Bigger does not mean better when managing wealth
With the growing burden of regulation, independent wealth managers face considerable entry barriers and competitive pressures, so success comes only to those who add value
The predicted exponential growth of independent wealth managers in Asia failed to materialize in 2018, with growth stunted at best during the year.
Challenging market conditions and the increasingly onerous creep of regulations have diluted the environment for aspiring new entrants.
Despite the difficulties for new kids on the block, established players who entered the fray years ago are maintaining their progress by augmenting their business and assets. Ultimately, many clients have become disenchanted with the process-driven offerings churned out by global wealth players, and continue to seek out deeper and more personal relationships with their asset managers.
Instead of striking out on their own in the current environment, experienced bankers, frustrated with in-house politics or pressure to sell proprietary products, are choosing to partner with established independent wealth firms.
One such firm TriLake Partners, led by seasoned wealth specialist Lucie Hulme, has added several industry veterans to its Singapore-based team.
Wealth advisors who have joined Hulme hail from industry giants such as UBS, Credit Suisse and Standard Chartered Private Bank. Many bankers were motivated to move due to a preference for working in a more intimate environment where they can offer long-standing clients an enduring, trusted relationship.
The Asset recently caught up with Hulme in Singapore to get her view on the industry and learn how she manages to compete with the global wealth management giants.
In a nutshell, it boils down to having your own point of view. For, according to Hulme, having an independent view is one of the key differentiators between her business and traditional private wealth units at major banks. On a daily basis TriLake receives relevant industry and market research from all the banks they work with as well as external research providers. Together with internal research, the firm is able to formulate its independent view and calibrate it to each client.
TriLake Partners has no proprietary funds or products, taking conflict of interest off the table completely.
"We made the choice not to have any products in-house in order not to compromise our independence," Hulme says. Hulme believes many bankers still suffer from a conflict of interest while working for some banks where proprietary vehicles are pushed in the front line.
"By not taking retrocessions from banks, there is no incentive for us to unnecessarily turn over the portfolios," Hulme adds.
So how do they monetize the service? Asian-based investors are said to be softening their stance on paying for fee-based advice. More are seeing the benefit of working closely with an impartial, long-term advisor especially when the help can extend to all matters relating to their wealth.
Hulme's firm charges a management fee taken on a quarterly basis. The payment is based on a percentage of a client's assets under management at TriLake.
The independent asset manager offers discretionary asset management, advisory asset management and consolidation services, the latter being a capability created in-house that Hulme is proud of.
The consolidation service is used for high net-worth clients who are multi-banked or have wealth outside banks. "We can also incorporate non-bankable assets and revenues that may be generated from them into this consolidation. It's a service that is really unique," says Hulme.
Operating costs, particularly those regarding compliance, may be a burden for new entrants into the independent asset management industry. Rather than having an in-house compliance team, TriLake Partners have made the choice to retain KPMG Services as their compliance support, a cost the firm does not hold back on. "I believe the regulations in our industry are complex and constantly evolving, therefore we feel that one person may have difficulty absorbing everything," Hulme adds.
The pervasive creep of financial technology offerings making their way into wealth management holds no fear for Hulme. For high net worth individuals, personal and tailor-made advice will always be needed, so technology's potential to dilute her business will be minimal, she points out.
"We believe that each family has a unique set of needs and circumstances and that addressing these needs requires skills and knowledge which go beyond simply managing portfolios," says Hulme.
"As our long-term interests are aligned with those of the families we serve, the most valuable role we can play is that of an independent trusted advisor, helping families and individuals to protect, preserve and grow their wealth," adds Hulme.
3 Jan 2019