Singapore’s wealth market is highly competitive and established compared to the wider region, where the private banking concept is still relatively new - particularly when considering emerging markets such as the Philippines, Indonesia, and China. Singapore has emerged as a premium private banking hub that caters to the global HNW elite, covering both offshore investors (who figure prominently here), and a substantial resident population that includes a large numbers of expats. As Southeast Asia’s premier financial market, almost all international private wealth managers have operations in the country, meaning it has an unparalleled product and service range within the region but is also the most hotly contested market.
Singaporean HNW individuals have made their fortunes predominantly through earned income, although business owners in one form or another are also significant. The most prominent industries from which HNW individuals have amassed their wealth are financial services and real estate.
At over 13%, the proportion of directors in Singapore who were women in 2017 was at roughly the same level as the proportion of HNW female investors, according to Diversity Action Committee Singapore. Offering dedicated services for female investors will become increasingly important, as efforts are underway to boost the number of high-earning female directors. Inheriting from spouses (typically from man to woman) along with the rise of more women working at the director level should result in tailored wealth services for women, (such as Miss Kaya) witnessing significantly more demand. All wealth managers need to ensure they are addressing this growing opportunity effectively and in a substantive manner, rather than simply offering pink credit cards.
The report "Wealth in Singapore: HNW Investors 2018", analyzes the investment preferences and portfolio allocation of Singaporean HNW investors. The report is based on our proprietary Global Wealth Managers Survey.
Specifically the report:
- Profiles the average Singaporean HNW investor in terms of their demographics and explores the expat opportunity in Singapore.
- Analyzes which wealth management mandates are preferred among Singaporean HNW investors and how demand will develop going forward.
- Examines the allocation of Singaporean HNW investors’ portfolios into different asset classes and how this is expected to develop in the future.
- Analyzes HNW investors’ propensity to invest offshore, preferred booking centers, and asset classes, as well as Singapore’s standing as an offshore center.
- Analyzes wealth and investment management product and service demand among Singaporean HNW investors.
- Explores consumers who have not yet entered the mass market and identifies how millennials’ needs and preferences differ to the mass market and where the opportunities lie in targeting them.
Companies mentioned in this report: DBS, Bank of Singapore, UOB, Credit Suisse, UBS
- Half of male HNW investors are older than 60, compared to 40% of female investors. This is high for the region.
- Singapore’s large expat population is transient, meaning wealth managers must be able to effectively convert them to offshore clients when they leave.
- Wealth managers that reach out to the expat segment with a one-stop service proposition will have an advantage over specialized boutiques.
- After years of waning, commodities and property will grow again in HNW portfolios.
- Offshore wealth is a crucial business line vulnerable to disruption from the rollout of CRS.
- Few providers currently offer impact investing, despite dramatic growth in demand from the next generation of investors.
- Develop and enhance your client targeting strategies using our data on HNW profiles and sources of wealth.
- Give your marketing strategies the edge required and capture new clients using insights from our data on HNW investors’ preferences for the various styles of asset management.
- Tailor your investment product portfolio to match current and future demand for different asset classes among HNW individuals.
- Develop your proposition to match the product and service demand expressed by Singaporean HNW investors and react proactively to forecasted changes in demand.
1.1. Singapore’s wealth market is dominated by foreigners
1.2. Key findings
1.3. Critical success factors
2.1. Singapore is a crowded market, requiring a targeting strategy customized to a diverse array of HNW investors
2.2. Demographics: Professionals employed in the financial services industry represent a lucrative target market
2.3. Expats: Wealth managers in Singapore cannot afford to ignore the expat opportunity
2.4. Investment style preferences: A lack of time drives uptake of advice
2.5. Asset allocation: Commodities and property will be on the rise
2.6. Offshore preferences: A good investment track record and a wide range of products can entice wealth home
2.7. HNW product and service demand: Wealth managers should lead with tax planning and develop an impact investment offering
3. AN OLDER HNW BASE SETS SINGAPORE APART FROM THE REST OF ASIA PACIFIC
3.1. Family office strategies are an effective way of developing relationships across generations
3.1.1. Singapore will see a wave of retirement before the rest of Asia
3.1.2. Family offices are an established feature in Singapore
3.1.3. Local private banks are explicitly aiming to grow family office business
4. A WIDE SERVICE OFFERING IS A MUST TO SEIZE SINGAPORE’S SIGNIFICANT EXPAT OPPORTUNITY
4.1. The transient nature of the Singaporean expat market means being able to transfer an onshore relationship to an offshore one is critical
4.1.1. Singaporean HNW expats are transients rather than immigrants
4.1.2. Job transfer is the number one reason for HNW investors moving to Singapore
4.2. UHNW and HNW investors migrating under the GIP are big business, but so are those who do not quite meet the threshold
4.2.1. The GIP investor is not a volume play on the market, but is still key
4.3. The complex needs of expats make them an attractive segment, but a wide service offering is a must to appeal to these clients
4.3.1. Providing tax advice can help bring expat offshore holdings to Singapore
