should insurance agents become wealth managers

© 2013 aprikot knowledge. All rights reserved confidential

Wealth Management!! September 2013, Manila, PHILIPPINES!

Version 1.0

Do Insurance Advisers need to be Wealth Manager?

ANALYSIS: World Bank – Washington D.C. §  Financial Analyst

BANKING: BCCI, BNP Paribas & ING Bank §  Retail, Corporate & Private Banker SECURITIES: Kotak (Goldman JV, India) §  Head of Non-Resident Clients

FUND MANAGEMENT: Prudential / Templeton (EastSpring) §  Distribution / Partner Management §  Regional Product (Asia) §  CEO, Singapore, UAE & Malaysia

INSURANCE: Prudential (PRULife, Regional HK) §  Regional Head for Banassurance, Asia QUALIFICATION §  MBA, Bcom(Hons), CWM, CFP, CIPM

www.aprikot.biz - 2

Please call me SURAJ (su raj)

47 / 24 years

CLIENTS

RELATIONSHIP

CONNECTIVITY

ACCESSIBILITY

MOBILITY

SOCIAL ENGAGEMENT

MANAGE CHANGE

PEOPLE

TECHNOLOGY

WHAT IS !HAPPENING

If Facebook were a country, it would b e the third most populated in the world, ahead of the United States.

If Facebook were a country, it would b e the third most populated in the world, ahead of the United States.

CHINA 1.3 billion

INDIA 1.1 billion

USA 300 million

Brazil 190 million

Facebook 500 million

Only China & India are more populated than Facebook.

500 BILLION. The number of minutes spent on Facebook per month.

Last year, that number was only 150 billion. Today it’s 500 billion.

25 BILLION. The amount of content (web links, news stories, blog posts, notes, photos, etc.) shared each month on Facebook.

That’s more than 6X last years volume.

ONE-THIRD. The proportion of women aged 18-34 who check Facebook when they first wake up—even before going to the bathroom.

13

That’s more than DOUBLE last year’s volume.

800 MILLON. People visit YouTube every month.

2 BILLION. The number of YouTube Videos viewed per day.

That’s twice as many as last year.

More videos were uploaded on You Tube in the last 2 months

than all the videos on since 1948.

That’s 13X more than the LIBRARY of CONGRESS

NINETY-FIVE.The percentage of companies using LinkedIn to find and attract employees. 59% use Facebook and 42% use Twitter.

14

LinkedIn

1 in 6.The number of marriages last year between people who met through social media.

THAT’S MORE THAN TWICE THE NUMBER OF PEOPLE WHO MET AT BARS, CLUBS, AND OTHER SOCIAL EVENTS COMBINED.

15

THESE WERE ALL

SOCIAL MEDIA COMPANIES.

WHAT HAVE THEY DONE ?!

WHAT ABOUT

DIGITAL COMPANIES ?

DIGITAL COMPANIES - ENTERTAINMENT

www.momenta.biz - 30

Online Money Transfer (2000, USA) Oct 2002 > acquired by ebay for US$ 1.5 billion As of 2012 > total payment volume exceeds US$ 145 billion; 194 markets; 232 million accounts. Customers can sent, receive and hold in 26 currencies worldwide.

Travel Website (2000, USA); Discovering Treasure on its travels World’s largest travel website in over 30 countries; over 100 million users; 21 languages. 2011 went public, now listed on NASDAQ. 400,000 hotels and 500,000 restaurants across 70,000 ciees worldwide.

TripAdvisor PayPal Online File Hoseng (2007, USA); Out-‐of-‐the-‐box success October 2011 >> 50 million users; Nov 2012 >> reached 100 million users. Dropbox revenue exceeded US$240 million in 2011.

Dropbox



Image & Video Sharing (2004, Canada) §  51 million registered users; 80

million unique visitors; 6 billion images.

§  Flickr is valued at US$ 4 billion.

Online Encyclopedia (2001, USA) §  Not-‐for-‐profit company. §  Donaeons >> 2009 US$ 8 million,

doubled in 2010 to US$16 million; 2011 raised US$ 20 million.

§  Free to all. 20 million arecles in 282 languages.

Wikipedia Zynga Online Social Gaming (2007, USA) Feb 2011 > $1 billion venture capital funding Late 2011 > Zynga’s games had 232 million monthly users.



Twitter How 140 characters changed the world Social Media/microblogging (2006, USA) Mar 2011 > more than 140 million monthly users Revenue > Twijer is expected to take in $950 million in 2014 before vauleng to $1.33 billion the following year. This year’s revenues are pegged at $582.8 million, a year-‐over-‐year doubling.

