15% rise in people making $200K to $1m in last financial year; banks recruiting RMs to serve more female, homemaker clients
What the report didn't show is that those entering the ranks of the affluent are getting younger - and banks are scrambling to cater to them.
Said one Standard Chartered female Priority Banking customer: 'Serving me was this young hunk with rippling muscles - and I was kind of distracted.'
A Stanchart spokeswoman said there is no arrangement to pair male relationship managers (RMs) with female customers or vice versa.
As more of the affluent are not just younger but also more discerning (with a good number female and homemakers), banks are looking at creative ways to serve them, in addition to looking after their financial matters.
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As more of the affluent are not just younger but also more discerning (with a good number female and homemakers), banks are looking at creative ways to serve them, in addition to looking after their financial matters. DBS, for instance, has two dedicated Treasures lounges at Changi Airport where customers can relax in luxurious surroundings and avail themselves of spa treatment while waiting for their flights, as well as perform certain financial transactions.
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DBS, for instance, has two dedicated Treasures lounges at Changi Airport where customers can relax in luxurious surroundings and avail themselves of spa treatment while waiting for their flights, as well as perform certain financial transactions.
Figures from the Inland Revenue Authority of Singapore show that the number of taxpayers who earned between $200,000 and $1 million grew to 71,022 in the 2009/2010 financial year, an increase of 9,224. These affluent taxpayers helped propelled taxes collected to a record $29.9 billion - not bad for a year that hadn't seen the end of the financial crisis.
'No, we are not surprised by these numbers at all as they are consistent with the profile of a rising Asian economy,' said Kevin Lam, regional head of sales & distribution, personal financial services, at United Overseas Bank (UOB).
Asia Pacific (excluding Japan) contributed 8 per cent or US$9 trillion to the global wealth pool but the affluent segment in Asia was growing at a faster 12 per cent, according to various 2008 reports on global wealth.
There is definitely an increased sophistication and appetite for wider and deeper financial solutions among affluent clients, especially those in Singapore, said Mr Lam.
UOB, which has ambitious hiring plans to cater to this rising group, sees that more are getting rich younger, he said.
Over the next few years, UOB will 'need more than 1,000 RMs across the region', said Mr Lam. The bank currently has 190 RMs serving Privilege Banking clients in Singapore.
'Our affluent clients are a good mix of new and old wealth. We have a good spread of clients aged 30 upwards, and there are increasing numbers of successful entrepreneurs and professionals in our client portfolio,' he said.
Stanchart says its affluent customers include homemakers and many in the 30s age group.
'The bank's affluent customers comprise a good mix of professionals, businessmen and homemakers. The average age of customers is increasingly younger,' said Ngo Min Ying, Stanchart general manager, premium banking, for Singapore and Malaysia.
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Regardless of age or gender, affluent bank customers are spoilt for choice as banks compete fiercely for their business. The three local banks in the last couple of years have spent millions of dollars building up a network of lavish branches dedicated to this select group.
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For instance, in 2008, customers aged 35 and below constituted 8 per cent of its Priority Banking customer base. Today, this segment of customers has grown to 10 per cent, said Ms Ngo.
Currently, over 40 per cent of its Priority Banking customers are women, she added.
Stanchart needs to hire 300 more RMs for its Singapore Priority Banking customers, said Ms Ngo.
In just the 12 months to June 2010, the number of Stanchart Priority Banking customers has grown 40 per cent, she said.
Still, the majority of affluent customers remain financially established individuals between 45 and 60 years of age, she added.
At DBS Group, the bank sees more housewives among its Treasures customers in its Hong Kong branches.
Its Singapore Treasures customers tend to be well-established professionals in their mid-40s to mid-50s who enjoy a certain comfortable lifestyle, said Pearlyn Phau, managing director of DBS Treasures.
Dennis Tan, head of branch & premier banking, OCBC Bank, said the bank has in the past year 'observed that our mass affluent customers are typically PMEBs (professionals, managers, executives and businessmen) who are well-read, investment-savvy and knowledgeable'.
Regardless of age or gender, affluent bank customers are spoilt for choice as banks compete fiercely for their business.
The three local banks in the last couple of years have spent millions of dollars building up a network of lavish branches dedicated to this select group.
Besides its two Treasures airport lounges, DBS has nine Treasures branches while OCBC has 12 Premier Banking outlets. UOB has seven Privilege Banking outlets, its latest being a swanky $1 million suite opened last month at Marina Bay Sands integrated resort.