5. WEALTH MANAGERS IGNORE ROBO-ADVISORS AT THEIR PERIL
5.1. Time is precious but control is even more important, meaning Singapore’s HNW investors strongly favor advisory mandates
5.1.1. Discretionary mandates are sold rather than bought in Singapore
5.1.2. Increasing discretionary wealth allocations means alleviating fears around lack of control
5.1.3. Bank of Singapore and OCBC have been able to grow their discretionary AUM
5.1.4. An advisory relationship allows for more efficient relationship building
5.2. Currently low demand does not mean wealth managers should ignore robo-advice
5.2.1. A targeted strategy is key to succeed in the HNW space
5.2.2. Miss Kaya is a local robo-advisor tailored to female investors, who are often ill-served due to the male bias in wealth management
5.2.3. CONNECT by Crossbridge Capital is a robo-advisor geared to the needs of HNW investors
6. STRONGER PROPERTY AND COMMODITIES DEMAND PLAYS TO SINGAPORE’S STRENGTHS
6.1. A lack of capital appreciation opportunities will see demand for bonds and equities moderate
6.1.1. All asset classes should see more demand, reflecting continued wealth market expansion
6.1.2. Wealth managers need to refresh their commodities offering to tap into HNW client interest
6.1.3. Property will return to prominence in Singaporean HNW investment portfolios
6.2. HNW investors in Singapore are becoming more risk-averse
6.2.1. Commodities investing among HNW individuals is driven by the desire for hedging
7. ASIAN OFFSHORE HNW WEALTH DOMINATES SINGAPORE
7.1. Offshore wealth is primarily Asian, but Singapore attracts funds from around the world
7.1.1. Offshore HNW AUM is concentrated from Greater China, although India is rising
7.2. Providing offshore investors with access to real estate investments is a must to be able to compete in Singapore’s offshore market
7.2.1. Stability and well-developed financial markets make HNW offshore clients crucial to private banking business volumes
7.2.2. High returns in the S-REIT sector should prompt continued investment
7.2.3. Wealth managers can play up the stability of the market to attract the cash element of the Asian offshore portfolio
7.3. Unlike many offshore centers, CRS implementation is less of an issue for Singapore
8. WEALTH MANAGERS MUST FOCUS ON IMPACT INVESTING
8.1. Wealth managers need to close the service gap for impact investing
8.1.1. Less than a quarter of wealth managers offering impact investing
8.1.2. LGT Impact Ventures shows how private banks can leverage impact investment demand
8.2. CRS will create a major issue but also an opportunity
9.1. Abbreviations and acronyms
9.2. Supplementary data
9.3.3. Liquid assets
9.4.1. 2017 Global Wealth Managers Survey
9.4.2. 2016 Global Wealth Managers Survey
9.4.3. Level of agreement calculation
9.4.4. Service level of demand score
9.4.5. Forecast level of demand calculation
List of Tables
Table 1: Cash and near-cash products: importance of asset allocation drivers
Table 2: Equities: importance of asset allocation drivers
Table 3: Bonds: importance of asset allocation drivers
Table 4: Property: importance of asset allocation drivers
Table 5: Commodities: importance of asset allocation drivers
Table 6: Alternatives: importance of asset allocation drivers
List of Figures
Figure 1: Female HNW investors are more prominent in Singapore than the rest of Asia
Figure 2: Expats represent a more significant opportunity in Singapore than in the wider region
Figure 3: Maintaining AUM as the lead wealth manager is a constant struggle in Singapore
Figure 4: Investors will be more exposed to property and commodities in the coming years
Figure 5: The limited size and range of companies on the SGX requires that investors look offshore
Figure 6: Impact investments are expected to take off, reflecting Singapore’s slightly younger investor demographic
Figure 7: An older HNW client base is focusing investment priorities on retirement
Figure 8: Singapore has less opportunity to tap into intergenerational wealth transfers than other markets
Figure 9: Singaporean HNW expats are more likely to be transients, giving wealth managers a short period of time to build an enduring relationship
Figure 10: The GIP process can be a lengthy route to permanent residency in Singapore
Figure 11: NRIs are a key expat market for DBS, with the bank leveraging its presence in India and Singapore
Figure 12: Expats in Singapore generate a lot of profitable business volume for wealth managers
Figure 13: Investment opportunities beats even Singapore’s attractive tax regime as the reason to invest via local wealth managers
Figure 14: The majority of Singaporean HNW wealth is held via advisory mandates, which is more than double the global average
Figure 15: HNW investors are opting for mandates based on convenience
Figure 16: The advisor-client relationship is the single most important retention tool in Singapore
Figure 17: Miss Kaya aims to be a financial hub for modern, affluent Asian women
Figure 18: CONNECT combines elements of automated and human-led investment advice
Figure 19: Singaporean HNW demand for commodities and property is set to take off
Figure 20: Schroders sees the stars aligning for strengthened commodities prices
Figure 21: Property prices in Singapore are rising once again, spurring investor interest
Figure 22: It is increasingly risk-off in Singapore and Asia Pacific, in contrast to the rest of the world
Figure 23: The growth of commodities is due to the conservative impulse rising among investors
Figure 24: Singapore is a popular regional booking center among Asian HNW offshore investors
Figure 25: Asia’s giants are Singapore’s main offshore clients in the HNW market
Figure 26: Property and equities dominate the Asian offshore portfolio
Figure 27: Wealth booked into Singapore is drawn to the stability and better returns on offer
Figure 28: Offering impact investment and tax advice are the two key areas of opportunity
Figure 29: Demand significantly exceeds supply when it comes to impact investing
Figure 30: Even smaller private banks can create compelling impact investment propositions for clients
Figure 31: Tax planning has not been the priority in Singapore it has proven in other financial hubs