Wonga Short-‐term consumer finance (2006, UK) – UK, South Africa, Canada & Poland. §  Offers £400 -‐ £1,000 for 1-‐30

days short term loans >> money within one hour.

§  Wong has approved over 3.5 million loans in 4 years.

§  Focus on innovaeon.

Amazon World’s largest e-‐retailer (1995, USA) Started as an online bookstore, but soon diversified, selling DVDs, VHSs, CDs, video and MP3 downloads/streaming, sooware, video games, electronics, apparel, furniture, food, toys, and jewelry. Cloud compueng services. Customer base: +30 million Sales – US$16.1 billion (2013 1st Quarter).


ALL THESE COMPANIES ARE REACHING YOUR CUSTOMERS DIRECTLY AND ALSO BUILDING RELATIONSHIP.

RELATIONSHIP THAT IS STRONGER THAN WHAT WE HAVE BUILT.

A. Technology B. Chemicals C. Automotive D. Media E. Banks

F. Consumer Health Care

G. Consumer Electronics

H. Energy I. Food & Beverages J. Aerospace & Defense

K. Consumer Goods L. Metals M. Pharmaceutical N. Telecom O. Financial Services

P. Brewing & Sprits Q. Food Manufacturing R. Entertainment

WHICH ARE THE MOST TRUSTED INDUSTRIES?

A. Technology B. Chemicals C. Automotive D. Media E. Banks

F. Consumer Health Care G. Consumer Electronics H. Energy I. Food & Beverages J. Aerospace & Defense

K. Consumer Goods L. Metals M. Pharmaceutical N. Telecom O. Financial Services

P. Brewing & Sprits Q. Food Manufacturing R. Entertainment

Please indicate (by ranking) how much you TRUST businesses in each of the above industries. There are 18 industries listed here – rank them by order of #1 being most TRUSTED and #18 least TRUSTED.

Name: _________________________________________________________________ TRUSTED INDUSTRY

FINANCIAL'SER

VICES'INDUST

RY'FINDINGS'

Edelman's 13th Annual survey

37

GLOBAL

ONLINE SURVEY IN 26 COUNTRIES

•  31,000+ respondents •  5 years in 20+ markets

•  8 years in 10+ markets

GENERAL POPULATION

•  1000 respondents per country surveyed

•  Ages 18+ •  2 years of data

INFORMED PUBLICS

•  500 respondents in U.S. and China & 200 in other countries

•  Ages 25-‐64 •  College-‐educated •  In top 25% of household income per age group in each country

•  Report significant media consumpeon and engagement in business news and public policy

•  13 years of data

Source: Edelman's 13th Annual survey

banking & financial services Industry – are least trusted

38

TRUST IN INDUSTRIES GLOBALLY

Source: Edelman's 13th Annual survey

MOST TRUSTED LEAST

65% & above 64 to 60% 59 to 50% Less than 50%

Technology (73%)

Consumer Electronics (70%)

Automoeve (66%)

Food & Beverages (62%)

Aerospace & Defense (62%)

Entertainment (62%)

Metals Industry (61%)

Food Manufacturing (61%)

Telecommunicaeon (60%)

Consumer Packaged Goods (60%)

Pharmaceuecal (57%)

Energy (57%)

Consumer Health Companies (55%)

Brewing & Sprit (55%)

Chemicals (51%)

Media (50%)

Banks (49%)

Financial Services (46%)

39

Financial SERVICES is at the bottom. People don’t trust us,

as much.

WHO is RESPONSIBLE?

WE

Financial Services Industry

40

DEVELOPED MARKET VS EMERGING MARKETS

Industry Average Sectors

Drilling down further, Asia is most trusting and EU is least trusting of financial service sector

41

TRUST IN FINANCIAL SERVICES INDUSTRY SECTORS BY REGION

Industry Average

Copyright © EON Inc. and Ateneo Graduate School of Business 2013 Read more at www.eon.com.ph/philippinetrustindex

Healthcare most trusted industry; trust in mining increased but not enough to pull up its ranking

37.3 25.3 25.3

24.7 24.0

23.7 23.7

22.1 21.8

19.4 18.6

17.5 17.3

16.1 15.8

12.2 8.9

6.2 4.7

Health CareInformation Technology

AgricultureWater & Sanitation

TelecommunicationsTourism & Hospitality

Food and BeveragePharmaceuticalsEnergy & Power

InsuranceProfessional & Technical Services

Banks & Financial ServicesTraining & Human Development

ConstructionTransport & Logistics

Recreation & EntertainmentReal Estate

Alcohol & TobaccoMining

N=1200 general public. Very much trust responses. Q: How much or how little do you trust each industry that I will mention?