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Published October 9, 2010
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Banks warm to wealthy bulge in the middle
Region boasts most individuals globally with net wealth of US$10K to US$100K, offering opportunities for a host of investable themes
By GENEVIEVE CUA
BANKING services for millionaires often hog the limelight, but by far the fastest growing chunk of wealth globally is the emerging 'middle' segment - individuals with relatively modest net wealth of between US$10,000 and US$100,000.
Asia Pacific boasts the largest concentration of this budding segment of wealth, accounting for 60 per cent of the segment's global population, or 587 million individuals, says Credit Suisse Research Institute in its first Global Wealth Report. The segment holds US$32 trillion of wealth, giving it a one-sixth share of global wealth.
The needs and appetites of this emerging segment suggest a host of investable themes for private clients, ranging from consumer plays in the equity market to microfinance, currencies and healthcare.
Giles Keating, Credit Suisse global head of research for private banking and asset management, expects this segment to replace the US consumer as the global growth engine. In terms of units, auto sales in BRIC (Brazil, Russia, India and China) already surpass those in the eurozone and the US. He said: 'We believe that wealth provides people in the middle segment of the wealth pyramid with the financial security they need to become the world's emerging consumers.'
Singapore stands out in the report as the fourth highest in terms of average wealth per adult of over US$255,000. This is more than double the average net wealth 10 years ago of US$105,000. In pole position is Switzerland, with average net wealth of over US$372,000, followed by Norway and Australia.
There are by now more than a handful of wealth reports with a similar tale of burgeoning wealth in Asia, citing strong economic growth and healthy government and household balance sheets. What makes Credit Suisse's report different is that it captures net wealth - that is, it reflects debt levels as well. Singapore's profile, for example, reflects average debt of US$37,600 per adult or a modest 13 per cent of total household assets.
Mr Keating expects wealth creation to be robust and resilient in Asia even as, in the near term, the economic outlook of developed economies is muted at best. 'We think it is unlikely that we will go back to anything like the weak situation that we saw in the US and Europe two years ago. If there is another downturn in the US and Europe, it will be small rather than large. Asia has enough firepower to deal with a small downturn.'
As to how the stock markets may affect wealth levels, he said: 'Equity prices are somewhere close to fair value on the global level and in mainland China . . . What is driving wealth estimates is the rapid capital accumulation across the Asia Pacific.'
Credit Suisse itself says it has seen its wealth management business grow four-fold in the Asia Pacific, where it uses Singapore and Hong Kong as hubs.
Here are some major highlights of the report:
Global wealth currently held by 4.4 billion individuals has risen 72 per cent to US$195 trillion.
Global wealth is forecast to grow 61 per cent to US$315 trillion by 2015.
China is the third largest wealth generator with total household wealth of US$16.5 trillion, behind only the US and Japan. China's wealth is expected to more than double to US$35 trillion by 2015, streaking past Japan to become the world's second highest.
There are over 1,000 billionaires globally, of whom 245 are in the Asia Pacific; 230 in Europe and 500 in North America.
In terms of asset mix, Singapore's wealthy appear to be evenly split between financial and non-financial assets. The latter includes property. Countries such as India and Indonesia have more than 80 per cent in non-financial assets.
The most prominent investment theme, not surprisingly, is that of consumer spending across the spectrum of wealth levels, from suppliers of essential goods and services including banking and telecoms; to discretionary products for the middle segment; and luxury products for the high end.
Valuations, said Mr Keating, remain attractive, even though values of companies catering to the lower-income tier have run 'a little ahead of themselves'.
Microfinance is another theme, and private clients are investing in funds that lend to entrepreneurs in micro sums that may start from as little as US$100.
'The reason private investors favour microfinance is that it offers a relatively stable and continuing return compared to other financial investments, and it delivers a social return - that is, it has a beneficial effect on economies and people,' the report said.
The report estimates that some 145 million people have tapped US$45 billion of microfinance loans. While the growth potential for banking services is huge, with some 2.5 billion people who have no access to banks, there is a risk of too rapid an expansion. 'If (institutions) expand too rapidly, they start to make loans that don't satisfy the best prudential criteria. We are at that delicate balance.'
Currencies and fixed income are another opportunity. 'With emerging market consumers taking over as the growth locomotive, emerging currencies will strengthen over the US dollar. Those currencies typically offer a substantial interest rate pick-up over the US dollar,' the report said. Two-year Treasuries are yielding some 35 basis points, against 5-7 per cent or more for some emerging currencies, said Mr Keating.
While exchange rates may fluctuate as the rhetoric over currency wars heats up, investors should use short-term dips as entry points into emerging currencies, he said.
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