Are investment managers aware of the advice gap in...

© Scorpio Partnership 2016 |

Scorpio Partnership – Fund Forum Berlin – Filling the HNW advice gap in Asia

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Are investment managers aware of the advice gap in Asia?Sebastian Dovey,

Managing Partner and Founder, Scorpio Partnership

FundForum Berlin – June 2016



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The minds and wallets of the APAC HNWs: striding after higher financial valuesWhat level of wealth do you think you need to be described as ‘wealthy’?

Source: M&G and Scorpio Partnership



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The sense of a moderate financial confidence is intriguingOn a scale of 1-10, how confident are you that you can achieve the level of wealth associated with being ‘wealthy’?

8%

5%

16%

3%

16%

15%

8%

5%

9%

8%

17%

7%

10%

14%

11%

5%

32%

36%

35%

29%

28%

30%

34%

29%

37%

40%

22%

41%

38%

33%

35%

42%

12%

11%

6%

19%

7%

7%

10%

18%

All

China

Hong Kong

Indonesia

Singapore

Under $1m

$1m to $10m

$10m and over

Coun

tryW

orth

Don't know Very low confidence (1-2) Low confidence (3-4) Neutral (5-6) Somewhat high confidence (7-8) High confidence (9-10)

Competitive financial market




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Guidance or recommendations

concerning prudent future action,

typically given by someone

regarded as knowledgeable or

authoritative.

ADVICE

INVESTMENT ADVICE

Any recommendation or

guidance that attempts to

educate, inform or guide an

investor regarding a particular

investment product or series of

products.



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Who are APAC HNWs going to turn to more in the future – the pros …Which investment advice channels do you use to help you make your investment decisions in 5 years' time?

Almost half of Asian HNWs expect to turn to IFAs in 2017.

36% of the Asian HNW study population also indicated that they would turn to priority bank by 2017, becoming the second most popular channel.

AGENT

Source: SunGard and Scorpio Partnership

47%

32%

28%

36%

32%

22%

21%

18%

23%

16%

11%

5%

7%

6%

6%

3%

1%

2%

1%

2%

5%

4%

0%

2%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%Independent financial

advisors

Family

Friends

Priority banks

Private banks

Retail banks

Social media

Traditional media

Accountants

Lawyers

Family Offices

None of these

% of respondentsExpected 2017 usage Percentage change



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Ideal attributes of the Asian HNW advisor What are the MOST important personal qualities of an advisor? Please select 5 qualities from the list and then press Next. APAC N=1134, Europe N=537, The Americas N=1438

APAC

EUROPE

THE AMERICAS

Dedication, listening and transparency are more in the focus lens for Asian HNWs.Source: FutureWealth 2015, SEI,

NPG and Scorpio Partnership

CONTENT



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The aspiration for advice is linked to a knowledge deficitHow would you rate your knowledge of investments? What level of investment knowledge do you aspire to? And, what is the respondents actual investment knowledge score?

6.35.8

6.26.7

6.46.0

6.46.3

4.8

5.9

4.84.4

4.8

5.4

3.7

6.4

7.7 7.7 7.67.9 8.0

7.27.5

7.9

3.05.0

7.09.0

Samp

le av

erag

e (n=

1087

)

Unde

r $1m

(n=1

49)

$1m

to $1

0m (n

=601

)

$10m

+ (n

=337

)

China

(n=3

15)

Hong

Kon

g (n=

192)

Indon

esia

(n=3

69)

Sing

apor

e (n=

211)

Worth Country

Inve

stm

ent k

nowl

edge

(out

of 1

0)

Perceived Actual Aspired

Actual knowledge 4.6

Aspired knowledge 7.8

3.2


CONTENT



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Yet, today the advisor guidance is not meeting expectationsDo you feel that your primary advisory firm and your advisor enable you to make informed investment decisions?

14%

16%

14%

12%

21%

22%

22%

21%

33%

17%

10%

16%

23%

28%

No, I wish I received more guidance from my advisor

Somewhat agree Agree Strongly agree

11%

12%

13%

10%

17%

18%

19%

18%

15%

6%

20%

21%

17%

20%

17%

Asia Pacific (N=1056)

Under USD1m (N=218)

USD1m to USD5m (N=476)

USD5m to USD10m (N=251)

USD10m and over (N=18)

Yes, my advisor gives me the guidance I need to make good decisions

Somewhat agree Agree Strongly agree

Asian HNWs identify a service deficiency in the region with regards to the quality of advice given by professionals as 51% wish they received more guidance.

VALUE

Source: FutureWealth 2015, SEI, NPG and Scorpio Partnership



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Asian HNWs are willing to pay for the right kind of advice

36% 39% 34% 36% 34%23%

36%43%

27%32%

18%23%

35%

32%

25%

28%

37%28%

47%41%

32%

45%39%

29%

0%

20%

40%

60%

80%

100%

All China Hong Kong Indonesia Singapore Under $1m $1m to $10m $10m and over

Country Worth

% o

f res

pond

ents

Yes Maybe No

Would you be willing to pay a fee for the advice given to you by a wealth manager?

The industry have a misconception that clients are only interested in product and not willing to pay for advice.

The market needs to highlight value to meet client needs.


VALUE



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Value is not purely a number in Asia – it is a feeling…

VALUE

What would make you more likely to pay for financial advice?

0%

10%

20%

30%

40%

50%

60%

70%

All China Hong Kong Indonesia Singapore Under $1m $1m to $10m $10m and over

Country Worth

% of

repo

nden

ts se

lectin

g 'Th

is is

MOST

impo

rtant'

If I find an advisor that truly understands my financial goals If I feel comfortable with the way my advisor is being compensated

If I find an advisor that truly understands my personal goals If the advisor can achieve higher returns than I would achieve myself

If the charges are laid out in a transparent way


In more competitive financial centre, the incentive to pay is significantly higher.



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Guidance needed

Big knowledge

gap

Lack of confidence in achieving

goals

Sales based culture

What can the investment management community do to help?

AGENT

CONTENT

VALUE



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Again, what can the investment management community do to help?



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Are investment managers aware of the advice gap in...

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