INFORMED Public - URBAN Areas

Gainers (%)

1st PTI 2nd PTI

Healthcare 22.2 29.3

Agriculture 11.2 16.7

Insurance 7 12

Mining 2.6 4.3

Losers (%)

Training 21.6 15

Real estate 10.0 6.7

PHILLIPINES

42

THE MESSAGE IS SIMPLE !§  Trust has been lost and the digital world is here.

§  The Technology Sector - Two issues – (1) Potentially preparing to take away our clients, and (2) building very high client expectations.

§  Successful relationships with customers in the digital world are high-trust relationships.

§  It is time for financial advisors to rebuild trust at the same time as developing all the communications and analytical advantages of digital technology. There is no other way.

§  The highly digitalized, non-bank competitors are already taking the best parts of banking, will soon take other parts of the financial industry. Retail General Insurance is substantially moved to the digital world. Time is short. Is Apple about to join the fray? Is Amazon? Is Facebook? {Or is it the telecom industry?}

!

Trust has been lost and the digital world is taking over.

www.aprikot.biz - 45

ZERO MOMENT OF TRUTH

Traditional Purchase Process Traditionally, there have been three critical junctures within a customer’s purchase process where product must be successful: stimulus, shelf, experience

Semulus

This is the moment when an advertisement/knowledge connects with a consumer in such a way that pushes him or her to visit a start the discussion.

Second Moment of Truth

Experience

(Experience) - Once home with the product, the consumer uses it and forms an opinion of his or her purchase.

First Moment of Truth

At shelf In-‐store

The consumer, driven by an advertisement or knowledge, visits your office and the combination of product packaging and salesperson claims, results in a purchase.

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IN LIQUID FINANCIAL ASSETS 1 . 0 m USD

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HNWI at RECORD LEVELS

(2012)

North America

Asia-Pacific Europe Latin America

Middle East Africa Total

Wealth (US$ Trillion) 12.7 (11.4) 12.0 (10.7) 10.9 (10.1) 7.5 (7.1) 1.8 (1.7) 1.3 (1.1) 46.2 (42.0)

%age Change 2011-12 11.7% 12.2% 8.2% 6.7% 8.6% 11.5% 10.0%

Source: Capgemini Lorenz Curve Analysis, 2013

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Data Source: Capgemini Lorenz Curve Analysis, 2013

World 2011 2012 %é

Population 11.0 12.0 9.2%

Wealth 42.0 46.2 10.0%

Asia-Pacific expected to lead robust Global HNWI Wealth Growth Global HNWI investable wealth is expected to grow to US$55.8 trillion by 2015. Asia-Pacific is expected to reach US$15.9 trillion (by 2015).

HNWI Population, 2007 -2011 (by Asia Market)

‘000 (Thousands)

1517 1366 1650 1739 1822

412 364

477 535

562 169

129

174 193

180

118

105

127 146

144

123

84

127 153

126

78

61

82

99 91

71

58

83

94 89

96

37

76

101 84

44

42

50

58 65

24

19

24

30 32

149

138

154

166 173

0

500

1000

1500

2000

2500

3000

3500

4000

2007 2008 2009 2010 2011

Other Markets

Indonesia

Thailand

Hong Kong

Taiwan

Singapore

India

South Korea

Australia

China

Japan

2.8m 2.4m 3.0m 3.3m 3.4m

Source: Capgemini Lorenz Curve Analysis, 2012. Note: Chart numbers and quoted %ages may not add up due to rounding. Philippines within “Other Markets”

Composition of Asia-Pacific HNWI

Wealth $11.4 t

Individuals 3.4 m

+$30 m Ultra-HNWI

$5 - $30 m Mid-Tier Millionaire

$1 - $5 m Millionaire Next Door

72012 WORLD WEALTH REPORT

WORLD’S POPULATION OF HNWI

FIGURE 1. HNWI Population, 2007 – 2011 (by Region)

(Million)

0

2

4

6

8

10

12

20112010200920082007

Asia-Paci!c

North America

Europe

Latin America

Middle East

Africa

1.1%

-1.1%

1.6%

5.4%

3.9%

2.7%

Global 0.8%

% Change Total HNWI Population2010-2011

10.1 8.6 10.0 10.9 11.0

CAGR 2007-2011: 2.1%

Number of HNWIsWorldwide

(Million)

3.1

3.3

2.8

2.7

2.4

3.13.4

3.3

3.4

3.4

0.40.4

0.1

2.6

3.0

3.03.1 3.2

0.40.4

0.50.40.1 0.5

0.40.1

0.50.50.1

0.1

FIGURE 1. HNWI Population, 2007 – 2011 (by Region)

(Million)

