Into the Future: Fast-Forwarding the Increasingly Dynamic Thai Wealth Management Market
Dec 9, 2021
Whatever the vicissitudes of the pandemic since early 2020, Thailand’s wealth management industry has continued to enjoy growth and diversification, building further on the many exciting developments within the sector in the past decade. But what is next for the incumbents, how are the international players competing and how are the new entrants and disruptors faring? The wealth management market appears to have weathered many of the Covid-19 storms and to be both maturing and diversifying in terms of its overall proposition. Local and international players have been upgrading and enhancing their platforms and propositions as they compete for market share, with these moves largely being supported by a robust and consistent effort from the regulators and from the government itself. The pandemic has somewhat hindered the progress, of course, but experts believe it has also offered a moment to incumbents and to newer competitors to hone their business plans, their models and their digital strategies to help them compete more effectively in the future. While there are negatives, there is considerable optimism that the private sector, the regulators and the government will pull together to help the country’s economy recover. The Hubbis Digital Dialogue of November 30 brought together an erudite panel of wealth management and technology experts to track where the industry is today and to chart its course for the foreseeable future ahead.
- David Perez de Albeniz, Regional Manager Asia, Allfunds
- Abhra Roy, Head, Finacle Wealth Management Solution, Infosys Finacle
- Dr. Jon Wongswan, Managing Director, Kiatnakin Phatra Securities
- Thiyachai Chong, Managing Director, Phillip Asset Management
- Tim Niranvichaiya, Managing Director, Thailand, StashAway
These are some of the questions addressed by our panel of experts:
- How are asset managers and wealth managers evolving to engage the post-pandemic era?
- As HNW clients think more globally – does this benefit international players?
- What does client experience mean to you?
- Has demand for investment products stayed strong? And for what type of themes or strategies?
- What are some of the expectations that wealthy Thai clients have when it comes to wealth transfer?
- Are banks still the dominant wealth management players? Or are any new entrants making inroads?
- How are firms accelerating their digital transformation? Driving efficiency? Improving he advisory process? Being more proactive in communications with clients?
- What are the key regulatory changes of late, what should we anticipate, and what impact would these changes have?
- Who is forging ahead in Thailand’s wealth market and why? Is it global PBs, or boutique international PBs, or domestic banks and firms, or the various JVs/partnerships? And why?
- How do competitors enhance their value propositions, their range of products, their advice and their service?
- What do the next-gens expect of their wealth management providers and why?
Setting the Scene
The Hubbis Digital Dialogue of November 30 looked in-depth at the range of products and advice available across the different segments of wealth in Thailand, as the regulators gradually liberalise and help the diversification of products and the development of talent in the local market. The discussion analysed the evolution of the onshore WM offering compared with the offshore proposition, the experts mined down into the regulatory environment and anticipate future developments there, and reviewed the evolution of the customer base and their expectations and review in some considerable detail the competitive environment as major financial institutions and other players jostle for position for the years and even decades ahead, including assessing the success to date of some of the local/foreign JVs or partnerships between international private banks and established domestic financial market brands. Most importantly, the discussion highlighted some of the key opportunities and also the more important challenges ahead in what is an increasingly diverse and robust wealth management market.
Key Insights & Observations
To be the best private bank is challenging but with the right approaches, the rewards are well worth the effort
A guest opened proceedings explaining that their mission is to be at the top of the tree in the local wealth management market. To do so, they have been evolving from local brokerage to include access to offshore stocks and funds, and have in the past three years also expanded into the private market space. “We also offer DPM, which is becoming more popular, especially for offshore market access. And we are offering advice and services beyond investments, for family wealth planning and structures,” he reported, adding that their strong investment banking business rounds off the offering for their clients, many of whom own their own businesses, or are key individuals in successful enterprises.
“We believe that competition is good for the market, and that we need to be competitive in all the spaces,” he said. “Some of the transactional areas are rather commoditised, so we need to look beyond those areas and beyond only products and investments. Private markets offer us the opportunity and we are proud to be a pioneer onshore, and we also provide access to a digital platform for investing in private markets, as we invest in that platform, ADDX in Singapore.”
“In short, we know we really need to be on the frontier on all the areas and that many of our peers in the industry are ramping up their capabilities, he explained.
Expert Opinion - Tim Niranvichaiya, Managing Director, Thailand, StashAway: “Technology has unlocked the full potential of data analytics and automated portfolio management. That means that portfolio management is more efficient and less prone to human errors. As a result, we can provide a better investment experience, reduce our operating costs, and offer a very competitive fee to our clients.”
Expert Opinion - Thiyachai Chong, Managing Director, Phillip Asset Management: “As to how asset managers and wealth managers are evolving to better engage with clients in the post-pandemic era, we certainly have to be more dynamic and adaptable. From an investment and risk management standpoint, we have to be both more strategic in balancing the macroeconomic risks with investment growth drivers, while being tactically adaptable towards the ever-shifting investment landscape. In Thailand, we are able to lead the industry in offering quality global investment solutions and expand the horizons for the client base. This engagement extends to how we serve and communicate with our client base, by demystifying the increasingly complex investment landscape, in a way that is meaningful and relevant for our clients, prospects and partners.”
