Wealthy investors favour Asia-Pacific offshore centres
21 Sep 2012
Asia-Pacific offshore wealth centres, led by Hong Kong and Singapore, are becoming increasingly favoured destinations by high net worth individuals, according to the new Asia-Pacific Wealth Report by Capgemini and RBC Wealth Management.
Asia-Pacific has overtaken North America as home to the largest population of HNWIs in the world, the report found. The region's HNWI population increase to 3.37 million in 2011, boosting growth of Asia-Pacific offshore wealth centres, George Lewis, Group Head, RBC Wealth Management, said: "Clients often prefer to invest in markets closer to home, making Singapore and Hong Kong naturally attractive centres for those in the region."
In addition to proximity, Singapore and Hong Kong are also attractive the HNWIs because of their cultural and linguistic alignment, proactive and transparent regulatory authorities and the access they provide to investments in developing, but highly regulated Asian markets such as India and China.
Still, the biggest driver for the growth of these offshore centres is the diversification of country risk prevalent in many markets in Asia-Pacific, the report found. Jean Lassignardie, Corporate Vice President and Head of Sales and Marketing at Capgemini Global Financial Services, said: "At present, the perceived benefits offered by Singapore overall slightly outweigh those of Hong Kong, but the authorities in Hong Kong are taking steps to bridge any gaps."
As the number of offshore wealth centres in Asia-Pacific grows, wealth management firms face several challenges in meeting client needs, with scarcity of skilled talent identified as the most pressing issue. The shortage of experienced wealth managers could undermine the capability of wealth management firms to effectively serve large numbers of clients.
Companies need to invest in additional training to maintain relevance with and demonstrate value to clients in order to attract additional assets, the report said. They also need to focus on and invest in several key areas, including advisory, legal and fiduciary expertise, product offerings, risk and compliance measures and IT infrastructure.
Author: Richard Newell