Note: Chart numbers and quoted percentages may not add up due to roundingSource: Capgemini Lorenz Curve Analysis, 2012

FIGURE 2. HNWI Wealth Distribution, 2007 – 2011 (by Region)

(US$ Trillion)

11.7

10.7

9.5

6.2

9.1

8.3

7.4

5.8

10.7

9.5

9.7

6.7

11.6

10.2

10.8

7.3

11.4

10.1

10.7

7.11.71.0

1.40.1

1.51.0 1.7

1.21.71.1

0

10

20

30

40

50

20112010200920082007

North America

Asia-Paci!c

Europe

Latin America

Middle East

Africa

-1.1%

-1.1%

-2.3%

-2.9%

-2.0%

0.7%

Global -1.7%

% Change Total HNWI Wealth2010-2011

40.7 32.8 39.0 42.7 42.0

GlobalHNWIWealth(US$

Trillion)

CAGR 2007-2011: 0.8%

FIGURE 2. HNWI Wealth Distribution, 2007 – 2011 (by Region)

(US$ Trillion)

Note: Chart numbers and quoted percentages may not add up due to roundingSource: Capgemini Lorenz Curve Analysis, 2012

21.7 k (0.6% of total)

266.0 k 7.9% of the total

3080 k 91.5% of the total

24.5% [$2.8 trillion]

23.8% [$2.7 trillion]

51.8% [$5.9 trillion]

Snippets

In associaeon with copyright@aprikot 2012

62

45

years or younger

Asia-Pacific, 41% of the HNWIs are

50

Years

China, average age of UHNWI is

Who is the Philippines HNW investor?

§  Most HNW individuals are between 31 and 50 years old

§  Credit Suisse Reports forecast 38,000 HNWI by 2015.

§  The majority of HNW individuals have amassed their fortunes through entrepreneurship.

§  Moderate knowledge and a conservative attitude make for a difficult client profile for Wealth Managers.

§  Philippines wealth managers must be able to deal with high degrees of financial illiteracy.


TonyV3112 / Shujerstock.com / *2012 Americas’ topped; Asia second.

HNW – What do they look for ?

§ HNWI focus on wealth preservation

§ The preference for a single point of advice and service is strong.

§ HNWIs perceive their wealth management needs to be “straightforward” (focused on investments, cash, and credit)

§ The current demand for digital channels is robust globally, especially for HNWIs below 40 years of age.

Highlight from the 2013 Global HNW Insight Survey

HNWI Trust & Confidence § Wealth Manager competency emerged as the single

largest service priority among HNWIs, with 67.5% rating it as most important.

§ Asset Allocation: HNWIs exhibited a clear bias toward safety and wealth preservation, allocating nearly 30% of their financial wealth into cash and deposits.

Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW Insights Survey 2013 4,400 HNWI’s : 21 Wealth Markets : 77.2% USD 1–5 mn, 10.2% over 10 mn – excluding primary residence.

Asset Allocation

16 !"#$ WORLD WEALTH REPORT

immense, confidence in regulatory institutions is particularly low. As we discuss in our Industry Spotlight (see page 28), the increasing regulatory burden has the potential to drive significant industry change, with material impacts for both firms and clients.

While wealth management firms will continue to face challenges in cementing the trust of HNWIs, they have a strong foundation from which to work. It will be important for firms to clearly communicate the impact of regulatory shifts to their employees, so they in turn can steer clients through the changes. Despite the industry challenges, firms and wealth managers able to present themselves as trusted advisors will be able to further build on the improving trust levels they have with HNWIs.

HNWI ASSET ALLOCATION REFLECTS CONSERVATIVE APPROACHHNWIs exhibited a clear bias toward safety and wealth preservation, allocating nearly 30% of their financial wealth into cash and deposits. This preference for capital preservation applied to HNWIs of all ages and wealth levels, suggesting that the overall lower level of trust in the financial markets may be playing a role in HNWI asset allocation decisions. Even HNWIs who identified growth as their primary focus put 26.4% of their assets into cash, only slightly less than HNWIs primarily focused on capital preservation who put 29.7% of their assets in cash.

Despite continued economic challenges, 75.4% of HNWIs around the globe cited confidence in their ability to generate wealth over the next year, showcasing the strong optimism HNWIs have in the future. Such optimism is likely driven by the high trust levels in their wealth managers combined with the high marks HNWIs placed on the competency of their advisors and support staff. Wealth manager competency emerged as the single largest service priority among HNWIs, with 67.5% rating it as most important. Globally, 52.6% of HNWIs gave their advisors and support staff a strong performance rating in this area.

