Saxo Markets just announced the arrival of Ken Shih to head up the bank’s new wealth management division. Having obtained their Series 4 and Series 9 licenses, Saxo Markets intends to build out its local asset management and wealth management capabilities, with Shih’s team taking a key role in this expansion.
Shih has over 18 years of experience across major industry players including HSBC, UBS and JP Morgan. He looks set to play an important role in the development of Saxo’s digital wealth management capability across the greater China region, named in a recent report by the bank as one of their top priorities.
China is one of the best established and fastest growing wealth management markets in the world; one that crossed the 20 trillion USD invested assets mark in 2020. Unlike extremely well-banked wealth markets in Europe and America, in China there exist greater opportunities for the growth of new market entrants, and analysts at Morgan Stanley have predicted that Chinese advisory fees could triple by 2030.
Other APAC markets like Singapore and Hong Kong have been well-known wealth management hubs for decades, with high average incomes and levels of household wealth. Mainland China’s growth in wealth management assets has been more recent, though it has taken place on a globally unprecedented scale. Trillions of dollars of personal wealth have been produced in the country, with many local entrepreneurs interested in maximising their portfolio gains by investing in both local and global equities.
The general cultural stance of private wealth investors in greater China is also typically more pro-risk than famously conservative European investors, which has allowed for accelerated fee and asset growth. The flipside of this (for their advisors) is such clients demand strong investment performance, with other factors than cost and investment growth less highly valued. This factor has also tilted the market in favour of digital platforms, which are typically lower cost.
Both the mass affluent and high net worth segments have seen dramatic asset increases in recent decades, with a mixture of local retail banks, international private banks and dedicated wealth management firms scrambling to win emerging new business. This has taken place concurrently with an increasing digitisation of the wealth management market.
One segment expected to be a key driver of future industry growth is wealth technology; both for the mass market, where ‘roboadvisors’ are expected to lower fees and expand access to investment management solutions, and also at the higher end where existing financial advisors will have their investment and reporting tools streamlined and made immediately available to clients via dedicated apps.
Of course, this change will increase pressure on investment performance. Making it easier for clients to see how well their portfolios are doing, minute by minute, puts pressure on many wealth managers to improve both their fee transparency and bottom-line results for their clients. The loss of the personal touch may also lead to a greater client disloyalty and willingness to switch advisors; all factors contributing to a difficult balancing act for advisors between digitisation and traditional wealth management.
Whatever challenges the future brings, Saxo will be hoping to capitalise on the ongoing expansion of the greater China digital wealth market. As an important part of the bank’s overall asset management function, wealth management is likely to play a key role in their future growth, and the addition of experienced bankers such as Ken Shih contributes directly to this goal.
