What if the most interesting story in Asian wealth right now isn’t the giant private banks, but the external asset managers (EAM) quietly, or not so quietly, making their mark? In Singapore and Hong Kong, they’re growing in numbers, scaling up their businesses, and extending their reach across markets.

Take Singapore, for example. Ten years ago, the independent scene was largely expat-driven, dominated by Swiss managers branching out into the city-state. But now, more local players are setting up shop to tap into new wealth. At the time, EAMs in Singapore held roughly 2% of the market. Today, that figure has climbed to around 8%. “I believe it’s eating into the private bank steadily now,” one IAM said.

Running an independent business, however, comes with real costs. One founder likened the operational expense to the price of a BMW 7 Series. Some co-founders take moderate salaries while paying staff fair market wages, rather than handing out outsized compensation.

By contrast, some EAMs distribute up to 80% of revenue to relationship managers, a model that raises questions about long-term sustainability. Copying bank-style compensation may attract talent in the short term, but can be unsustainable and distort industry dynamics.

As one EAM put it, “before talking about cost structures, ask yourself: Who’s at the centre of your EAM – the client or the relationship manager? Your answer shapes the sustainability of your business and ultimately the cost structure. And let’s be honest: you don’t need to invent EAM 3.0 because the market won’t notice it anyway.”

Then there’s the debate over retrocession. While most EAMs still rely heavily on retrocession fees, some firms in Singapore and Hong Kong have found success with discretionary management models, earning income from management fees on AUM rather than transaction-based commissions.

The balance is gradually shifting. Today, the split is roughly 85:15 in favour of retrocessions, compared with 95:5 previously. In Europe and the US, retrocessions are regulated or prohibited, and Asia may eventually follow suit.

Moreover, with regulations tightening, another question arises. Can emerging HNW markets in Africa, Asia, and Latin America, where financial infrastructure and client documentation vary, meet stricter compliance requirements in hubs like Singapore and Switzerland?

“And are we at risk of missing out on this growth simply because our frameworks were not designed with these markets in mind?” an EAM added. On top of that, there’s the ever-present challenge of managing client expectations.

As another EAM noted, “many clients are still not educated enough to understand that there is no free lunch, especially if you entrusted your hard-earned wealth to someone to help grow it. What makes you think that these people will do it for free for you? So, it is rather unrealistic that in private wealth management, many clients still think they can get the top-notch services and investment returns by paying nothing. As we all know, you pay peanuts, you only get monkeys.”

The bottom line? Asia’s independent wealth sector is growing and increasingly influential, but it faces high costs, evolving revenue models, regulatory pressures, and client education gaps. As the market matures, the question remains: how will these independents adapt – consolidation, perhaps?