However, the financial crisis has had a significant impact on the industry’s overall image, leading to overall low levels of HNWI trust in financial markets and regulators. In the first quarter of 2013, only 45.4% of HNWIs had trust in financial markets and only 39.6% had trust and confidence in regulatory bodies and institutions. Trust in European financial markets was especially low (30.4%), likely driven by ongoing economic uncertainty.

The shifting regulatory landscape emerged as a factor in the low confidence levels HNWIs have in regulatory institutions. In addition to shouldering some blame for the crisis, regulators may be seen by HNWIs to be moving at a slow pace in terms of issue resolution despite increased regulatory velocity, and creating service interruptions due to a lack of jurisdictional regulatory alignment. In Europe and North America, where the regulatory change is

FIGURE 12. Breakdown of HNWI Financial Assets, Q1 2013

(%)

0%

25%

50%

75%

100%

Middle East& Africa

LatinAmerica

EuropeJapanAsia-Paci!cexcl. Japan

Asia-Pacific

NorthAmerica

Global

Cash/Deposits

Equities

Real Estateb

Fixed Income

Alternative Investmentsa

28.2%

26.1%

20.0%

15.7%

10.1%

21.3%

37.2%

13.5%

18.7%

9.3%

22.7%

22.3%

24.6%

16.7%

13.7%

49.4%

22.6%

11.9%

9.2%

7.0%

27.3%

21.5%

26.7%

15.3%

9.1%

27.6%

12.5%

30.1%

16.8%

13.1%

26.0%

17.0%

24.7%

16.0%

16.3%

FIGURE 12. Breakdown of HNWI Financial Assets

(%)

a Includes structured products, hedge funds, derivatives, foreign currency, commodities, private equityb Excludes Primary ResidenceNote: Chart numbers may not add up to 100% due to roundingSource: Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW Insights Survey 2013

Allocation to Investment of Passion

HNWI Behaviors & Preferences, Q1 2013


FIGURE 15. HNWI Behaviors and Preferences, Q1 2013

(%)

Single FirmI prefer to work with a single wealth management firm

that can meet the full range of my financial needs

HNWI Preferred Wealth Management Approach

Preferred Wealth Manager Relationship

HNWI Preferred Wealth Manager Service

42.1% 22.8%

41.4% 14.4%

35.1%

35.0% 22.9%42.1%

32.7% 26.3%41.0%

32.2% 27.1%40.7%

34.0% 23.5%42.4%

33.9% 26.9%39.1%

28.4% 27.8%43.8%

44.5% 20.0%35.6%

30.7% 23.7%45.6%

30.9% 26.0%43.1%

26.8% 26.0%47.2%

44.2%

Straightforward NeedsMy wealth needs are straightforward: I want to manage

my cash and credit, and grow my investments

Wealth PreservationI am currently most focused on preserving my wealth

Personal Wealth AdviceI seek advice and solutions for my own

personal wealth needs

Financial and Life Goals MeasurementI judge the success of my portfolio based on my own

financial and life goals (i.e. on an absolute basis)

Multiple FirmsI prefer to work with various wealth management firms who each have a specific area of expertise that meets my needs

Complex NeedsMy wealth needs are complex and may encompass my business, or my extended family or philanthropy

Wealth GrowthI am currently most focused on growing my wealth

Family Wealth AdviceI seek advice and solutions for the wealth needs of my extended family

Financial Benchmark MeasurementI judge the success of my portfolio, by comparing it to financial market performance and benchmarks (i.e. on a relative basis)

Self-Managed InvestmentsI rarely seek professional financial advice because

I prefer to make my own decisions

Single Touch PointI want a single touch point with one individual who

facilitates all aspects of my relationship with the firm

Uncomfortable With Mostly In-house ProductsI am uncomfortable when my wealth manager

recommends mostly in-house products to meet my needs

Direct ContactOverall, direct, personal contact is more important

than digital contact (internet, mobile, email)

Real-Time / Anytime ReportingIt is important for me to be able to see how my savings

and investments are doing at any time

Comprehensive CommunicationI want my wealth manager to keep me fully updated on

transactions, opportunities, events, and news

Standardized ServicesI am happy for my wealth manager to offer

a standardized level of service to me, so long as it meets all my needs

Digital ContactOverall, digital contact (internet, mobile, email) is more important than direct, personal contact

Scheduled ReportingIt is most important for me to receive written reports at agreed-upon points in the year

Filtered CommunicationI want my wealth manager to filter communications so I only receive what is necessary

Customized ServicesTo ensure all my needs are met, I am happy to pay more for a customized level of service from my wealth manager

Professional AdviceI seek professional advice and I usually act on it

Multiple ExpertsI only want to speak to the different experts at my wealth management firm who can deal with my specific requirements

