The Challenges & Opportunities for Wealth Management in Indonesia
Great opportunity lies ahead for wealth management in Indonesia - but that the regulators need to liberalise - and soon - and the industry must develop both its talent and its onshore proposition.
What topics will we discuss at the forum?
Progress needed to boost the onshore investment proposition
For years there have been discussions about opening up international investments to Indonesia for distribution onshore, but so far there has been little to no progress. While there is modest liberalisation for insurers who can now get 20% of invested assets in overseas assets, the asset management industry remains seriously hampered.
But local opportunities are lacking
The domestic capital markets are relatively thin, especially compared to the size of Indonesia's economy and population.
Moreover, performance has been lacklustre
Why are deposits still so popular? Because the average rate for the past decade has been over 7% and remains at almost 5%, and meanwhile the equity and debt markets have been volatile for the past eight years.
Segmentation needed
Perhaps the regulators should liberalise first relating to segments, to permit greater flexibility for private banks and asset management dealing with high-net-worth (HNW) and especially ultra-HNW clients (UHNW), with liberalisation for the mass affluent sector to follow later.
Why the need to restrict institutions?
Why restrict financial institutions and intermediaries from offering more access to foreign assets, when there are no restrictions on individuals sending money offshore? And why not offer a wider range of investment opportunities onshore as part of the draw of funds back to the country in the tax amnesty so that much of that hard work does not simply unravel?
Nurture and retain talent
High-quality relationship managers can easily move to Singapore to ply their trade. To build and retain a skilled, professional talent pool of bankers and advisers locally, the regulators must help diversify the product range and industry must address education, training and compensation.
Maturity required
To maximise the potential of the RMs, they need sufficient maturity as well as expertise; otherwise they will struggle to build the relationships they require with their clients.
Second and third generations await
The wealth management industry must develop its proposition and communication methodologies to gain maximum traction with the second and third generations of wealth in the country, especially as these individuals are worldly and well educated from Western colleges and as some 70% of HNWI's private wealth remains onshore, and that percentage is likely to rise.
Offshore is less compelling
The offshore proposition is also challenged, for example in nearby Singapore, by fast-rising costs and rapidly proliferating regulation, both of which lead to margin compression. Developing the onshore product and service suites is therefore increasingly important.
Knowledge essential
The younger generation clients need younger-generation RMs who not only have the product expertise but who can engage those clients in meaningful dialogue. These RMs must also approach the business more holistically, to see their role as encompassing the fullest range of their clients' personal, family and corporate financial and advisory needs.
Internal collaboration
To be successful RMs therefore need to work to leverage internal resources for the maximisation of client service and revenues for their financial institutions.
External partnerships
To develop the onshore private banking/wealth management proposition, leading local financial institutions can consider partnerships and alliances with established offshore firms, thereby leveraging their product range, expertise and talent.
We are delighted to host this must-attend fixture in the Indonesian wealth management calendar.
Hubbis events are –
FUN, CONSISTENT, RELEVANT, ENGAGING AND UNIQUE