Hybrid advice is a significant lever for firms to increase high net worth individual assets, but progress on transformation is lagging
PARIS--(BUSINESS WIRE)--Asia-Pacific High Net Worth Individuals (HNWIs)1 display a strong demand for hybrid2 wealth management advice, according to the 2017 Asia-Pacific Wealth Report (APWR), released today by Capgemini. Although wealth manager-held Asia-Pacific (excluding Japan) HNWI investment performance grew an extraordinary 33 percent in 2016, satisfaction with wealth managers dwindled as HNWIs sought holistic value beyond investment returns. With a lack of progress by firms in self-service wealth management delivery, traditional wealth management firms risk ceding ground to BigTechs3.
Asia-Pacific wealth management firms must accelerate their hybrid advice model transformation to bolster HNWI satisfaction, unlock financial benefits, and protect themselves against BigTech disruption, APWR findings suggest.
Asia-Pacific HNWI demand for hybrid advice is highest in the world
HNWIs in Asia-Pacific, excluding Japan, led the world in demand for hybrid wealth management advice (49.6 percent), compared with Europe (49.1 percent), Japan (47.6 percent), Latin America (45.6 percent), and North America (35.1 percent.) HNWIs in Indonesia, Hong Kong, and Japan call for hybrid advice the most, while Japan, Hong Kong, and Australia are leading demands for outright automation of some wealth management capabilities.
Anirban Bose, Head of Global Banking and Capital Markets at Capgemini, said, “Many Asia-Pacific wealth management firms are well into their transformation journeys, but 42.8 percent have not progressed beyond the proof-of-concept stage, and 21.4 percent have not begun any hybrid advice initiatives.”
Executives and analysts are aligned with the choice of HNWIs to consume services via self-service delivery, an advisor-led approach or a combination of the two; preferences vary depending on the stage of the client lifecycle as well as individual characteristics. Chinese HNWIs (52.1 percent) are most inclined toward a hybrid approach.
Opportunity for wealth management firms to implement holistic hybrid advice models
Wealth management executives in Asia-Pacific welcome hybrid advice and many have begun their transformation, though their objectives differ from their peers around the globe. Compared with firms in the rest of the world, Asia-Pacific wealth management firms focus more on achieving operational efficiency and regulatory compliance versus revenue. They also lag behind their North American and European peers in hybrid program effectiveness – an issue compounded by lower satisfaction with hybrid advice from Asia-Pacific HNWIs in the under-served US$1 million-US$5 million segment, compared to those in the more affluent segments.
The APWR 2017 indicates that Asia-Pacific wealth management firms must fast-track their hybrid advisory efforts to improve high net worth client satisfaction, unlock financial benefits, and protect themselves from disruption from BigTechs such as Alibaba and Tencent. Asia-Pacific HNWIs, excluding Japan, show a higher proclivity to wealth offerings from BigTech firms at 72.5 percent compared with 50.5 percent from the rest of the world. Asia-Pacific wealth firms must adapt their people, processes, and propositions to drive the most value from hybrid advice efforts.
Among HNWIs in Asia-Pacific (excluding Japan), 90.1 percent say hybrid advice is significant in their decision to increase (or decrease) assets with a primary wealth management firm over the next 24 months, as compared with only 67.4 percent in the rest of the world. In Japan, 66.7 percent of HNWIs say hybrid advice is a significant factor in their decision to allocate assets.
Asia-Pacific Wealth Report 2017 Methodology
The Asia-Pacific Wealth Report from Capgemini is the industry-leading benchmark for tracking high net worth individuals (HNWIs) in the Asia-Pacific region, their wealth, and the global and economic conditions that drive change in the Wealth Management industry. The 12th annual edition includes findings from an in-depth primary research on global HNWI perspectives and behavior. The 2017 Asia-Pacific Wealth Report focuses on 9 core markets: Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, Singapore, and South Korea. The market-sizing model includes 18 countries and territories (i.e., the 9 core markets plus New Zealand, Kazakhstan, Myanmar, Pakistan, Philippines, Sri Lanka, Taiwan, Thailand, and Vietnam).
A global leader in consulting, technology services and digital transformation, Capgemini is at the forefront of innovation to address the entire breadth of clients’ opportunities in the evolving world of cloud, digital and platforms. Building on its strong 50-year heritage and deep industry-specific expertise, Capgemini enables organizations to realize their business ambitions through an array of services from strategy to operations. Capgemini is driven by the conviction that the business value of technology comes from and through people. It is a multicultural company of 200,000 team members in over 40 countries. The Group reported 2016 global revenues of EUR 12.5 billion.
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Capgemini’s Financial Services Business Unit offers global banks, capital markets firms, and insurers transformative business and IT solutions to help them nimbly respond to industry disruptions, to give their customers differentiated value, and to expand their revenue streams. A team of more than 55,000 professionals collaboratively delivers a holistic framework across technologies and geographies, from infrastructure to applications, to provide tailored solutions to 1000+ clients, representing two-thirds of the world’s largest financial institutions. Client engagements are built on bar-setting expertise, fresh market insights and more than a quarter century of global delivery excellence. Learn more at www.capgemini.com/financialservices.
1 HNWIs are defined as those having investable assets of US$1million or more, excluding primary residence, collectibles, consumables, and consumer durables
2 Capgemini defines the hybrid-advice model as, “Putting clients in the driver’s seat by allowing them to tap into life-stage and need-based wealth management and financial planning capabilities in a modular, personalized pay-as-you-go manner. These capabilities will be delivered through: the amalgamation of (1) a cognitive analytics-driven automated/self service delivery (such as for basic investment management); (2) a human-led delivery (such as for complex wealth structuring); or (3) a wealth manager-assisted hybrid approach – as preferred by the client”
3 BigTech is a general term referring to technology firms not traditionally present in Asia-Pacific financial services, such as Alibaba and Tencent