Andrew Au: «Wealth Managers Need to Provide Higher Quality Services»

Andrew Au: «Wealth Managers Need to Provide Higher Quality Services»

Digital and technological solutions will ultimately lead to wider access to wealth management services, writes Andrew Au, co-founder and CEO of AGDelta in an essay for finews.asia.

Wealth management services in Asia are currently accessible to a small slice of the population, with the mass affluent unable to access quality services and advice.

This problem is being compounded by the fact that the number of financial advisers has not kept up with the growth in the number of wealth individuals in Asia, making it hard to offer their services to enough investors.

It is no secret that since the global financial crisis Asia has led the world in terms of economic growth and development. In the years following, while developed nations struggled with low growth, Asia, albeit from a low base, enjoyed sustained high levels of growth and by 2030 will account for the largest share of global GDP at around 40 percent.

«More Asians are rising up the economic scale, entering the middle class and higher»

While China and India will account for much of that, markets in the region such as Vietnam and the Philippines will continue to emerge thanks to their large populations and high growth rates.

More Asians are rising up the economic scale, entering the middle class and higher, with more high net worth individuals (HNWIs), at 5.5 million in Asia-Pacific than North America (5.2 million) or Europe (4.5 million), with $18.8 trillion in financial wealth, according to Capgemini's world wealth report 2017.

Yet despite this immense wealth that has been created, the levels of actively managed wealth in the region remains low at less than 10 percent with only the top end of the economic scale enjoying the benefits of quality wealth management. 

The current wealth landscape is too suited to HNWIs, and this is caused by a number of reasons. Firstly, we have seen a massive increase in regulations since the global financial crisis.

«Banks today are still too siloed»

Numerous new rules have been imposed that have increased the risk on financial institutions, and restricted their ability to create and offer innovative products to investors. Additionally, millions are spent on compliance departments alone, further raising costs and making it hard to turn a profit for all but the richest client.

Banks today are still too siloed, with different departments not communicating properly with each other. This is compounded by inefficient, old IT systems that cannot keep up with the changing demands of modern banking.