Eddie Gan, UBS Wealth Management’s managing director and market head for Singapore, reveals what his high-net-worth clients in the city state are looking at now.
Q: How has Singapore’s private banking landscape changed over the past five years?
A: Singapore, in line with Asia, continues to lead the way as the centre of innovation and wealth. In the Asia-Pacific region, it is projected that around 45% of the wealth will be transferred in the next five years, and around 70% over the next ten years.
We foresee that tomorrow’s client base will be more diverse, entrepreneurial, global, younger and with a higher proportion of women.
We have witnessed the rise of wealthy millennials over the past few years. This is why UBS has been offering our Next Generation programmes in Asia for more than a decade, to partner with our clients whose primary concerns are wealth protection and succession for generations to come.
Clients in Asia (including Singapore) have stronger demands for digital offerings. They want to be able to interact with their bank wherever and whenever.
There has also been a growing interest among our clients in sustainable investing. We have seen our clients embracing innovative investment opportunities related to sectors such as providing access to primary healthcare, affordable education, oncology and microfinance.
Q: How are regulations affecting product due diligence and investment suitability in Singapore?
A: Our focus is not on product targets. We are able to offer our clients customised solutions across the integrated bank by leveraging our investment bank and asset management franchise.
Q: What are some noteworthy trends in the Singapore market that you’re hoping to capitalise on?
A: UBS has been collaborating with Singapore’s wealthiest families for more than 50 years. In Singapore, a high proportion of our wealth management clients are professionals and entrepreneurs.
Many of the self-made billionaires are first- or second-generation entrepreneurs, who are still involved in their family businesses and are increasingly sophisticated with growing institutional needs. We have collaborated with various large organisations in Singapore over the years, such as the Singapore Chinese Chambers of Commerce, to reach out to high-net-worth individuals in different industries.
For the past nine years, we have been successfully collaborating with Chinese entrepreneurial clients on their business, investment and family succession planning needs.
Last year, we also launched a special desk to service high-net-worth international citizens in Singapore. This desk aims to target clients who are senior executives, CEOs of companies, professionals and business owners.
Q: What are your expansion plans for Singapore operations looking ahead to 2020?
A: We will continue to invest and hire strategically in our business in Singapore. We are also potentially planning to hire one or two new desks of corporate bankers, in line with our focus on entrepreneurs.
Q: How is UBS engaging with the fintech community in Singapore?
A: Innovation and digitisation are key strategic priorities for UBS. UBS Singapore first launched EVOLVE, the Centre for Design Thinking & Innovation, as part of its digitisation strategy in June 2015.
Located at our UBS Business University Asia-Pacific campus, the centre focuses on creating new innovative and user-centric products to meet the evolving needs of our wealth management clients in Asia-Pacific and globally. The centre also hosts workshops, events and forums, sharing best practices between academia, innovation partners and industry experts.
UBS also organised ‘UBS Future of Finance Challenge’ competitions in 2015 and 2017. The competition invites the world’s emerging and established fintech firms to showcase innovations that can transform the world of finance and banking.
Q: How does a typical Singaporean client plan their wealth?
A: On the investments front, many clients in Singapore are likely to look at their investments from the point of view of building up and preserving their wealth through the enhancement of yields and investment returns. They also tend to be very well connected and knowledgeable about their home markets.
Q: How is succession planning typically done in Singapore-based families?
A: One important topic among Singapore clients is succession planning and the smooth transfer of wealth from one generation to the next. They are not only focused on wealth creation but also on wealth preservation.
This is why our global family office platform, family advisory services and philanthropy offerings have been very well received by our clients in their succession planning efforts. Our client advisers are trained to discuss legacy matters with clients, whether that’s to plan for a business transition to the next generation, to achieve transparency regarding future asset ownership or to
create a family legacy through philanthropy, art or other ventures.
Increasingly, Singapore’s wealthiest families are setting up family offices as part of succession planning. This is where UBS’ global family office team delivers our investment banking capabilities to our family office clients.
Many of our Singapore clients are business owners who are interested in corporate activities for their businesses such as large asset-sales, M&A, IPOs, and other large capital-raising activities. They are looking for banks with the capabilities to execute these. UBS client advisers undergo specialised training for this.
Q: What are domestic high-net-worth clients investing in this year?
A: We recommend to our clients that they maintain a diversified investment portfolio across various asset classes and avoid home bias in their investments. For example, investors may wish to consider diversifying their investment portfolios through selective hedge funds, and some hedge funds have performed well in current market conditions.
The view was that in assets such as equities, we are likely to see intra-asset class correlations falling, which means the opportunity set is growing for active managers and hedge funds in particular.
Interestingly, some of our investors embraced this and got more engaged, and in fact we saw many of the selected hedge funds living up to their proposition during the recent equity sell-off.
Investors who have underweights to equities are encouraged to consider rebalancing their portfolios. Given higher volatility levels, investors may also wish to include some derivatives in their portfolio to ensure market exposure while at the same time obtaining some downside protection. Lastly, we would recommend that investors consider seeking returns from currency positions in their portfolios as well. This is because some currency positions may respond to different drivers compared with equity markets, thereby providing further diversification benefits and investment returns.
Q: Which new asset classes and products are investors looking at?
A: While the unique period of ultra-low volatility is behind us, UBS recommends that investors may wish to stay long Asian equities versus bonds due to the region’s strong economic fundamentals and robust earnings growth.
We added a long Singapore dollar versus US dollar position in February to benefit from the weakness of the US dollar, andgiven the Singapore dollar’s trade-weighted FX regime and the country’s high beta to the strong global growth backdrop. We remain overweight the equity markets of China, Indonesia and Thailand, and underweight Malaysia, the Philippines and Taiwan. In our global tactical asset allocation, we are neutral on Japan. In fixed income, we stay overweight JACI high yield versus JACI investment grade.
One new angle that investors may wish to consider would be sustainable investments. It is possible to build investment portfolios across different asset classes that adopt a sustainable approach, and it is therefore possible to achieve diversification levels commensurate with more conventional investment approaches.
This article was first published in the March issue of Citywire Private Wealth magazine.