The regulator said quantum technology is a rapidly advancing field that holds significant potential to transform the financial industry and broader economy.

MAS has been collaborating with the National Quantum Office following the announcement of the National Quantum Strategy by deputy prime minister Heng Swee Keat in May 2024. MAS will establish a Quantum track under FSTI 3.0 to support financial institutions’ interests to build quantum capabilities in Singapore.

There are three types of grants:

Technology Centres grant – This supports the establishment of quantum computing and security innovation functions in Singapore, to enable financial institutions and global technology companies to explore and unlock new opportunities arising from quantum technologies. This grant will provide funding support of up to 50% on manpower and other qualifying expenses such as hard/software infrastructure, subscriptions and licenses, for a period of 24 months.

Technology Innovation grant – This comprises two sub-tracks to support adoption of quantum technology solutions by financial institutions. The first sub-track aims to catalyse meaningful institutional use cases that bring about significant impact to business. The second sub-track will support strategic endeavours to solve relevant industry-wide problem statements. Up to 50% co-funding support will be provided to advance the exploration and implementation of such quantum solutions.

Security grant – This aims to enhance cyber security readiness to better prepare our financial infrastructure and services for the quantum era. Funding support of up to 30% will be provided to enable experimentation and development of quantum technology-related pilots that explore the use of Post-quantum Cryptography (PQC) and Quantum Key Distribution (QKD) to safeguard firms’ critical data.

MAS will also work with Institutes of Higher Learning and the Institute of Banking and Finance on talent development initiatives to support the development of quantum capabilities in the financial services sector.

The statement further said that while financial institutions have been progressively adopting AI, recent technological advancements have made such tools more widely accessible and increased the pace of adoption. With the advent of Generative AI, financial institutions have embarked on initiatives to map the technology’s opportunities and risks, and have begun piloting it across a range of use cases. Nevertheless, the level of AI-readiness and adoption varies across financial institutions in Singapore.

The aim was to “bolster financial institutions’ development and deployment of AI technologies in Singapore – Singapore has the potential to become a centre of excellence for anchoring AI capabilities, such as in the development of applications, as well as testing and deployment of AI solutions for the financial sector. MAS will support financial institutions in establishing AI innovation centres in Singapore for a range of functions including: AI model building and training, deployment of AI models for high-impact use cases, governance and risk management, as well as testing and monitoring.

“Develop AI platforms to address industry wide use cases – There are strong prospects for the financial industry to apply AI to solve industry-wide problems beyond what each financial institution can do individually. This involves the development of frameworks and platforms for policies and protocols that enable secure and privacy-protected data exchange where financial institutions can collaborate on industry-wide use cases.

“For example, MAS has identified scam and fraud detection as a use case for the first pilot project, and will work with banks, technology solution providers and public agencies on this. The funding will support projects that accelerate the development of industry-wide AI solutions and high-impact use cases.”

More details on the enhanced support for AI will be announced in the coming months, the regulator concluded.

These new locations have extended Pantheon’s footprint into two important private wealth hubs and supports its ongoing expansion in the private wealth channel.

The Singapore office will be a hub for its activities in Southeast Asia and across the wider Asia-Pacific region serving a client base that includes a number of blue-chip institutional investors and national pension funds.

It will be led by Brian Lim, Pantheon partner and head of the firm’s investment activities across Asia and emerging markets.

To read more on this topic, visit: Global wealth set to reach $629trn by 2027

While the Geneva office will extend the firms presence in continental Europe and will be led by Carlos Arias, Principal in the firm’s European Investor Relations team, who provide broader coverage for the firm’s institutional and private wealth clients in French speaking markets as well as Spain and Italy.

Pantheon’s private wealth platform offers a range of evergreen fund solutions with a combined $5.8bn (£4.7bn, €5.5bn) in assets under management (AuM).

Susan Long McAndrews partner and global head of business development, said: “ Our strategic focus is on building our presence in key growth markets and client channels, offering our investment acumen and commitment to service excellence to more investors, while growing our investment capacity and reach.

“We are pleased to bring our global expertise to local markets in Singapore and Geneva, where we have generated significant momentum and where we see substantial opportunities for further growth.”

