In the past few years, the number of customers in the Asia-Pacific (APAC) wealth management industry has multiplied. The dynamism in Asia, higher than in the rest of the world, is bringing numerous opportunities with higher growth potential and a greater number of high net worth individuals (HNWI). However, these developments are also causing challenges for financial institutions.
The pressure caused by digital disruption, the need for a better customer experience, and the higher demand for new digital assets make it imperative for advisers to adopt and integrate technology into their processes and services.
In this blog post, we explain the current trends and challenges facing wealth managers in the APAC region and how technology can be used to overcome these obstacles and improve the customer experience. We also outline the topics covered in the APAC WealthTech Talks: Technology to enable the APAC client adviser webinar that we took part in.
The APAC customer
Previously far behind Europe and North America, wealth in the Asia-Pacific region has grown faster than in other leading regions and is nowadays fighting with North America for first position.
The PwC report Asset and Wealth Management 2025 states that assets under management in the APAC region are expected to grow faster than in any other region globally. This impressive development has brought about the phenomenon of the “nouveau riche” and a tech-savvy generation, along with a broad diversity of family types and interests.
Because of the enormous diversity, it can be difficult to draw a typical profile for the APAC client, and therefore it is difficult for advisers to adapt to this new diversity.
In the last few years, the APAC client has been moving from passive to active involvement and the number of interactions between advisers and clients is expected to increase. Clients from the Asia-Pacific region are searching for a way to have control on their investments without completely moving to self-management solutions. The quality and closeness of the relationship with their wealth manager is therefore very important, even more since the COVID-19 crisis.
The APAC wealth management industry
The COVID-19 crisis accelerated the need for digital solutions and services, and impacted the proximity of the advisers with their clients. Technology would enable wealth managers to provide the right services and products faster and to more clients both at home and abroad.
However, while the entertainment, travel, and e-commerce industries in APAC are exploring and developing digital solutions, the financial industry lacks customised and on-demand services, cross-device apps and self-service functionalities. Digital offerings are not meeting client expectations, and it appears that the wealth management sector lags behind other industries in terms of customer experience.
Therefore, the pressure on the wealth management industry is high. Advisers “need to become business revolutionaries or disruptors in order to survive and prosper in this environment”, according to the PwC report. With the arrival of WealthTech players offering digital platforms and low cost solutions, “managers who achieve success will be those who beat the market by providing proven alpha, innovative product structuring, and ensuring that the client experience remains a strong element of their value proposition”, as the report explains.
That’s not to say that the APAC region is not implementing and pursuing digital solutions. Digital assets, such as cryptocurrencies and NFTs, are on the rise. Environmental, Social and Governance (ESG) and Socially Responsible Investments (SRI) are also gaining in popularity across the region, suggesting that more and more clients want more transparency on their investments.
Regulation in the APAC region
Compliance is of course a key topic to cover when talking about any financial industry. It requires effort, time and resources for companies to remain compliant. In the APAC region, where growth is faster than ever, it is complicated for wealth managers to keep up with ever-changing regulations across different jurisdictions.
As Michael Tscherter, expert in investment reporting from Finalix, stated in the APAC WealthTech talks webinar, “regulation is not a threat, but an opportunity”. Responsibility for compliance is shifting more and more to the front office: to client advisers. Financial institutions need technology to support this shift and free up operational teams to be more efficient and proactive in their day-to-day tasks.
Since the financial crisis in 2008, regulation is not a matter to be taken lightly. It’s easy to overlook new regulations, but the risk is disproportionately high; fines that can run into the millions of dollars, and even jail time, as Alan Blanchard, Head of Business Development UK at Apiax, noted.
The COVID-19 crisis also added complexity, especially remote working environments and the shift from physical to virtual meetings, which implies a whole new set of regulations to comply with.
What challenges do APAC wealth managers face?
