Distributors identified client familiarity and on-boarding as the areas they need to improve on most to reach more of the region’s wealthy population, during AsianInvestor’s Fund Selectors Forum yesterday.
Speaking on a panel entitled “the future of wealth management in Asia” to an audience of distribution executives, participants emphasised the importance of product simplicity as a means to increase fund penetration and client engagement.
At the same time they talked of a need for client education on the value that distributors such as banks and insurers can provide in advance of an industry move to a flat advisory fee and away from the commission-based model in Asia.
“As an industry, I think we have not done a great job of understanding our clients, both on the product manufacturing side and the distribution side,” said Donna Cotter, head of Asia wealth management at Canadian insurer Manulife.
“Now we are entering the age of the consumer where we will have to be much more deliberate about what we do. We need to be more thoughtful and to understand our clients better.”
She noted that staff at Manulife had been taking part in role-play reconstructions to gain better understanding of the on-boarding process from a client perspective. This was not just for frontline staff, but across the firm’s divisions.
“What we are learning is that we have been very internally focused in the past,” Cotter noted. “When you have people dealing with application forms day in, day out, they do not see these as complicated.
“You have to be able to step out of your everyday and to get people from all different areas of the firm to look at the whole customer experience.”
Roger Bacon, head of managed investments for Asia Pacific at Citi Private Bank, agreed that distributors had to gain a greater understanding of their clients. But he cautioned that economics would dictate how far this could be achieved within the different client segments of mass-affluent, wealthy and ultra-wealthy.
“We as an industry are in the process of making this transition from a product to a client mindset,” he noted, saying relationship managers and advisers should spend the first 20 minutes of each meeting simply listening to client needs.
But Rodolphe Larqué, Asia-Pacific head of funds and ETFs at Credit Suisse Private Banking, said the problem was not a lack of understanding of what clients wanted.
“The problem is that what they want is not always achievable, especially in this part of the world,” he argued, in reference to unrealistic return expectations. “The most important thing is education; spending time with clients in an effort to bring them back to reality.”
Bacon identified digital on-boarding and ease of delivery as fundamental improvements the industry could make. He said it had taken him two weeks to buy a money-market fund this year, with a stack of forms to fill in. “That has simply got to change; it does not matter which client segment [you are in]."
“This is the first stage of the digital revolution, and we have got to get it right," added Bacon. "It has to be much simpler for clients to do business with us, or they won’t.”
Cotter suggested fund firms could learn from technology platform providers such as Alibaba in terms of understanding customer needs and prioritising simplicity and transparency.
“We will see more partnerships [between tech firms and product providers] and some industry disruption, particularly on simple products,” she said. “You can look at that as a threat or as an opportunity.”
Larqué observed that while the likes of Alibaba offered great tools as enablers, he questioned the quality of content. “A lot of our clients are more concerned with content than the way it is provided to them,” he said, adding that the personal touch became more important the higher up the wealth spectrum you went.
An audience member asked if low-commission products would take off in Asia, and whether the region was ready for advisory-based relationships.
Bacon noted that the penetration of advisory-heavy platforms was low in Asia relative to the US and Europe, the Middle East and Africa. “The take-up is low today, but this is a massive growth area over the next five years,” he said.
Larqué observed that clients in Asia were not ready to accept they might need to pay a bank for advisory-only services. “It is a perception of banking that still needs to change,” he said.
Cotter concluded that for any change in fee structure to become effective, clients had to be made aware of what they were paying for in the first place. “As an industry we have a lot of work to do to prove we are providing value,” she said.