Comfortable With Mostly In-house ProductsI am comfortable that my wealth manager’s own range of in-house products is adequate for most of my needs

Strong Preference for Parameters on Left No Strong Preference Strong Preference for Parameters on Right


(%)

Note: Chart numbers may not add up to 100% due to roundingSource: Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW Insights Survey 2013



(%)

Single FirmI prefer to work with a single wealth management firm

that can meet the full range of my financial needs

HNWI Preferred Wealth Management Approach

Preferred Wealth Manager Relationship

HNWI Preferred Wealth Manager Service

42.1% 22.8%

41.4% 14.4%

35.1%

35.0% 22.9%42.1%

32.7% 26.3%41.0%

32.2% 27.1%40.7%

34.0% 23.5%42.4%

33.9% 26.9%39.1%

28.4% 27.8%43.8%

44.5% 20.0%35.6%

30.7% 23.7%45.6%

30.9% 26.0%43.1%

26.8% 26.0%47.2%

44.2%

Straightforward NeedsMy wealth needs are straightforward: I want to manage

my cash and credit, and grow my investments

Wealth PreservationI am currently most focused on preserving my wealth

Personal Wealth AdviceI seek advice and solutions for my own

personal wealth needs

Financial and Life Goals MeasurementI judge the success of my portfolio based on my own

financial and life goals (i.e. on an absolute basis)

Multiple FirmsI prefer to work with various wealth management firms who each have a specific area of expertise that meets my needs

Complex NeedsMy wealth needs are complex and may encompass my business, or my extended family or philanthropy

Wealth GrowthI am currently most focused on growing my wealth

Family Wealth AdviceI seek advice and solutions for the wealth needs of my extended family

Financial Benchmark MeasurementI judge the success of my portfolio, by comparing it to financial market performance and benchmarks (i.e. on a relative basis)

Self-Managed InvestmentsI rarely seek professional financial advice because

I prefer to make my own decisions

Single Touch PointI want a single touch point with one individual who

facilitates all aspects of my relationship with the firm

Uncomfortable With Mostly In-house ProductsI am uncomfortable when my wealth manager

recommends mostly in-house products to meet my needs

Direct ContactOverall, direct, personal contact is more important

than digital contact (internet, mobile, email)

Real-Time / Anytime ReportingIt is important for me to be able to see how my savings

and investments are doing at any time

Comprehensive CommunicationI want my wealth manager to keep me fully updated on

transactions, opportunities, events, and news

Standardized ServicesI am happy for my wealth manager to offer

a standardized level of service to me, so long as it meets all my needs

Digital ContactOverall, digital contact (internet, mobile, email) is more important than direct, personal contact

Scheduled ReportingIt is most important for me to receive written reports at agreed-upon points in the year

Filtered CommunicationI want my wealth manager to filter communications so I only receive what is necessary

Customized ServicesTo ensure all my needs are met, I am happy to pay more for a customized level of service from my wealth manager

Professional AdviceI seek professional advice and I usually act on it

Multiple ExpertsI only want to speak to the different experts at my wealth management firm who can deal with my specific requirements

Comfortable With Mostly In-house ProductsI am comfortable that my wealth manager’s own range of in-house products is adequate for most of my needs

Strong Preference for Parameters on Left No Strong Preference Strong Preference for Parameters on Right


(%)

Note: Chart numbers may not add up to 100% due to roundingSource: Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW Insights Survey 2013

Focus on Wealth Growth vs Wealth Preservation

23!"#$ WORLD WEALTH REPORT

Global HNWIs Show Clear Focus on Wealth Preservation, though Some Emerging-Markets HNWIs Seek GrowthDespite 75.4% of HNWIs citing confidence in their ability to generate wealth over the next year, a preference for a generally conservative approach is widely held. A higher percentage of HNWIs indicate a focus on wealth preservation (32.7%) compared to wealth growth (26.3%) (see Figure 16). This tendency toward wealth preservation is stronger among older HNWIs and those in upper wealth segments, as 44.8% of HNWIs who hold US$20 million and above in investable assets and 34.8% of those who fall into the 60-plus age band are focused on wealth preservation. Regional differences also exist with HNWIs in the emerging markets of Middle East and Africa relatively more focused on wealth growth. The majority of Japanese HNWIs did not show a strong preference for wealth growth or preservation, perhaps reflecting an uncertain mindset towards their wealth strategies and leading to large cash and deposit holdings of 49.4%.

Asset allocation preferences also reflected the focus on wealth preservation. Even in the face of robust overall growth in equity markets over the last three years – the MSCI World Index grew by 6.9% annually

from 2010 to 2012 – the majority of HNWIs globally continued to favor capital preservation instruments, such as cash and deposits (see Figure 12 on Page 16).