In the UK, the introduction of the Retail Distribution Review (RDR) paved the way for the advice market to head towards fees. There was a somewhat mixed reaction to the move towards fees – but ultimately it has been accepted and thrived in the UK.

Across the Channel, the EU recently faced a backlash against banning commissions and had to u-turn when announcing its retail investment package. As part of the package, the EU is banning inducements for “execution-only” sales, where no advice is provided, to ensure that financial advice is “aligned with retail investors’ best interests”. It was originally looking to ban asset managers and insurers from paying financial advisers for recommending their investment products.

This also led to a European Federation of Financial Advisers and Financial Intermediaries (Fecif) member writing an editorial called the future of financial advice in Europe: why a commission ban is not the answer.

Another region which is still more commission-focused is Asia Pacific. The advice markets of Hong Kong and Singapore have some firms which have embraced fees, but the majority still use a commission model.

International Adviser has spoken with a range of firms in the industry to discuss whether the Hong Kong and Singapore advice markets can move fully towards a fee-only model.

Survival

The biggest argument against fees in the UK was that banning commissions would mean the end of some advice firms – and they wouldn’t survive the move towards fees.

So, is this an issue for firms in Hong Kong and Singapore?

An unnamed source from a global wealth manager said: “Diversification of income streams away from commission-only models just makes good sense from a governance perspective. As an ‘upside’ it also creates less volatility in the business revenue model.

“In other words – the business is less dependent on new client acquisition and can focus on the value proposition for existing clients because the business is getting paid to service their existing clientele and in doing so is generating income not wholly based on finding new relationships.”

Simon Parfitt, director of wealth management at Pyrmont Wealth, added: “A big issue is the markets are fragmented. There are more than 100,000 registered insurance agents all selling commission-based insurance products, primarily in the domestic market.

“It is also common for domestic IFA firms to favour a commission rather than fee model, both at a product and fund level.”

Success

Sometimes the debate also leads to the suggestion that fee-based models cannot work in every advice market due to the landscape.

Wing Chan, head of manager research for Europe and Asia Pacific at Morningstar, said: “While a product-led, commission model has historically dominated fund distribution in Hong Kong and Singapore, technology has enabled the emergence of digital platforms, robo-advisers and we are seeing an increasing number of alternative distribution models.

“Fund distributors and wealth managers in Hong Kong and Singapore are also placing a greater focus on building holistic portfolios that aim to align to investors’ financial goals, and we see that a key step towards the provision of more comprehensive wealth advice for consumers.”

Ian Black, managing director for Apac at Globaleye, added: “By focusing on needs and goals first and selecting the relevant solutions to deliver these we ensure better client outcomes. It is essential to deliver advice in a transparent and comprehensive manner to ensure that consumers are fully informed before making choices on how to proceed. This is very much in keeping with the UK model.

“On the other hand, many clients are unwilling or unable to work on a fully fee for service model and prefer to pay for advice through the solutions, either by commissions or by deduction from the plan – whichever is better aligned with their needs.”

Status quo

Fees may not be the standard at the moment – but is there a chance they could become the norm in Hong Kong and Singapore?

Black added: “The true issue is one of transparency rather than the payment mechanism. If a consumer is aware of the costs, both product and advice, and agrees to these it is of little consequence whether these are paid via the product or directly as a fee. One key point to be considered is the flexibility to change the solution easily as consumers’ needs evolve over their lifetime.

“There is a need however for more financial institutions to move from a reliance on initial commissions to a mix of an initial fee followed by fees for ongoing service. This will build a more resilient advice sector and better align the interests of firms and consumers.”

The unnamed source from a global wealth manager also said: “I think that giving clients the choice of paying for services via fees will attract the better-informed clients. In today’s 24/7 access to information world, many clients can do their own research online and will come prepared to talk about fees in a way that that they wouldn’t have done 10-15 years ago.

“I think as client awareness continues to increase; the industry will have to adapt, especially where high net worth clients are involved.”

Expat vs domestic

The Hong Kong and Singapore markets are quite complex – and also have a big domestic market as well as expat.

