Market Commentary

Anton Murray - Market Commentary

Technology: Friend or Foe in Wealth Management?

Posted by Anton Murray Consulting on . Posted in Insights, Wealth Management MC

Last week we were catching up with a client working for one of the regions most prominent wealth management firms, and we discussed how digital disruption could be a huge game-changer for the industry over the next decade.

The strategic use of technology could be the future of wealth management.

Michael Cunningham

We are seeing an immense shift of wealth from baby boomers to the younger millennials, the effect of which is a transformation of the industry regarding increased efficiency and the inherent need for adaption by established firms. Now more than ever, the retention of loyal customers must balance with clients demanding greater choice.

A recent survey by Forbes has shown that by 2020 over half of all investable assets in the US will be controlled by those aged 16-50. Furthermore, a huge $1 trillion each year passes down to younger generations. In other words, investors under 50 are becoming more valuable to wealth and relationship managers.

So, what does this really mean for the future of wealth management?

The financial services industry is fast becoming one of the most digitised in today’s world. Over 60% of all retail banking transactions occurs online. The lesson to be taken from all this is channel diversification.

Traditionally, high net worth clients have been seen as desiring personal contact regarding their asset portfolio, but this may no longer be the case. In Europe, forty-seven per cent of ultra-high net worth clients are on Facebook. Additionally, forty per cent of high net worth clients under 50 believe that social media is an important platform with which to interact with their bank. So it seems important and logical for wealth managers to utilise the power of online channels and social networks. In fact, a 2012 Forrester study showed that client-advisor relations via digital channels actually correlated to higher fees earned.

The lesson here is not that wealth management must wholeheartedly embrace digital channels and ignore traditional methods of communication. But it does appear that stronger client relationships, enhanced risk management and lower operating costs are achievable via the capitalisation of digital channels.

Digital technology can help clients not only connect to their peers but also multiple sources of advice and multiple accounts. What this means for wealth managers is in fact distinctly higher levels of investment activity. The key ingredients for stronger customer analytics, and crucially, future growth could lie in embracing the digital world.

By embracing younger high net worth clients, and their desire for varied methods of communication, wealth managers could identify client needs earlier via online interactions. Furthermore, digital channels are an excellent way to connect early on with high net worth clients’ children by offering direct access to specialists.

Digital technologies have the propensity to answer unmet needs and ultimately provide clients with a superior experience, whilst simultaneously capitalising on evolving market prospects.

To learn how digital disruption in wealth management may affect your career, please reach out to our recruitment team for a coffee.

Michael Cunningham is a Partner at Anton Murray Consulting, working from the Sydney Office. 

Anton Murray Consulting is specialist recruitment consulting firm focused on providing high calibre banking professionals to clients primarily within the Investment Banking, Funds Management and Wealth Management sectors. Headquartered in Sydney, Australia we work on a diverse range of assignments across the Asia-Pacific region across our four primary locations of Sydney, Singapore, Hong Kong and Melbourne. 

Australia’s $54b pension fund seeks to expand private equity team

Posted by Anton Murray Consulting on . Posted in News, Wealth Management MC

Deal Street Asia

Australia’s second-biggest pension fund is expanding its private-equity team as it plans to boost returns at a time of high valuations in stocks and low bond yields. MLC Ltd., which oversees more than A$70 billion ($54 billion) in pension assets, is looking to hire two PE fund managers who will be based outside Australia and will scout for investment opportunities, according to Chief Investment Officer Jonathan Armitage. This comes after David Seebold, who was previously in the Sydney PE team, was posted to New York as MLC looks to spend a cash pile that’s at the highest level since the financial crisis in some of its portfolios, Armitage said.

Armitage is scouring the globe for options on where to spend his next dollar as Australia’s pension pool, the world’s third largest, is forecast to grow to A$4 trillion within the next decade. With yields below zero on more than $10 trillion worth of bonds and global equity valuations close to all-time highs, MLC expects to increase its investments in private equity and other alternative assets in the next two years. “Returns from the private equity part of the portfolio continue to be very robust,” Sydney-based Armitage said in an interview Friday. “We’ve got what I would describe as a pretty healthy pipeline of potential investment opportunities.”

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ESG can’t be ignored in investment decisions

Posted by Anton Murray Consulting on . Posted in News, Wealth Management News, Market Commentary, Wealth Management MC

Will Hamilton, The Australian

The dramatic closure of the ­Hazelwood coal power station in Victoria may well be a key moment in history — and in the wider nature of how we go about investing. Capable of producing up to 25 per cent of the state’s power needs and employing more than 900 people, the facility had operated for half a century but the French owner Engie last week outlined plans for a complete shutdown of the plant early next year.

Events such as Hazelwood prompt us to look more broadly at investment issues in the area of ESG or environment, social and governance. ESG factors have now come into the mainstream of investment decisions and are incorporated into analysis towards achieving risk reduction and protecting shareholders. In short they are now significantly affecting the value of a company.

The United Nations Principles of Responsible Investment (UNPRI) “recognises that the generation of long-term sustainable returns is dependent on stable, well-functioning and well governed social, environmental and economic systems”. I should point out that while the UNPRI is both voluntary and aspirational it has been developed with some of the leading investment managers, and provides a framework for integrating ESG into investment-making decisions.

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DBS, Julius Baer weigh bids for ABN AMRO Asia wealth unit – sources

Posted by Anton Murray Consulting on . Posted in News, Wealth Management News, Market Commentary, Wealth Management MC

Saeed Azhar and Sumeet Chatterjee, Reuters

DBS Group Holdings (DBSM.SI) and Julius Baer Gruppe (BAER.S) are weighing bids for Dutch lender ABN AMRO Group’s (ABNd.AS) Asia private banking business that manages about $20 billion in assets, several people with direct knowledge of the matter said. ABN AMRO, which has hired Lazard Ltd (LAZ.N) to advise on the sale, could also receive preliminary bids from other wealth managers, the people said, adding that first-round bids are due in the next few weeks. The sale could fetch between $300 million and $350 million, or 1.50-1.75 percent of assets under management, senior M&A bankers said, citing valuations for similar deals.

The Dutch bank’s plan comes after several Western firms have withdrawn from private banking in Asia, hit by pressure to reduce costs at home, slowing growth in the region and rising compliance costs. ABN AMRO declined to comment on whether there was a plan to sell the business but said in an emailed statement that it had cut more than 20 jobs in Hong Kong and Singapore in the past few months to make its business more efficient. The bank, which returned to the stock market in November after seven years in government hands, currently has about 130 bankers to the rich in Asia and the Middle East.

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Asia Revenue May Top Europe in 5 Years: Julius Baer CEO

Posted by Anton Murray Consulting on . Posted in News, Wealth Management News, Market Commentary, Wealth Management MC

Chanyaporn Chanjaroen, Bloomberg

Julius Baer Group Ltd. said Asia may overtake Europe as its biggest revenue-generating region, as the Swiss wealth manager steps up hiring in Hong Kong and Singapore. “In the next five years, Asia could be the biggest region for us if we grow at double-digit” rates, Chief Executive Officer Boris Collardi said Wednesday in an interview in Singapore. More than half of about 200 new bankers that Julius Baer plans to hire this year will be based in Asia, he added.

Asia contributed about 532 million Swiss francs ($547 million) of Julius Baer’s operating income in 2015, small compared with the 2.2 billion Swiss francs from Switzerland and the rest of Europe. But the share of revenue generated in Asia has been growing fast, doubling to about 20 percent of the total last year from about 10 percent in 2011. Julius Baer is the fifth-largest private bank in Asia by assets under management, according to a 2015 ranking by Asian Private Banker.

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