“The key to our model here in Hong Kong and the way we interact with the group companies is building a network of businesses that can interact across borders and tap into each other’s expertise and network,” Mangaraj reports. “We are owned and operate independently, but we can draw on the resources and arrangements of global group of companies to benefit our business and the value we add to clients.”
Mangaraj observes that the key to building a strong private wealth business has been the ability to maintain and build strong relationships with their clients backed by a platform which provides a slew of specialized solutions for clients. In recent years there is an increasing tendency of private wealth service providers to accumulate in sprawling, international holding companies which makes it difficult to customize solutions specific to different client needs across geographies. “Such structures,” he comments, “hinder the local expertise of the asset manager by imposing management and regulatory burden of the holding structure and its domicile.”
Within the larger Union Capital Group there is a bank, an insurance company, a trust company, capital markets business, broker-dealer licenses and asset management companies. “Each business is separately owned and managed and is responsible for its development, but we can work with counterparts in the group to provide globalised solutions and different expertise.”
A different proposition
Mangaraj reports that UCAP has a different value proposition driven by experience and entrepreneurial endeavour, which is the foundation of its rapid growth in past five years. “In this time,” he explains, “UCAP has established fully-licensed entities in several jurisdictions around the world, serving sophisticated investors in an individual, bespoke manner.”
Mangaraj explains that armed with appropriate licences in Hong Kong, the firm provides discretionary and advisory services to clients based on the mandate they want the firm to run. “We work independently with a few investment banks and custodians here,” he notes, “we do not hold client assets as those are custodised with the banks. We focus on achieving the optimum solution to a client’s requirement. This may mean providing better execution platforms, better service, most efficient pricing or cherry picking Investment options which helps the client in achieving his or her Investment objective. We are not constrained to sell a specific product or achieve a budgetary goal for the firm. The interest between the client and us is truly aligned. With this strategy, we have built the firm to 18-strong team here in Hong Kong in four years."
Seeking freedom of expression
Mangaraj believes bankers are attracted to his firm because of ongoing consolidation in private banking industry, leaving experienced relationship managers yearning for level of independence and client focus they might have had in the past.
“We see that some bankers want to be freer to provide solutions they know the client seeks by working in an open-architecture environment choosing from different providers in the market,” he explains. “If you look at private banking industry at the moment there is a lot of constraint in terms of what the bankers are allowed to door not allowed to do, because of the issues that banks have. For example, decisions taken by regional or global decision makers at a bank might not be what the local offices want, but they have to abide by the big corporate restrictions.”
The momentum for growth – people
“We are focused on growth here in Hong Kong,” he reports, “The key differentiator, as always, is finding the right bankers to keep our expansion going. We have always focussed on entrepreneurial bankers who want to work with our platform.
Mangaraj and his team believe that there are bankers who have excellent client relationships they want to leverage.
Bankers who have a commonality of purpose and ethos with UCAP and who are prepared to take the leap. “Here as an independent relationship manager, a banker can actually increase the assets under management from their clients, without having to consolidate under one platform. Secondly, the engagement point with client is more intense with us, as we are able to monetise a whole range of services that perhaps are not an option in corporate bank set-up for internal reasons.”
Mangaraj also dismissed bankers assuming that economics of working with an independent platform such as UCAP do not work. “The rewards are most certainly here for those bankers that bring the assets, as we secure better prices and can provide more holistic solutions for their clients. In short, we offer a much broader platform for the banker who joins us to potentially make more revenue and add greater value to the client.”
Great potential lies ahead…consolidation too
Mangaraj believes there is great potential for the independent wealth management industry in Asia in the coming years. “Those that have simply sprung up without any real ‘USP’ to attract clients or those highly localised firms, will likely struggle. This could be due to increase in operational expenses or lack of achieving the optimum scale of operations. For example, I am sure the regulators here will sooner or later cease the retrocession model. Thus a firm would have to build enough in-house product and advisory capabilities to drive revenues.”
The result, he expects, will be that of some smaller, localized firms potentially ceasing business and others consolidating into larger independent entities.
“Growth from the client base,” he adds, “will be driven by clients and bankers realising that it makes less and less sense to be with one platform. The banks, for instance, have increased pressure on their cost to income ratios and these pressures are passed on to the bankers. Independent models would start becoming more and more attractive working platforms.”