As UK expats are used to fees, the commission debate may only be a discussion in the expat market.

But according to the unnamed source from a global wealth manager, the domestic market is also regularly discussing the fees versus commission debate.

They added: “I think the idea of expat versus local models is evolving. Clients are increasingly international with a much broader footprint of investment requirements and access to information. The question of a commission or fee-based model is an industry issue and one that I don’t think ranks very highly on client agendas.”

Pyrmont Wealth’s Parfitt said: “At the moment I think yes, there doesn’t seem to be a desire or momentum in the domestic market to change.

“I think that is also due to client expectations – if you come from a country with a more mature financial planning market, such as the UK or Australia, then perhaps you just expect the same when you are overseas.”

Regulatory action

The introduction of fees in places like the UK was sparked by regulation and watchdogs.

The argument most of the time is regulators should not always step in to solve every issue – many would argue that this is the same in Hong Kong and Singapore.

Morningstar’s Chan said: “Regulations have been a key driver in the wealth management industry’s move towards fee-based advice in markets such as the UK, Netherlands and Australia.

“Based on our understanding and interactions with regulators in Asia, there is the tendency to take a softer approach – rather than banning commissions outright, the focus is on transparency making sure that investors are clear about the fees they are paying.

“Rather than a bundled fee structure, our view is that investors are best served by a clear delineation of fees between advice and investment management so they can make choices that are most suited to their needs.”

Parfitt added: “I think it will only change with regulatory intervention and in the domestic market especially insurance companies have a lot of sway and would likely lobby against this. Fragmentation in the market does not help with getting a cohesive framework.”

Lastly, the unnamed source said: “Regulators exist to protect clients and the industry that they oversee, they already have an understanding of how things operate in their markets. The question is: can they, should they do more? I think it is safe to say that the markets in Singapore and Hong Kong are operating efficiently, but we mustn’t rest on our laurels.

“The regulator should be regularly engaging with the firms that it oversees to understand how they work with clients, including remuneration models. It should be a collaborative gradual expansion of revenue streams that increase market diversity and continue to improve client outcomes. I don’t think it is up to the regulator to solve something. It is less of a problem to solve and more of an adaptation of their regulatory approach to account for a wider and more diverse client servicing dynamic.”

It will be headed by the government’s overseas representative to Asia, Gene DaCosta, and is expected to have a physical presence in the final quarter of this year.

The Asia office will establish and nurture strong public and private sector relations, create effective communication between the Cayman Islands and key Asian countries and advance financial services interests.

DaCosta, said: “Having the office based in Singapore allows the Cayman Islands Government the ability to quickly and effectively provide the necessary support our stakeholders in the region may require from time to time.

“Indeed, Hong Kong is a particularly important locale for us as it has longstanding, strong business relationships to Cayman. I’m expecting to have frequent in-person meetings in Hong Kong (likely quarterly visits at a minimum), alongside those that will occur in Singapore and other jurisdictions in Asia.”

This is the Cayman Islands Government’s latest public sector overseas office following the opening of an office in Washington DC in December 2022.

Sumitomo Life will pay consideration of £500m for Aviva’s equity stake and £300m for the two debt instruments. Sumitomo Life is currently a 23.2% shareholder in Singlife and sees Singapore as a key market within its overall southeast Asia strategy.

Aviva’s exit from the Singlife joint venture represents a further step in the simplification of Aviva’s footprint following the international disposal programme completed in 2021. It is also consistent with the group’s ambition to focus on its capital-light business units. Aviva sold its majority stake in Aviva Singapore to a consortium led by Singlife in 2020.

The disposal proceeds will be considered alongside Aviva’s existing capital management framework. Under this framework, any surplus capital is available for reinvestment in the business, bolt-on M&A, and/or additional returns to shareholders.

Amanda Blanc, group chief executive of Aviva, said: “This is a good outcome for Aviva. The transaction further simplifies the business and we are in a very strong position to build on our trading momentum in the UK, Ireland and Canada.”

The transaction is subject to customary closing conditions, including regulatory approvals, and is expected to complete in Q4 2023.