Perhaps most pressing in the country is the continued need to overhaul the business model across the wealth management industry, while creating the right type of (longer term) revenue – which will help to increase the penetration of products and retain more assets onshore.
The wealth management industry in Malaysia must ensure it can evolve and mature in several key ways, especially if it wants to make the most of the expected trend towards more assets staying onshore amid greater transparency globally.
In particular, the paradigm of trying to generate more and more revenue from product sales is changing as margins continue to compress. As a result, institutions and individual advisers are waking up to the realisation that they need to find new ways to create value – which means provide real advice.
In short, this involves putting themselves in the shoes of their clients first, and understanding their needs.
This is particularly important given that the investment, regulatory and tax landscapes are more complex than ever before. This demands a more personalised and tailor-made approach to individuals and families.
Deepening relationships in this way is also a key part of working more closely with the next generation of investors – whose requirements and needs are clearly different. Inevitably, making more use of fintech solutions and new online platforms is a key part of this.
Essentially, therefore, a hybrid model seems to be a likely way for wealth management to move forward in Malaysia
Being successful, therefore – whether as a wealth manager, fund house or professional services firm, relies on being able to adapt product offerings, marketing strategies and delivery channels to the mentality of clients.
At the same time, succession and governance remain big issues for business families in Malaysia. And some families are taking the lead in making concrete plans for the next generation.
A key hurdle for the domestic industry, however, is that many consumers still do not see sufficient value in the role of advisory services general, so tend to avoid paying for such services. Yet the optimists in the market believe that as markets mature, coupled with new developments in technology, services will converge to become more personalised and relevant – and thus command a fee.
Finding the right balance, and offering consumers choice, in terms of fees and incentive structures to drive this represents a key component.
Against all these trends and challenges, to ensure any initiatives have meaning and will have an impact, the industry needs to take more seriously its responsibility to encourage a more structured and comprehensive approach to client education and professional development.
These were some of the view of practitioners from within Malaysia and across Asia, speaking at the 7th annual Hubbis Malaysian Wealth Management Forum 2017 in Kuala Lumpur in July.
Key event take-aways
• There finally seems to be a move in Malaysia towards having more of a real advisory conversation, according to 70% of poll respondents
• 95% of delegates agree that the competency framework around wealth management in Malaysia needs to be significantly increased
• The vast majority (86%) of poll respondents believe wealth solutions present the biggest opportunity for wealth managers in Malaysia going forward – compared with investments (14%)
• Just over half of delegates think succession planning is the main priority in terms of wealth solutions needs of client in Malaysia today – ahead of minimising tax (20%) and protecting the next generation via insurance (20%)
• 45% of poll respondents said IFAs are the most capable type of firm to help clients in Malaysia with their wealth planning needs. The next two preferred options are licensed professional services firms (24%) and multi-family offices (18%)
• The biggest challenge for wealthy families is business succession, according to 45% of poll respondents – followed by finding an adviser they can trust (38%) and family governance (15%)
• Investor and adviser education is the most likely way to increase mutual funds penetration in Malaysia, believe 46% of poll respondents. This is more important that changing the compensation structure (35%) and lowering upfront fees (19%)
Delegate, speaker and sponsor summary
• More than 30 speakers
• Over 260 CEOs, senior management, product gatekeepers and business unit heads from the leading local Retail Banks, Universal Banks, Private Banks, IFAs, Independent Advisers, Insurance Companies and local Asset Management Firms
• Sponsors: Standard Chartered Bank, Franklin Templeton, Legg Mason, Sun Life Financial, Affin Hwang Capital, State Street, J O Hambro Capital Management, Global Precious Metals, Henley & Partners, Appway, IRESS, ERI, Equiom, Asia Plantation Capital, FactSet, Alpadis, BVI House Asia, Swiss Asia, Rosemont, Leonteq, and Mercer
Mark your diary
• 2018 event in KL – Thursday 28th June