Thailand offers significant growth potential for leading players as well as new entrants
The same guest reported that they are anticipating growth of 20% a year on average for the next few years. “We have plenty of room to grow in terms of new clients, a greater share of their wallets, to boost global investments for them and to diversify asset classes, and to expand into other areas with the clients, such as wealth and estate planning and also link in to their businesses as well, in other words to be much more holistic in our approach and coverage.”
More and more clients are allocating funds to offshore assets, especially with a lacklustre domestic market
The domestic equity market has been lacklustre for some time and rates lower than in the past. Accordingly, more and more private clients are diversifying to offshore assets, with market players adapting their offerings and strategies to build more international access and capabilities.
The need to be seen as the trusted advisor and partner is central to the proposition
Another guest reported that as a key wealth management player, they must become and remain a trusted partner to their clients, distributors, and partners. And as to engagement with those parties, he said they needed to be more adaptable, and more dynamic. “From an investment viewpoint,” he reported, we must look at a wide angle view in terms of balancing investment needs, risk management, and assessing different macro risks ahead. In the longer-term, we are partners for our clients, and how we express it the solutions, whether it's in an automated robo environment, or in a discretionary managed account, at the end of the day, the value we try to ensure clients have the best in class investments for them, packaging in a way that demystifies both global investments and the local markets.”
He explained this must reach across all the customer segments. “The value proposition must be consistent, whether you're one of the leading family offices, or a retail customer, everyone should have access to quality investment management. Accordingly, we see the holistic picture, needs, expectations, risk appetite, goals, and then provide strategic and tactical asset allocation and management.”
Talent is more of a problem and growth targets might be hindered by the challenge of hiring the right people with the right experience
A panellist acknowledged that a potential hindrance to fully realising this growth potential comes in the form of the shortage of talent in the domestic market. “Human capital in this industry is a scarce resource,” he conceded, “but we have strategies to cope. First, we hire new people into the private banking world and train them up. Secondly, we are leveraging more technology to help our RMs be more efficient, more targeted and productive, as well as improving their well-being a the same time, we hope. And we are also building the supporting function within the wealth management in order to support our sales team, so we have the advisory team, we have a CIO office, investment solutions, and all this means our RMs have readymade solutions packaged ready to engage their clients.”
Regulatory evolution and encouragement is also centred on suitability, and relevance, helping the industry
Another guest observed that the regulators are also encouraging the industry to be more relevant in the products and solution it promotes to clients, to help empower those clients to make sound, rational decisions on their financial futures, and to curate the right balance of solutions, life insurance and so forth to help them in the future. “The regulators are keen to make sure we protect the mass market clients, those who do not have the sophistication and the risk appetites, and those who need quite simpler solutions,” he reported. “They also want to make it easier for the clients to engage with the industry, from account t opening and onboarding to communication and delivery of investment and other ideas. I think we're going to see a lot of forward-looking engagement with the various regulators, not just the SEC, in Thailand.”
The competitive environment is evolving organically and in ways that are improving the wealth management proposition
A guest observed how the increased competition and diversity in the wealth market was boosting the overall proposition, and with the organic market growth and the shift of money from passive cash and deposits to more productive assets, the market was well placed to accommodate greater competition, while maintain growth potential for the incumbents, providing they adapt and modernise their models and strategies.
Goals-based digital platforms are appealing to a wide range of Thai clients
An expert reported how their assembly of investment products must result in the right solutions, and that goals-based investing has wide and growing appeal in Thailand. He explained that his platform’s take on advice is the digitised curation of investment ideas around goals-based portfolios. “People can create up to any financial goals that they want, they can select from a prefilled eight goals, the algorithm will help calculate the amount of money that they will need,” he explained. “For example, if you want to send your children to Harvard in 10 years, we will give an estimate amount of how much you need to save and invest and what you need at the end. They will recommend the right risk level for our clients, as well as building a monthly plan for the clients. And as the time goes, as clients approach their goals, we need to reduce the volatility of their investment, so the platform also makes recommendations for the clients gradually to reduce their risk profile. In this way, we digitise all the advisory. And a lot of our clients actually appreciate that, especially the millennials or the younger generation who prefer more digital solutions. And our HNW clients are very keen on what is a highly advanced approach we provide, with sophisticated asset allocation, but also simplified for their ease of access and transparency.”
Digital wealth management platforms are on the rise in Thailand, where digital adoption is rising fast
A panel member explained how the digital investment platforms are expanding in Thailand, offering easy and low-cost access to global ETFs and portfolios. “Not only is digital adoption rising fast, but Thailand is a very big market in wealth management, with a growing middle class,” he commented. “Moreover, Thai people hold a lot of cash, roughly 47% in cash compared to 14% in North America, and that means they are not growing their wealth and then face retirement issues ahead. The other issue is the concentration of investments in the Thai domestic markets, so they need to diversify globally. We are here to try to simplify this access and help solve these two issues.”
