As the coronavirus situation seems to get worse by the day, finews.asia spoke with a boutique wealth manager in Asia on how its clients are coping and what might be in store for the wealth management industry. Here is his personal view.
Actually, we heard about a certain mysterious virus in Wuhan in mid-December. Initially, vague reports were relayed to us by business travelers and by our channel partners operating in Hubei. In early January, we collected and corroborated enough anecdotes to form the view that the «Wuhan Pneumonia» could become a replay of the SARS scare in 2003.
But, we were still greatly surprised by the speed and intensity of this new virus, and the scale and abruptness of the government response.
Trying to Help Evacuate Clients
In the past week, the whole team has been in crisis mode, trying to help evacuate clients and their family members in Hubei province (some were local residents, some were visiting the local sights in a warm winter), and shepherding (by phones and messages) them to regional air hubs of Chengdu, Kunming, Changsha, Shanghai so they could catch flights to their home countries or sanctuary locations.
We also arranged for surgical masks and protective goggles to be delivered into clients in Beijing, Shanghai, the Jiangsu province who didn’t want to or couldn’t leave their homes. But the custom clearance proved to be painful.
Templates of Wills
Other clients were quite worried about their portfolios, not just performance but the risk of trading being suspended. So far the markets and exchange regulators have behaved with calm. Some clients called us in the middle of the night to enquire about private banking accounts in European booking centers and what insurance could be bought online without physical trips to Hong Kong or Singapore. Some clients even asked for templates of wills.
It’s distressing and humiliating to see clients taking up our advice and seeking protection only after a major risk event had presented itself. We could have and should have been more intuitive, more graphic, and much less academic in our pitches.
Apocalyptic Forecasts
Looking forward, we don’t have much visibility. The World Health Organization (WHO) is reassuring and probably strangely upbeat. But the apocalyptic forecasts by a few researchers at U.K./Canadian universities might be too pessimistic – way too pessimistic.
Our best estimate is that the Chinese economy could suffer two quarters of negative growth, but rebound in May or June. Chinese stocks will take a beating but quality ones are by nature resilient. Global airlines, luxury stocks will suffer a possible rerating. Pharma and bio stocks are luring but to pick the winners in advance is tough as ever after the sector beta surge subsides.
Trigger of Fusion
For the wealth management industry, the coronavirus will probably become the «trigger of fusion». Citizenship planning, insurance plans, trusts, wills, second homes, doomsday hideouts could become salient points in a holistic discussion.
Rather than pitch a London new build, a St Kitts passport, a Manulife global scheme, and a La Prairie vacation package as disparate, nice-to-have «revenue enhancers» after the 15 million dollars of core wealth has been allocated, wealth advisors in Asia must and shall be expected to answer piercing questions: what if it happens again, something worse, what shall I do, and what should I do now?
The coronavirus is a timely drill for wealth managers and Asian UHNWIs. Let’s all take care and be safe.