Traditionally, and driven by industry practice, HNWIs have largely measured the success of their portfolios on a relative basis using yardsticks like market indices or benchmark returns. Our survey showed, however, a movement away from this conventional measure. HNWIs are now more inclined to judge a portfolio’s success on an absolute basis, such as its ability to help them achieve personal financial and life goals like retiring comfortably, sending a family member to university, or buying a vacation home. Thirty-five percent of HNWIs now prefer to judge their portfolio using such absolute measures, while only 22.9% prefer to use relative benchmark returns to evaluate success.

Measuring wealth performance on an absolute basis was of particular importance among HNWIs in higher wealth segments. Of HNWIs with US$20 million and above, 44.3% prefer an absolute measure. Interestingly, on a regional basis, HNWIs in mature markets were considerably less likely to use an absolute measure compared to their counterparts in emerging markets.

FIGURE 16. Focus on Wealth Growth vs. Wealth Preservation, Q1 2013

(%)

0%

25%

50%

75%

100%

Middle Eastand Africa

Latin AmericaAsia-Paci!c(excl. Japan)

JapanEuropeNorth AmericaGlobal

Wealth Preservers

Wealth Growers

No Strong Preference

26.3%

41.0%

32.7%

27.7%

39.6%

32.6%

23.3%

44.2%

32.5%

15.3%

60.4%

24.3%

31.5%

29.6%

38.9%

37.7%

18.4%

43.9%

42.4%

24.9%

32.7%

Asia-Pacific


(%)

Note: Question asked on a 10-point spectrum: Please indicate your focus on growing your wealth vs. preserving your wealth? “Wealth Preservers” and “Wealth Growers” are percentage of respondents providing a top three rating across the spectrum extremes for wealth preservation focus vs. wealth growth focus; “No Strong Preference” are the remaining percentage of respondents with responses near the mid-point on the spectrumChart numbers may not add up to 100% due to roundingSource: Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW Insights Survey 2013

INAUGURAL GLOBAL HNW INSIGHTS SURVEY SETS INDUSTRY STANDARD FOR UNDERSTANDING HNWI PREFERENCES








(%)

0%

25%

50%

75%

100%




Wealth Preservers

Wealth Growers


26.3%

41.0%

32.7%

27.7%

39.6%

32.6%

23.3%

44.2%

32.5%

15.3%

60.4%

24.3%

31.5%

29.6%

38.9%

37.7%

18.4%

43.9%

42.4%

24.9%

32.7%

Asia-Pacific


(%)










(%)

0%

25%

50%

75%

100%




Wealth Preservers

Wealth Growers


26.3%

41.0%

32.7%

27.7%

39.6%

32.6%

23.3%

44.2%

32.5%

15.3%

60.4%

24.3%

31.5%

29.6%

38.9%

37.7%

18.4%

43.9%

42.4%

24.9%

32.7%

Asia-Pacific


(%)










(%)

0%

25%

50%

75%

100%




Wealth Preservers

Wealth Growers


26.3%

41.0%

32.7%

27.7%

39.6%

32.6%

23.3%

44.2%

32.5%

15.3%

60.4%

24.3%

31.5%

29.6%

38.9%

37.7%

18.4%

43.9%

42.4%

24.9%

32.7%

Asia-Pacific


(%)










(%)

0%

25%

50%

75%

100%




Wealth Preservers

Wealth Growers


26.3%

41.0%

32.7%

27.7%

39.6%

32.6%

23.3%

44.2%

32.5%

15.3%

60.4%

24.3%

31.5%

29.6%

38.9%

37.7%

18.4%

43.9%

42.4%

24.9%

32.7%

Asia-Pacific


(%)



Competency Single point

Wealth preservation Wealth advice

So, what are HNWI looking for

WEALTH MANAGEMENT

What is a

.. more than investment advice, encompass person's financial life

WHY Wealth Manager? The Asia-‐Pacific HNWI populaeon grew 9.7% to 3.3 million in 2010, exceeding Europe and nearing North America. The region’s HNWI wealth grew 12.1% to US$10.8 trillion. Japan remains the single largest HNW segment in Asia-‐Pacific, accouneng for 52.5% of the region’s HNWIs, followed by China (16.1%), and Australia (5.8%). Asia-‐Pacific is home to many of the world’s fastest-‐growing HNWI populaeons. The 20 fastest-‐growing HNWI populaeons were in Asia-‐Pacific and MEANA markets.

Wealth Manager? ….. consetutes unique job tasks and specialized knowledge and skills different from financial planning and designed to serve a unique type of client: those who are affluent and High Net worth client. Where you relaeonship is based on professional TRUST.

