Countries in Asia Pacific also share two demographic factors that impact the services provided by wealth managers: generational wealth transfer and a large expatriate population.

In order to thrive, wealth managers need to look beyond meeting the current needs of investors and focus on building long-term investment plans, brand familiarity and trust to win and retain the next generation of investors.

Additionally, the wealth management needs of Asia Pacific’s expat population should not be overlooked. Many prefer working with a financial institution they are familiar with. They want quick, simple access to their assets while working overseas and to receive the same client experience across locations. It is therefore important for regional wealth management firms to create a seamless client experience for clients who work in different locations. This will become all the more important, as younger investors are more likely to explore work opportunities abroad.

Preparing for the next gen

Markets in Asia Pacific are also experiencing sustained economic growth and rising household incomes, resulting in a larger middle class and a pool of newly mass-affluent investors. Private banks and wealth management firms need to act quickly to support the wealth creation taking place in Asia Pacific.

It is also vital that they properly guide and advise new investors to build loyalty and trust at an early stage, especially since some of these mass-affluent investors may be the ultra-high net worth investors (UHNW) of tomorrow.

The new generation of investors want to receive the same quality in wealth management services as their (U)HNW peers in terms of advice, performance and personalisation. There will be visible differences, and this is mostly due to the fact that these younger generations often have different expectations from their parents, including a greater preference for digital technologies as well as a more hands-off approach that may even favour discretionary portfolio management, especially in China and Hong Kong.

The need to attract long-term loyalty

From a wider Asia Pacific perspective, serving this growing pool of investors at scale can put a lot of strain on relationship managers and advisers. Given the current talent shortage in the industry, with relationship managers having to oversee an increasingly large number of clients, there are still major challenges ahead for the region’s wealth managers.

Technology will play a vital role in ensuring that wealth managers can offer investors a wide range of investment services and a smooth onboarding experience. On top of that, integrating artificial intelligence solutions, such as virtual assistant technology and generative AI, to support relationship managers is what will make a difference in client loyalty.

In addition, the cloud is a key enabler of digital transformation in the finance sector. It enables wealth managers to roll out new services more quickly, increase cost efficiency through flexible pricing models, and rapidly expand into new markets. For frontend applications such as web and mobile banking, cloud technology is essential to ensure constant availability across devices. This is a demand that we see globally – not just in Asia Pacific.

An optimistic outlook

While we are optimistic about the outlook for the wealth management sector in the APAC region, there are still challenges to overcome. For countries such as Japan, where there is an ingrained conservative approach to investing, wealth managers can still encounter resistance when it comes to shifting potential clients to managed investment solutions and gaining their trust.

However, from a broader perspective, wealth managers can leverage digitalisation and improve operational efficiency, which will ultimately help them to reach and server a greater number of clients while providing a more holistic and personalized wealth management offering.

This article was written for International Adviser by Pascal Wengi managing director for Asia Pacific, the Middle East and Africa at Avaloq.

The latest Saltus Wealth Index surveyed 2,005 people with investable assets of £250,000+ which found that on average respondents expected their property to contribute 44% to their retirement funds.

With house prices falling by 4.7% and the slowdown of the housing market in the last six months Saltus reported that this raises significant concerns about the retirement plans of many HNW individuals.

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Megan Jenkins partner at Saltus, said: “ These findings are alarming as relying solely on property for retirement planning is not a recommended strategy. The cost of purchasing a new home may eat into funds intended for retirement and the unpredictability of the market may result in the need to sell at a lower price than anticipated due to short-term market conditions out of their control.

“There is also a significant emotional aspect to consider, with an understandable attachment people often have to their homes making it difficult to downsize when necessary.

“The recent decline in house prices and challenging market conditions underscore the importance of diversified retirement planning, particularly for HNWIs. Relying solely on property to fund retirement carries significant risk and it is crucial for individuals to have a well thought out and diversified plan that takes into account both the financial and emotional aspects.”

While UHNW investors currently allocate on average 20% of their portfolios to private equity, they are now looking to decrease their real-estate and cash allocations to increase their private equity and private-debt holdings to 23% and 6% respectively.

Making it the second-largest asset allocation in UNHW portfolios, behind listed equities at 26% and ahead of real estate at 22% making it a mainstream alternative asset class.

Some 67% of respondents said the move was driven by the potential of enhanced returns as well as diversification of their portfolios.

