In recent years, the numbers and wealth of the super-rich (those with a net worth of $500 million or more) have grown most prominently in Asia. This region has thus given wealth managers—running the spectrum from private bankers to multifamily offices—tremendous opportunities to build substantial advisory practices.
But even if the possibilities are astounding, there are also numerous obstacles to success.
Wealth managers seeking to do business with individuals in this region need to recognize a number of key client characteristics and preferences. Let’s consider three segments of the Asian super-rich:
Business Owners
Irrespective of geography, most extreme wealth creation is tightly tied to very successful businesses. This is certainly true of great personal fortunes in Asia. Moreover, most of these Asian tycoons are presently managing their businesses with the intent of growing them.
This will lead them to firms that can provide structured finance. While that expertise is not a necessity, it can be an important first step in connecting a wealth manager to a rich family. Once a relationship has been established, such wealth managers are well positioned to provide additional services and products. This need is transforming some of the traditional private banks operating in the region into private/investment banks.
Discretionary investment management—the cornerstone offering for many wealth managers elsewhere—is often only a small part of the relationship with wealthy Asian clients, since much of their wealth is already wrapped up in their businesses. Instead, advanced planning that strongly focuses on tax mitigation is much more meaningful to them.
The most appealing tax services will address their present day business dealings and cross-border activity, such as jurisdictional arbitrage strategies. In addition, wealthy Asian clients often have extensive international holdings, and some of them are concerned about political and economic stability. So an array of wealth protection services is also very appealing.
Many ultra-wealthy Asian clients are digital natives, so wealth managers must be adept at communicating with them that way. They want immediate access to information, including the status of their holdings. But though technology plays a big role, they still need personal interactions with skilled, high-touch, knowledgeable relationship managers. The careful blending of high-tech and high-touch is critical.
Women
While men dominate the ranks of the super-rich, women are joining this cohort at a greater pace, and the percentage of new female billionaires exceeds those of male billionaires as female entrepreneurs emerge in Asia. These women, like all the ultra-wealthy, exhibit a number of core characteristics: They all have high levels of “self-efficacy”—a strong conviction in their own ability to achieve their goals. They understand and are quite adept at strategic networking. They are quite accomplished negotiators.
They often have to work harder and many times smarter than men to amass extreme wealth. Having gone down this track, they are usually motivated to continue enlarging their personal fortunes.
But women also tend to think about the purposes of their wealth, and think about how they can use it to positively impact society.
What’s interesting is a trend in which these women have moved away from the traditional wealth management firms and opted instead for creating their own single-family offices. Their primary motivation, the same as men’s, is to ensure they are in control. And it’s common for these single-family offices to strategically outsource expertise, with keen attention to cost/value trade-offs—so they will often rely heavily on external wealth management firms.
When it comes to their single-family offices, self-made Asian super-rich women will regularly do their homework and will be very tough negotiators. They will bring the same mind set, talents and capabilities that have made their business endeavors so successful to the establishment and oversight of their single-family offices.
NextGen
Despite the preponderance of first-generation new money, there are quite a number of multigenerational families that have created incredible personal fortunes. In established families, the children or grandchildren of the wealth creators (depending on when the family fortunes were initially founded) are commonly not very happy or enthralled with the way their predecessors managed the family fortunes.
Thus, they are disinclined to see old, well-worn relationships with their parents’ or grandparents’ advisors as particularly worthwhile, unless those professionals are demonstrating that their services and products are exceptional. But often, the previous generation’s advisors will be discarded in favor of more sophisticated and responsive professionals. That’s also a motivation behind these families’ creation of single-family offices.
The increased mobility of the Asian super-rich, especially of younger generations, coupled with the fact that they are interacting with one another more and more, allows them to do a lot of sharing. Many of them “do lunch” together, often with the assistance of a facilitator and selected experts, informally, perhaps while attending events such as the World Economic Forum.
As a result, the next generation wealthy are again turning to the idea of a well-run family office as a way of maintaining the preferred levels of control, strategically outsourcing tasks and maximizing their relationships with external experts, just as super-rich women are.
Thus, talented wealth managers who are able to connect with these single-family offices can become extremely successful.
Conclusions
Given the opportunities, the competition is intense. More and more wealth managers and other professionals are trying to build highly profitable businesses by working with this cohort. And as single-family offices emerge, the level of competition is only going to increase.
As with all the super-rich the world over, one of the biggest problems is gaining access to the decision makers. The optimal way to connect with them is through referrals from other highly regarded professionals. If you are recognized as one of the best of the best for a particular expertise, product or service, it can contribute greatly to your gaining access and winning them over. This stature regularly goes to wealth managers who are recognized industry thought leaders.
