Hong Kong-based independent financial adviser Convoy is seeking to launch a new platform for high-net-worth clients and is in talks with offshore private banks with a presence in the city.

The firm has a sales force of about 1,500 people and an estimated 60,000 customers, mostly individual retail investors. It has offices in Hong Kong (types 1, 4 and 9 licences), Shenzhen and Beijing.

Insurance brokerage is its core business, selling investment-linked products. It also runs third-party mutual fund distribution and has a small stock brokerage business.

Alan Ng is head of business development and investment management for affiliate Convoy Asset Management and he is responsible for 350 third-party funds from about 40 external providers that Convoy has on its platform.

He says Convoy has HK$10 billion ($1.3 billion) in assets under advisory for investment-linked products. In 2010 it launched a discretionary portfolio management service (DPMS) for clients via three insurance partners that now has HK$2 billion in assets under management. “So we have turned around 20% of AUA into AUM in just two years,” notes Ng.

It has five portfolios within its DPMS service, one of which is for clients with HK$1 million portfolio size. But Ng tells AsianInvestor Convoy is seeking to reach out to HNWIs with at least US$1 million in what it is calling an “elite project”.

“Our clients invest in insurance products, investment-linked products, MPF schemes and mutual funds, but high-net-worth clients are more demanding than that so we need to expand our product range,” notes Ng.

He says Convoy will look to launch private placement funds and structured products and is in discussions with two or three offshore private banks in Hong Kong to share their platform on a B2B basis (he points to the appeal of institutional investment banking products and services, including loans and leverage).

“We want to bring this [elite platform] in before the end of this year and we are looking at the infrastructure currently,” explains Ng. “We want to provide a better platform for our consultants, that way they can more easily attract clients from private banks and local banks.”

When it comes to Convoy’s third-party product range, Ng points to a shift in client interest to fixed income investment. He estimates 70% of clients’ assets under advisory are now invested in equity funds and 30% in bond funds, compared with 90:10 just 18 months ago.

The most recent addition to Convoy’s platform has been renminbi-denominated qualified foreign institutional investor (RQFII) funds, from the likes of Harvest, Guotai Junan and Citic Securities.

But Ng confirms these products have not sold well, partly because of the lack of track record as well as similarity in asset allocation.

Data provider Strategic Insight estimates retail banks account for about 60% of fund distribution in Hong Kong, with securities firms, insurers and direct (30%), and IFAs and private banks (10%).

According to Cerulli figures from last year, which the firm is in the process of updating, IFAs had a 3.9% share of funds distribution in Hong Kong, and 10.6% across Asia.