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We clearly see how the new generation of investors is embracing environmentally responsible investing to contribute to a more sustainable world. For many, environmental protection is the most important variable when investing and they want to know what the carbon footprint of a stock in their portfolio is.

Through our recent survey, we noted that sustainability is a core driver for next-generation UHNWIs. It is no longer a simple trend but a force to be reckoned with – sustainability is a key differentiator for private banks. This new generation wants to bank with banks with a core conviction in sustainability. For private banks, therein lies the opportunity to engage their clients more on stainability, and help educate UNHWIs along the way.

«One trend that we have observed is the acceleration in digitalization and its impact on banking relationships»

There is much to be done by banks to communicate the benefits of ESG and sustainable investments and increase the visibility of potential areas of investment, but what we have observed, and what our survey concretely shows, is that there is an appetite to learn more, and do more, from investors.

Any other trends that you observed in terms of expectations and needs of investors?

One major trend that we have observed is the acceleration in digitalization and its impact on banking relationships. 87 percent of UHNWIs believe that a bank’s degree of digitalization will matter going forward, and our study also reflected UHNWIs’ desire for banks to offer new services and new ways of communicating as the next steps in the evolution of banking.

While the quality of advice and services is still what makes the difference, banks who are able to augment these with strong technological capabilities will be the winners. These days, clients are asking us if they should change the manner in which they structure their wealth, and this topic has been of very keen interest in recent months amid the COVID-19 pandemic.

«I was concerned that sustainability might take a backseat compared to other issues»

In fact, many things accelerated since COVID-19. Wealth planning has been brought to the forefront, where issues of concern regarding family businesses and family wealth governance have perhaps become more urgent.

Also, what we are seeing in the markets these days is a real change in investing, with a lot of focus on sustainability now. In the past, it seemed that sustainable investing was not as popular in Asia as compared to other markets such as Europe or the U.S. When COVID-19 hit, I was concerned that sustainability might take a backseat compared to other issues.

But what happened was exactly the opposite. In almost all of our discussions, not only were they more engaged and open to sustainability, clients wanted a systematic approach to sustainable investing. And it wasn’t solely on ‘green’ investing – clients were genuinely interested in sustainability-related issues such as inequality, a topic that has become especially important during the pandemic.

«What we are seeing in the markets these days is a real change in investing»

It is clear that the COVID-19 crisis has already had a devastating impact on global society and economies and will continue to do so in the months ahead. Therefore, it is more important than ever to focus convince clients that sustainability will generate superior returns, and support our clients in incorporating their convictions to create lasting impact through their actions.

What about the consolidation in Asia’s wealth management industry?

It's probably too early to see a trend. We had a year with a lot of trading due to the high volatility in the markets. For models that are more transaction-based 2020 was not a bad year. Therefore, consolidation has somehow been postponed for a while.
But more than ever I think that the industry and its players need to have a clear, a very clear value proposition and strategy and to stick to that.

At Lombard Odier, we do not believe that we can be everything to everyone. We are here to protect the assets of our clients and to grow these assets over the years, supporting our clients in passing it on to the next generation. And we do this by constantly innovating, constantly rethinking everything for our clients.
 
Has the crisis changed your perception of Asia?

I would not say that my perception of Asia has changed due to the crisis. On the contrary, the COVID-19 pandemic has reflected the increasing sophistication and complexity of the wealth management demands and needs of clients in the region.

«They are more engaged, or want to be more engaged, in topics such as sustainability»

They are attracted to quality investment advice and discretionary offering, and a bank’s ability to facilitate extra financial services, including financing; they are more engaged, or want to be more engaged, in topics such as sustainability; and there is an increasing understanding for strong expertise and understanding in managing and protecting wealth through generations.

The disruptions and impact of the pandemic have forced leading families and entrepreneurs in the region to rethink everything – not only on the way they are driving their businesses but also on which values they are willing to drive their life.

Vincent Magnenat is a Limited Partner and the CEO of Lombard Odier Asia. He is also the CEO of the Singapore office and Asia Head of Private Banking. Prior to joining Lombard Odier in 2012, he spent close to nine years at Société Générale, one of the largest European banks. He began his career in international private banking at Credit Suisse in Switzerland and relocated to Singapore in 2002.