A 2018 report by data firm Wealth X that analyzes the state of Ultra Wealthy Individuals ( $30m or more in net worth) brought to light that Asia posted the greatest jump in the number of Ultra HNIs at 18.5% while their net wealth grew by 26.7% almost twice the rate seen in the United States.
This rise in Asian affluence has captured the popular imagination, the chart-topping success of the Blockbuster Jon Chu film ‘Crazy Rich Asians’ depicting the ultra luxurious lives of Asian billionaire heirs and heiresses is a prime example.
However, amidst the hullabaloo raised by the Ultra HNI& HNI tycoons, a growing segment of ‘Mass Affluent’ Asians with comparatively modest incomes of US$100,000 to US$1,000,000 are the ones prompting a gold rush in the Wealth Management Industry.
What’s the market opportunity?
Asia holds the second largest concentration of private wealth in the world with $47.3 Trillion in private wealth compared to North America’s $50.8 Trillion. Over the next 5 years, this is projected to hit $70.7 Trillion speeding past North America to claim the number one spot.
What are the challenges?
Despite the growing wealth of the region, the Wealth Management industry has captured only 20% of the market. This is because traditional Wealth Management firms have focussed on the growth of Ultra HNIs at the cost of the ‘Mass Affluent’ the fastest growing wealth segment in Asia at a CAGR of 9.8%.
However, the conventional approaches used in Western markets are failing in Asia due to the unique Asian cultural milieu of tech savviness, inherent distrust of external advice and an unwillingness to pay for financial advice.
Hence a tailored strategy needs to be developed keeping the millennial ‘Mass Affluent’ Asian in mind to tackle this market effectively.
Wealth Management platforms can help capture this segment.
The Asian Mass Affluent who have mostly made their money in the tech and finance industries are very tech savvy. Catering to them requires a tech-enabled high touch approach that blends the best of human talent with cutting edge technology. Using new age Wealth Management platforms and leveraging Artificial Intelligence and Robo advisory driven insights can help differentiate your wealth management practice in the eyes of the customer.
How can Wealth Management platforms drive value for tech-savvy clients?
Empower customers with 24×7 monitoring:
Clients who are tech savvy prefer to be on top of their portfolio and be more involved in active management. Delivering a custom app experience that allows them to monitor their portfolio and reach out to wealth managers instantly can help customers feel more empowered. Wealth Management platforms with Client and Advisor apps help both stakeholders stay on the same page at all time.
Drive trust with Analytics, and AI driven advisory:
The Asian cultural milieu values empirical evidence and scientific approaches especially towards investing. Wealth Management platforms that can back up investment recommendations with detailed analytics and AI driven insights will help create trust towards the Wealth Manager and temper tendencies to make erratic and irresponsible investing decisions.
Offer premium customer service:
Wealth platforms can help managers automate up to 60% of their daily operational tasks including Client on-boarding, Portfolio construction, Portfolio monitoring, and Rebalancing. This gives Wealth Managers the time to reach out, build relationships and maintain constant contact with demanding customers.
High value for money:
The Mass Affluent tend to be more frugal with their investments as they have mostly self-made fortunes. They tend to look for value when shopping for luxury goods or for services. Wealth Platforms can help bring down costs of serving each client and this benefit can partially be passed on to the customer to give them better value for their money.