COMPETENCY STANDARDS for Wealth Managers

A wealth manager’s competencies are encompassed into three distinct layers –

§  Build trusted relationship – client relationships that result in a successful partnership.

§  Realistic Goals - recommendations leading to the creation and implementation of a comprehensive whole-life wealth management plan.

§  Wealth Accumulation - implement wealth accumulation by managing strategies and monitoring developments.

§  Wealth Preservation – preserve and optimize wealth by managing an optimal strategy of generating income from assets.

§  Wealth Transfer - Legacy and Estate planning - implement strategies to transfer assets as per the legacy plan of the client.

§  Implement & Monitor – Coordinate a trusted and respected team of specialists to provide a well- rounded wealth management advice and service to the client.

To achieve the client centric competencies, Wealth Manager must have the necessary knowledge and skills of wealth planning, products, services, legal & compliance, capital markets and the Industry.

T = R + I + C S.I.

Customers Expectations


Excellent Customer Service!

Transparency!

Objective Advice!

Professional Competency!


Prof

essi

onal

Com

pete

nce

Obj

ectiv

e an

d Q

ualit

y Ad

vice

Excellent Customer Service

Transparency

Wealth Advisor / Manager

§ Cer

tifica

tion

§ Res

earc

h an

d H

ouse

vie

w

§ Und

erst

andi

ng P

ortfo

lio

§ Systematic process -

§ Independent investment

§ Consistency § Regular customer contact

§ Customer reporting § Disclosures

4W


A framework to find solutions for the client’s needs. Deals with diverse goals and unique individual preferences.

Growing the wealth in optimal ways while observing the client’s risk-tolerance profile or desired targets.

Maintain wealth through insulating it from market shocks or dangers with appropriate risk-management techniques.

Figuring out the best ways to transfer wealth to the client’s heirs or beneficiaries. Takes into account any tax implications and philanthropy but also needs to considers social and cultural value.

Wealth Management!

Wealth Accumulation !

Wealth transfer!

Wealth Preservation!

In today’s context, what is wealth management? §  “Wealth Management addresses every aspect of a client’s financial life in a

consultaeve and a highly individualisec way.

§  It uses a complete range of products, services and strategies.

§  A wealth manager has to gather informaeon both financial and personal to create an individualized series of recommendaeons and be able to make those recommendaeons completely tailored to each client.

§  Off the shelf – it won’t do. §  What wealth management requires is conneceng with clients on a personal

level that is way beyond the retail financial services industry norm”

Robert J McCann, President of the Private Client Group, Merrill Lynch

Advisory Process

Investment Advisory Process

Risk Profiling

Recommend the portfolio

Execute transactions

Rebalancing

Reporting; transparency

Goals & Objectives

Review; Rebalance, if required

1 2

3

4

5

6

Next Generation Financial Advisor, must take on the role as a Wealth Manager

The next generation wealth manager has a lot more on his or her plate. That means:

§  moving away from a product-centric to customer-centric focus

§  to be the primary financial relationship based on a bond of trust, and the ability to deliver client-focused solutions and options.

§  delivering a quality customer experience at every touch point

§  offering better reporting, more frequent updates to keep clients informed in real-time, using various forms of technology

§  being the bridge between the client, the specialists within your firm and the back office to create a seamless flow of excellence

§  in a multi-racial environment, having the high-touch soft skills while remaining sensitive to the demands of different cultures

§  dealing with newly emerging needs for succession planning requires a different set of skills.

Calling all Insurance Advisors Two problems:

1.  High Net Worth Clients - The banking model with Wealth Managers & Specialist functions, will lure away your HNW clients, gradually.

2.  Retail Clients. The technology companies will lure away your retail clients by offering them better pricing and technology driven quality service.

What about personalized Service?

Some services don’t require personalized service – technology driven consistency in service serves the client better. Example – Car Insurance, why will one need personalized service? Or ATM Vs Teller,


New Insurance Landscape §  Regulators world-wide are taking action to ensure customers get better and

more professional financial advisory services.

§  The focus cannot just be on sales, but rather on ongoing quality advice and remunerating people who can provide this.

§  The required skills and knowledge which tomorrows insurance adviser is expected to have, in particular:

§  a wider scope and greater in-depth of product knowledge – not limited to life insurance products;

§ more effective communication skills to translate some of the technical terms to layman’s language fro better understanding; and

§  Excellent interpersonal skills to enhance consumer trust


New Insurance Landscape “rather than training being focused on products, as in the past, it needs to be more broad based, focus on clients needs. It is then possible to select the right products to meet these needs”


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should insurance agents become wealth managers

Economy & Finance