Stay relevant in the fast-changing world and don’t be fixated on plain vanilla topics like daily stock trading, VP Bank’s Asia CEO Pamela Phua told finews.asia, calling bankers to place greater focus on alternatives and non-investment issues.
The global wealth management industry is undergoing tectonic shifts that will profoundly transform the marketplace in a plethora of ways such as client demographics from intergenerational wealth transfer or the digitalization of all things from banking interfaces to actual assets.
The biggest risk for private banks in all of this is to be left behind and maybe even fade away into obscurity.
«Many banks are still simply having conversations around traditional investment vehicles, such as stocks, bonds and funds, without deep-diving into their clients' holistic aspirations,» said VP Bank’s Asia chief executive Pamela Phua in a recent conversation with finews.asia.
«Private bankers should go beyond the usual dollars and cents of engaging clients and talk about other things such as their passions or philanthropy, for example. As an industry, the risk is that we stop moving alongside clients in the new world.»
Alts and NextGen
According to Phua, the private banking industry has two major opportunities moving forward: alternative investments and banks' involvement in the historic transferal of wealth to the next generation.
«It’s too easy for money managers to say, ‘I’ll take care of your stocks, bonds and funds’,» Phua explained. «Let’s look beyond that and see how we can enter conversations that never included bankers before and expand the scope of discussions.»
Private Markets
On alternatives, Phua highlighted private markets as a major area of focus for VP Bank due to growing investor demand.
«Of course, clients are familiar with public markets but as we look around, companies are staying private for much longer. And by the time they go public, we’re not looking at just a billion-dollar company but multiples of that,» she said. «So our clients are looking to get involved with such companies at earlier stages and this is more of a common rather than an optional conversation nowadays.»
To that end, VP Bank launched a private markets platform – ORBIT – to facilitate investor matchmaking and champion private market assets as a more commonplace topic when dealing with client portfolios holistically. The platform was first launched in Liechtenstein last year and will roll out in Asia later this year.
Digital Assets
Another type of alternative that has been garnering increasing attention is digital assets, ranging from the headline-grabbing cryptocurrencies to the tokenization of markets.
In the case of VP Bank, Phua shares an example where a client made a relatively unique inquiry about a specific artwork and its inclusion in asset statements, potential liquidity obtainable from the asset and transferal to the next generation.
«Our colleagues in Liechtenstein put in place a blockchain solution that allowed the artwork to be tokenized and formally included in financial statements,» Phua recalled. «In addition to liquidity and better oversight, the client can also transfer ownership to multiple individuals from the next generation without, so to speak, breaking the artwork into pieces.»
Sustainable Investing
On top of personal passions or cutting-edge technology, Phua notes that the next generation is showing increasing interest in sustainability-related issues which have been further accelerated by the pandemic.
«Especially due to the challenges faced worldwide in the past few years, such as the pandemic and climate change, alongside a mindset shift from newer generations, families are feeling more earnest than ever about the idea of shared humanity and are beginning to think beyond growing wealth for themselves,» she said.
Although Asian investors are a nascent entrant into sustainable investing, Phua has observed interest not only directly in ESG-related strategies but even willingness to adopt ESG factors in more general, core investments, such as discretionary mandates which saw overall assets double in the region in the past year.
Bank Strategy
After joining in July last year, Phua’s initial focus was to merge Singapore and Hong Kong into a single, integrated entity as well as establish an Asia management committee.
The bank’s next step is to grow in the region to contribute to the group’s five-year plan – «Strategy 2026» – which includes the goal of achieving net income of 100 million Swiss francs ($105 million) and net new money of more than 4 percent per annum while maintaining a tier-1 capital ratio of over 20 percent.
Strategic Partnerships
Rather than relying on massive hiring campaigns, VP Bank is distinctly focused on partnerships for growth with intermediaries like external asset managers or multi-family offices.
It has an existing partnership in North Asia with Chinese multi-family office Hywin Wealth, which allows access to its 1,600 relationship managers onshore, and is now exploring another tie-up in Southeast Asia. Within that region, the bank is currently having «interesting conversations» in Malaysia, Indonesia and Thailand.
«The comfort and familiarity with partnerships is unique to VP Bank – more than 50 percent of our group's business, after all, is with intermediaries,» Phua said.
