024. Holistic Approach wealth management for High Net Worth Individuals (HNWIs)

I read this article "Taking on a holistic approach - Changing wealth management advisory landscape expected to benefit the high net worth" appeared in The Edge Malaysia dated January 26 ~ February 1, 2015, with much interest.

It is an eye opener and also to remind of needs for different category of people.

• Malaysia has seen a dramatic rise in the number of high net worth individuals (HNWIs) over the last decade.
• CapGemini Financial Services Analysis 2014 shows the number of HNWIs in the country grew 6.6% to 66000 in 2013, while their wealth grew 9.3% to US$420 billion (RM1.3 trillion).
• this is positive for the wealth management industry in Malaysia and the Asia Pacific region as a whole as there will be greater need for more holistic advisory services.
• The higher up the pyramid of wealth, the more complex it is for HNWIs to manage their wealth. That is why wealth management models are important to this group of individuals.
• The real challenge for HNWIs is which organisation to choose and what they want from it.
• For wealth managers, the real challenge is providing the targeted clients with value~added services that are profitable to them
• experts foresee a moving away from advisory wealth management to discretionary wealth management, which is more commonly practised in Europe.
• Wealth managers who use the discretionary wealth management model have the discretion and right to manage their client's assets according to their respective risk appetite, profile and aims.
• The discretionary model evolved from the advisory model and the execution model.
• advisory model:- where wealth managers advise clients
• execution model:- where clients tell wealth managers what they want to do.
• It will be about next~generation planning and wealth transfer issues. It is not going to be purely investment management and assets management [coordinated activities to realise value from assets.]
• Wealth managers will not just be executing advisory work, but doing more discretionary asset management, [such as] more asset allocation and looking at a wider spectrum of services for their HNWIs clients
• The discretionary model also plans for future events. It plans for retirement, for the family and much more. It is not just about transactions for today but setting goals for the future. It is about looking at long~term rewards as well as building relationships and trust
• the discretionary model will give Malaysian HNWIs more options.
• we have a lot of opportunities. HNWIs are not really in favour of private banks because they find there is just too much product pushing
• Another emerging trend is the growth of single family offices (SFOs) in Asia. A family office or an SFO is a private wealth management advisory firm established by an HNWI to manage investments and trusts for the family.
• families will move from owning business to owning a lot of money, and something has to be done about that.
•  While families may want to give it all to wealth managers or private banks, they can also opt to take it in~house and employ asset or investment managers ~ people who understand tax and trust issues, and can help with inter~generational planning. These people can also help with philanthropic activities and the whole of the reporting element of being a family office