Nomura: Refining the Wealth Management Proposition for Asia’s UHNWIs

Vincent Ng, Joint Chief Investment Officer, Wealth Management, Asia ex-Japan, at Nomura in Hong Kong is at the cutting edge of the Japanese bank’s increasing impetus in Asia’s private wealth market. The firm focuses on ultra-high-net-worth-individuals (UHNWIs) and the upper end of HNWIs, tailoring advice and solutions. He met with Hubbis to define Nomura’s position in the market and to explain how the firm is refining its objectives and taking a holistic approach to its clients’ needs and expectations.

Ng is one of the key leaders at Nomura’s wealth management business in Asia ex-Japan, devising and offering investment services including tailored advisory, product specialisation and strategic asset allocation. Since joining Nomura in 2012, he has been instrumental in building a comprehensive advisory platform to complement the firm’s private client franchise, expanding its advisory services and product offerings.

His team provides holistic investment advice and portfolio solutions across asset classes by offering tailored solutions to UHNW clients and family offices, and supporting them in the development of asset allocation and portfolio strategies. Ng has 17 years of industry experience, having held various advisory roles in the private banking arms of Deutsche Bank and Merrill Lynch before joining Nomura.

The Japan connection

“As a global investment bank with long-established and deep roots in Asia, Nomura delivers unparalleled access to, from and within Asia,” Ng says. “We set ourselves apart from other Asian private banks through our deep connections into Japan. The firm’s retail division, which includes wealth management, is today responsible for AUM of USD 1 trillion. Globally, we are a unique combination of stable retail and asset management businesses and a market-based wholesale business with a strong capital base, ample liquidity and a healthy balance sheet.

Our “all-weather” advisory approach enables us to provide the best investment solutions to our clients by identifying the key risk factors and picking the best-of-breed asset managers and products, regardless of market and economic cycles. We cater to different clients by delivering bespoke investment solutions.  The long-term success of our business is based on our commitment of putting our clients first.”

He explains Nomura’s six pillars covering investment needs of wealth management clients: investment advisory, product specialisation, discretionary portfolio management (DPM), strategic asset allocation services, alternative investments, product management, and execution.

Expanding the range

“We also have tailored advisory services where we support the relationship managers, working as their investment partners. This is an individualised, personalised offering.”

He adds that the older generation in the region often prefers to either manage their own portfolios or consider discretionary mandates, while the second and younger generations are more open to hybrid ideas, a mix of active and passive portfolio management as part of their engagement with Nomura. This category of clients is increasingly looking for impact investing from several different angles. “They consider us as one of the go-to firms to source those ideas for them,” he says.

Risk in business, caution in investment

Ng gives the example of a typical HNWI or ultra-HNWI client who might have listed his/her business in Japan, the US, or Asia. “We can offer them a range of alternatives, from single stock financing, hedging solutions, investment opportunities through the capital markets or M&A, or investment ideas in advanced consumption, the smart home living concept, electric vehicles, or associated themes across the value chain.”

He says, “the owner-entrepreneur type clients are able to diversify  their investments away from their own business. Most of them will want to hedge their business risks, most of them want a very conservative portfolio with stable returns, for example in fixed income, and we also focus on cash management solutions for their companies. On the liability side, we offer solutions for how they hedge their liabilities or market risk exposures related to their businesses.”

Individualising the offering

Ng says that DPM offerings are fairly widespread in the market, but tailored advisory mandates that are truly personalised are rarer, and that’s an area in which Nomura is increasingly engaging with clients in Asia.

“The second generation,” he says, “wants to sit in the driver’s seat, they want to get involved in the whole process, including the investment decision process, so we come up with the investment decisions together. Ultimately, armed with our advice, it is they who often make the final investment decision. Our service offering is straightforward, with a simple and transparent pricing model.”

Ng says clients are rather cashed-up currently, but are looking for investment opportunities. He says clients prefer investment ideas linked to the real world, driven by real-life developments. “They are largely cautious still, not yet convinced to reinvest,” he says. “If you are managing your family wealth, you don’t want to take excessive risk, you want to manage a portfolio with peace of mind. And some clients are asking how we can hedge market risks, or help repair portfolios which are underperforming. From the structuring and derivatives world, we have various solutions to offer.”

Links to Japan

Ng says the majority of Nomura’s HNWI clients in the region are Asian and tend to like Japan and the value proposition that the firm represents. “They tend to like the stability, quality, commitment, culture and investment opportunities in Japan,” he reports. “For example, over the past few years, we have been able to offer lots of investment opportunities related to Japanese equities and real estate.  From an asset allocation point of view, global clients often include Japan, and we, as a very powerful Japanese financial services group, have helped identify some of the conviction strategies for them. With the convergence of central bank policy, global economies have realised the idea of Japanization. Global real rates may stay low for much longer than we expect, and investors can learn from Japan’s experiences.”

Ng adds that his team in Asia ex-Japan partners with the firm’s research and market experts in Japan to identify investment themes and ideas. “It is paramount that we continue to strengthen the partnership across our divisions and regions. Our ‘One Nomura Approach’ allows us to offer a full suite of investment solutions to meet our clients’ every need.   Our delivery model ensures that we can provide them with what they need, where they need it and when they need it. From idea generation to product implementation to tailored solutions, we try to create more opportunities for our clients,” he remarks.

Ng concedes that every firm likes to present a value proposition that differentiates it from competitors, but in reality, he knows the industry is somewhat industrialised and commoditised.

The relationship is paramount

“However,” he says, “if I have to try to articulate our culture, our difference, it is in being client-centric, in wholeheartedly servicing clients, providing holistic solutions, being partners with them, approaching them with an entrepreneurial mindset, and building a business together with them. Maintaining and building long-term trust, that is the Nomura way. And by layering in the full range of Nomura capabilities across many areas, we build valued relationships.”