Singapore has proven itself to be a promising destination for wealth managers, and the demand for talent hasn’t kept up with the growing number of people in need of their services.
Wealth management firms that are looking to expand their operations into an increasingly wealthy Asia could start first in this city-state, where English is widely spoken and international wealth pours in.
Reasons Wealth Management Firms Should Be in Singapore
According to Credit Suisse Research Institute’s 2018 Global Wealth Report:
- There are 183,737 millionaires in Singapore. That number is up 11.2% from a year before.
- 1,000 of the millionaires are “crazy rich”, meaning they have a net worth greater than $50 million.
- Credit Suisse forecasts that the number of millionaires in Singapore will grow by 5.5 per cent per annum in the next five years, reaching 239,640.
Singapore has long served as a hub for attracting international clients. 80% of its assets under management and administration (AMA) are from abroad, according to the Singapore Business Review.
The country already attracts funds from Europe and North America, which represent 17% and 19% of Singapore’s total AMA.
And with the whole of Asia in its backyard, Singapore is most certainly attracting its neighbors.
“Singapore will continue to attract wealth from Indonesia, other Southeast Asian countries, non-resident Indians, and the Indian subcontinent. It’s also favored by greater China investors due to its political and economic stability,” said former Merrill Lynch private banker Rahul Sen.
A Need for Wealth Management Services
It’s not just that there is increasing wealth in Singapore, but there is not enough talent to mange all of that wealth.
Talent is so hard to come by in Singapore that, according to Bloomberg, wealth managers could see pay raises of 30% or higher by switching to a rival firm.
“It’s a crazy market. Every day we’re still discovering new high-net-worth clients.” – Derrick Tan, head of Greater China and North Asia at Bank of Singapore.
According to Credit Suisse Group, Singapore – along with Hong Kong – are lacking in licensed relationship managers. Between the two places, there are fewer than 10,000 licensed relationship managers.
“For a huge market like this, it’s certainly not enough,” said Amy Lo, head of Hong Kong’s Private Wealth Management Association.
A Sound Regulatory Environment
For decades, Singapore has been regarded as the “most mature and respected” wealth management center in Asia.
In fact, Deloitte ranks Singapore as the most competitive in Asia for wealth management business.
“Singapore’s regulatory regime (one of the world’s most prudent) causes a high level of stability which, in turn, supports growth; measures by the authorities to ease ways of doing business, together with low tax rates, additionally attract clients.” – Deloitte
Wealth Management Set Up Considerations in Singapore
Hire Mandarin Speakers
Because so much of the growing wealth is coming in from China, you need wealth and relationship managers who can communicate with clients in their native language.
You’ll also need skilled sales/business development personnel and marketers who can reach out to the Chinese market.
The good thing is Singapore is home to a large population of Mandarin speakers; more than one-third of those in the country speaks Mandarin at home.
English is the most widely spoken language in Singapore, and bilingualism is not uncommon. Most likely the Mandarin hires will be fluent in English, too.
If you’re thinking about taking your organization global, travel light.
Though Singapore is a favorable environment for wealth management companies, navigating the regulatory environment, hiring new staff, and relocating existing employees will still present challenges.
Instead of adding another challenge, wealth managers should consider outsourcing their middle- and back-offices.
Setting up an operational and IT infrastructure from scratch and doing it all internally can be very costly, especially if you lack the experience and resources to set it up properly.
An outsourcing provider could set up and maintain all of the operational and IT needs.
These providers should handle all daily reconciliation and other reporting requirements, and their technological resources and know-how should allow for more timely and accurate reports.
Their efficient practices will translate into lower operating costs for wealth managers, while allowing for more scalability and operational flexibility.
In this respect, outsourcing can help firms travel light.
Wealth Management Digital Platforms a Must
If you’re looking to pursue new markets, especially in Asia, digital- and mobile-first strategies are a must.
The use of mobile banking has surged in Asia, Singapore being no exception.
Singapore’s largest bank, DBS Bank, has committed SGD 200 million (USD ~$148 million) in digital banking regionally.
Furthermore, clients from China, many of whom already accustomed to the convenience of “doing everything” on social media app WeChat, will prefer mobile applications to check on their portfolios.
Wealth managers will need to make sure their clients have access to similar platforms, both easy to use and providing up to date information on their investment performance.
Singapore Awaits Wealth Managers
Singapore’s wealth and the lack of personnel to manage that wealth creates opportunity for talent who can manage it.
Of course, it’s not as easy as hopping on a plane and just setting up shop. There are legal and regulatory, financial, operational, and technical-related matters to consider, among other factors.
But still, relative to other countries in Asia, Singapore may be the best place to start.
And as long as the right people are hired and certain functions are outsourced to lighten the load, your firm’s presence in Singapore should be promising.