Thomas Eskebaek chief executive at TitanBay said: “The private-equity industry has demonstrated its remarkable robustness in spite of recent economic headwinds, thanks to its ability to offer portfolio diversification and enhanced returns.

“As our study has evidenced, UHNWs are increasingly drawn to private-equity investments, marking a clear shift away from other, more traditional asset classes. With alternatives such as private equity, investors are encouraged to take an increasingly longer-term view of their portfolios.

“What remains to be seen is whether private equity will now become the norm, and if the regulatory landscape can keep pace with heightened interest from sophisticated investors.”

The wealth giant’s ‘Billionaires Ambitions Report 2022’ found that 95% of ultra-high net worths (UHNW) believe they should use their resources to tackle global challenges, with more than two-thirds seeing it as their duty to “lead the way”.

They see the greatest opportunities to make a difference in smart agriculture, clean water and sanitation, as well as economic development and poverty alleviation.

According to the respondents, the best way to bring about change is working with like-minded businesspeople, philanthropists and governments.

But UHNWs don’t want this push to stop with them; as 75% intend to instil these attitudes and values to the next generation.

Billionaires believe that addressing global challenges will help them combine personal values with financial returns, with a third firmly convinced that future investment returns will be linked to fighting global challenges.

“We’re living through an era where instability and innovation collide. This has created a cohort of billionaires with a high level of technical expertise, who first and foremost see themselves as problem-solvers,” said George Athanasopoulos, head of global family and institutional wealth at UBS.

“Like everyone else, they are concerned about the challenges facing the world, and they are in an ideal position to use their entrepreneurial capital to deliver fresh approaches and effective ways of doing what’s needed to tackle these issues. They are optimistic about the role that private enterprise can play alongside governments in creating a positive impact for future generations.”

Wealth fluctuations

The report also discovered the total number of billionaires around the world has declined slightly due to a volatile environment.

As of March 2022, there were 2,668 billionaires, compared with 2,755 the previous year.

More specifically, 360 people saw their wealth fall below the $1bn (£821m, €953m) threshold, while 273 surpassed it in 2022.

Similarly, total billionaire wealth went from $13.1trn in 2021 to $12.7trn in 2022.

But UBS expects the total number of billionaires and their wealth to have fallen further since March 2022 due to a decline in asset prices.

Regional trends

In terms of geographical locations, Asia Pacific still holds the largest number of billionaires with 1,084, but this is down by 59 people. Total billionaire wealth in Apac was down nearly 10% to $4.2trn.

In contrast, India’s billionaire population flourished and overtook the UK as the fifth largest economy in 2022. It had 166 billionaires, up from 140 the previous year.

The US, which is home to around a third of billionaires, remained resilient with 735 UHNWs, up from 724 last year. Total wealth followed a similar trend, with a 7% increase to $4.7trn.

Wealth across western Europe remained flat at $2.3trn while the number of UHNWs dropped to 467 from 474.

More significant fluctuations were experienced in eastern Europe, due to the war in Ukraine, with the number of billionaires falling to 127 from 154, and wealth dropping by over a third to $455bn.

The Middle East and Africa reported somewhat positive trends for the UHNW, with total wealth growing by 7.5% to $279.4bn, but the population decreased slightly to 89 from 91.

The “strategic investments” were in Switzerland-based Edge Laboratories (Edgelab) and Evooq.

The move aims to strengthen the private bank’s digital investment capabilities for its ultra-high net worth (UHNW) clients across Europe, the Middle East, Latin America and Asia.

JP Morgan PB will leverage the companies’ wealth management software services – which include risk analytics, portfolio construction, optimisation, advisory platforms and workflow capabilities – to provide advisers with digital tools to deliver bespoke portfolios and personalised planning.

“The relationship with Edgelab and Evooq comes at a time of challenging market conditions,” said Adam Tejpaul, head of investments and engagement at JP Morgan International Private Bank. “Edgelab’s and Evooq’s multi-asset class risk engine provides our advisers access to powerful risk analytics and ultimate levels of portfolio customisation to help clients best navigate markets and make portfolio decisions that support their investment objectives and broader life goals.”

Cédric Ullmo, chief executive and founder of both Edgelab and Evooq, added: “With this investment, Edgelab and Evooq gain capital at a critical stage of growth for the companies that will help increase resources needed to deliver core portfolio products and initiatives.”