He explained that their model is digital engagement, not human, but that they do have in-house advisors to help the clients. “We are not competing with the traditional players, we do not have a big team of wealth advisors; we engage and educate digitally. And we are scalable, as we are through technology able to grow rapidly without adding infrastructure, which is already in place.”
Expert Opinion - Thiyachai Chong, Managing Director, Phillip Asset Management: “The client experience means that our clients have to be at the heart of everything. For asset managers, this means understanding the needs, wants and concerns of our clients and partners across the value chain. This is especially so in times of high uncertainty and volatility, where we have a duty to ensure that we are proactively managing their investments and risks, while communicating and serving clients in a holistic, comprehensive and timely manner.”
Expert Opinion - Tim Niranvichaiya, Managing Director, Thailand, StashAway: “The client experience is at the core of our platform; we want our clients to achieve their financial goals as simply and seamlessly as possible. That's why we provide sophisticated investment management on an incredibly intuitive platform. Clients can create personalised portfolios, monitor performance, and access financial education quickly and easily.”
Expert Opinion - Thiyachai Chong, Managing Director, Phillip Asset Management: “The next-gens expect more of their wealth management providers, they are looking for a more holistic and comprehensive solution that aligns with their views and values, which transcend traditional product-centric or sales-centric offerings. They value quality engagement, be it in the latest financial innovations or in value-based investments which closely reflect their values including ESG themes such as averting climate change and the clean energy ecosystem. At the same time, the customer journey has to be redesigned towards technology and convenience, which paves the way for innovation across the wealth management industry.”
Digital platforms are also on the rise to distribute an enlarged range of mutual funds, hedge funds and private equity to meet expanding demand for diversity and simplicity
“We think of ourselves as an enabler for financial institutions to access mutual funds and ETFs efficiently, but not only mutual funds,” a guest reported. “We also started to offer private equity products, as well as hedge funds. We are trying to cover the whole spectrum of what a wealth manager will need, in order to service their clients. And we deliver through an entire suite of digital solutions, including mobile and via app. Thailand is now the second most important, if not already the most important market for us Southeast Asia, and growth is phenomenal, in what is a highly dynamic market.” He added that access to Thai investments for foreign investors is also important, and they had been discussing greater opening of their platform to domestic fund managers as well, in other words to boost a two-way flow in the future, perhaps when the pandemic wanes and Thailand’s appeals become more compelling once again.
Digital adoption and digital transformation align to create a more seamless wealth management marketplace
A banker explained that their key centre of attention is the client experience. “We concentrate on bout client engaging through digital channels, making sure that we deliver the right messages and information the right ways, making sure it is a much more enjoyable process and experience for the clients, including the full investment journey.
Another guest reported their focus was more and better use of data, structured and unstructured, to elevate their investment proposition and risk management for clients. “We are intent on generating alpha for clients, so the right assembly and analysis of data is essential to that mission,” he reported. “A second key focus for us in the client engagement experience, so there is a more holistic experience and solution for those clients.”
Another expert reported they have 3 core pillars of technology. First is around improving the effectiveness of investment bank management as well as producing and creating new investment products for clients. The second is client experience, making sure that the client has the most seamless experience on our platforms, from starting onboarding until the very end, reporting and updating. The third pillar is continuing improvement of their in-house processes, even better automation and greater efficiencies achieved.
Digital transformation in Thailand from a regional and global perspective – on track
A technology expert highlighted three key trends in digitisation that are also playing out in Thailand. First is onboarding, and then keeping the client engaged digitally by showing them great ideas and products that are suitable, in other words using data and employing AI and ML to make the offerings more relevant and contextual, and then also making sure the delivery is interesting, interactive and represents a good experience.
Secondly, a seamless open architecture and open APIs will facilitate a broad and holistic curating and then delivery of products and ideas from the market providers.
Thirdly, there is a thrust to further improve the processes and the back- and middle-office efficiency to ensure that there is the digital capability to handle all the business. “You may have a great experience, but your back-office process must really allow that STP,” he reported. “So, it's very important that the journey is from onboarding, as well as transacting, interacting, completing and reporting.”
Digital transformation must be a continuing journey with a longer-term strategy
An expert advised that digital transformation is not never complete, it is a continuous journey, but one with a well-devised direction and continual reference to the technology compass. “Banks and firms need to keep planning for their technology future, so they are creating an entire environment, so they have a five-to-10-year plan and so they then keep upgrading. They need that vision, they certainly don't want to change things again, within two to three years.”
He added that the 360-degree vision of the client and the empowerment of the RMs and advisors are central to the future, to ensure clients are well served but also to boost the efficiency and productivity of those bankers and advisors. “The clients expect this type of efficiency and seamless, digitally-supported approach, and the newer generations are going even more the digital route, so the future is digital, but it is also about relevance, suitability and making sure that ideas and solutions fit those clients.