 2026, VP Bank is integrating sustainability into all its decisions. Its Investing for Change initiative focuses on opportunities in the area of sustainability, repositioning its product range and assessing new solutions in the area of impact investing.

VCCs are paving the way to a new era

VP Bank is not resting on its laurels and indeed believes it’s at the dawn of an era of accelerated growth in Asia. In support of this view, it cites the increasingly favourable regulatory embrace of the fund management industry and the launch of the VCC product in 2020.

Says Jost, “I think it’s going to be a very important landmark for the industry. If you look at the numbers, since January 2020 we’ve had about 160 VCCs established in Singapore. That is a lot, in my opinion, for a completely new structure.”

As their trusted wealth partner, VP Bank is working closely with its clients in Singapore to fully leverage the VCC structure and seize future opportunities.

This is a sponsored article from VP Bank.

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