Asia is undergoing a historic wealth transfer and private banking clients are increasingly thinking about the next generation. This has led to a surge in wealth planning demand, Julius Baer’s Rajesh Manwani told finews.asia.
With an estimated $2.5 trillion in assets expected to transfer to the next generation in Asia by 2030, it is no surprise that clients are beginning to make preparations. A recent Capgemini report found that 77 percent of ultra-high net worth individuals rely on their wealth management firms to support their intergenerational transfer needs.
This is no different at Julius Baer which is Asia’s fifth largest private bank by assets under management at end-2023. According to its regional head of markets and wealth management solutions Rajesh Manwani, around 40 percent of client assets currently have a wealth planning aspect.
Client Needs
Clients' wealth planning needs cover high-touch consultations about various issues including wealth structure, residency, family constitutions and more. For family offices, this includes operational considerations such as outsourced chief investment office services, reporting systems or aggregation.
«The number of discussions we've seen at the very high end has been higher than ever in the past,» Manwani noted in an interview with finews.asia.
Investor Sophistication
Increased client sophistication extends beyond wealth planning to investor knowledge. For example, home bias has decreased dramatically, partially due to the performance in Chinese markets, which has resulted in increased diversification. Financing has also been more disciplined with moderated use of leverage and a greater mix of currencies.
«Structured products are still being used but more so for diversification. The preeminence of accumulators and decumulators has decreased a lot in favor of rate-linked notes, bond-linked notes and minimum redemption notes,» Manwani added. «After communicating the message of disciplined investing by using core building blocks and staying on the course, the message has sunk in.»
Revamped Platform
In addition to repeatedly communicating a message of disciplined investing, the bank has also benefited from a revamped platform. This includes manufacturing a focused shelf of in-house solutions with only around 15 core building blocks.
«14 out of 25 in-house funds have a 4 or 5-star Morningstar Rating,» Manwani said. «So compared to some competitors that have big supermarket platforms, we have a shelf with a greater concentration of highly rated strategies.»
Private Markets
One area that has seen major hype in the industry is private markets. Julius Baer has also been active in this asset class but it has been «more discerning» due to two main developments in the region.
«Firstly, Asian clients love big brand names which results in a lot of alpha opportunities from middle market managers being completely missed. Secondly, there is a lack of vintage diversification,» Manwani explained. «In response, we launched a multi-vintage strategy with six to eight middle market managers.»
Business Strategy
The improvements in client sophistication and a re-engineered investment engine have resulted in business returns for Julius Baer. The bank previously announced that it aimed to increase recurring gross margin by two to three basis points over a three-year plan from 2023 to 2025.
«We are generally on track and Asia has played a part,» said Manwani.
Tech Upgrades
On technology, Julius Baer has made various upgrades that have improved the efficiency of how it delivers its wealth management proposition as well as client experience.
Recent moves include the use of a single advisory system which has resulted in a 70 percent reduction of time spent on processes. It has also enhanced processes for structured transactions which can now be fully executed within three or four clicks, all while on the phone. And for client-facing functions, it has been working on curated content which has resulted in a click-through rate of 63 percent.
Innovation Lab
Julius Baer is also preparing for technological advancements for the longer term. Through its innovation lab, it has been working on various projects including one that leverages large language models to allow clients to access various types of content with simple inputs. This project is now being incorporated by the head office within the bank's strategy for scaling. Other use cases explored include robotics process automation, chatbots and tokenization.
«We are the only pure-play private bank with an innovation lab in Asia. We are not leaning on wholesale or consumer banking,» Manwani noted. «That lab is based in Singapore and its stature has been elevated in the organization with a global mandate.»