After Mario Bassi from The Wealth Mosaic highlighted key trends among wealth managers in the APAC region, he led the panel of experts gathered to share their thoughts on the challenges facing the region and what needs to be done to overcome these knots. The key points that emerged from this discussion are listed below:
Transparency and adequacy
APAC investors are getting more involved in the management of their wealth and are aware of the latest trends and solutions. According to Michael Tscherter from Finalix, “advisers need to provide adequate and complete information, on their fingertips”.
The development of sustainable investing practices, like ESG and SRI products, also increased clients’ demands for more transparency and clarity in their investment.
“Advisers need to provide adequate and complete information, on their fingertips”Michael Tscherter, Finalix
Personalisation of products and services
COVID-19 accelerated the need for hyper-personalised services in the banking and investment industry. Clients are seeking solutions that are perfectly tailored to their needs and interests at any given point in time.
Innovative solutions using apps, AI, and machine learning can customise portfolios and recommend specific products depending on the investor’s profile, for example. This is a huge driver for banks and wealth management companies in APAC as the ultimate goal is to serve clients at the right time, with the right content.
Regulation is one of the biggest challenges for wealth managers, but can also become an opportunity.
Tailored digital tools can be business enablers and empower wealth managers. For example, embedded compliance allows advisers to realise more business opportunities while keeping costs low and risks under control. Compliance hence becomes a competitive advantage and an opportunity, rather than a risk or a threat.
New digital assets
New digital assets such as cryptocurrencies and NFTs have become a hot topic in recent years and are revolutionising the way we invest. “Training is essential”, said Weekee Chia of OCBC bank. Advisers should learn about new assets and keep up to date with the latest changes to be able to properly advise their clients.
To make them accessible to clients, embedding those new topics into the frameworks, new platforms and processes seems inevitable, Sacha Walker, Managing Director at Julius Baer, reminded us during the APAC WealthTech Talks: Technology to enable the APAC client adviser webinar.
James Verner, CEO at InvestCloud, recommends taking inspiration from applications we are using every day on our mobile devices, from any industry, to discover what we like about it and help build a much better experience
The desire for a better investment experience and interactions of quality with advisers will continue to grow in the years to come. Understanding APAC clients can be difficult, but it is important for advisers to develop their digital empathy in order to improve customer experience and increase customer satisfaction.
What solutions can help wealth managers better succeed?
“Do not chase technology per se”, reminds us Michael Tscherter. New digital tools can of course add value for clients and advisers themselves, but it also takes effort to understand how this new technology is working and changing the usual activities. Advisers should not be overwhelmed by innovative solutions.
Technology needs to fit in the process. Wealth management companies shouldn’t rush in adopting innovative solutions, but rather take their time and invest where they will have real value, fitting their needs and the needs of their clients, without adding too much complexity in the process. And as Michael Tscherter stated, “foundation is key”.
“Digital solutions need to make things faster, simpler, more efficient and cheaper, on both sides. It needs to bring added value and enable advisers and clients to accomplish tasks they could not before” explained Alan Blanchard.
Technology should support the adviser, but not replace it. According to the World Wealth Report 2021 (WWR) by CapGemini, HNWIs are more and more interested in hybrid advice models and modular financial planning services. Wealth management is relying by essence on the interaction between client and adviser, and this shall remain, even if the channels are evolving. “People genuinely don’t want to replace human interaction with a completely digital experience” explains Alan Blanchard in the webinar. “They need a trusted person on their side”. It is especially true in the APAC region, where hybrid advice is considered most important by 68% of HNWI (according to the WWR).
Advisers should allow self-directed investment solutions when financial markets are prosperous, but be ready to guide their clients and help them in their strategy in times of crisis. A strong and trustful relationship is important, more than ever, as well as personalised services and omnichannel connections, Alan Blanchard explained.
“Digital solutions need to make things faster, simpler, more efficient and cheaper. Technology can assure advisers that what they are saying is allowed and correct.”Alan Blanchard, Apiax
New assets, training and digital solutions
Cryptocurrencies and NFTs boomed during the pandemic, as more and more people invested in digital assets from their home during lockdowns and slow downs of the economy. This trend is expected to continue and grow even further in the following years. In consequence, it appears essential for advisers to provide the opportunity to invest in new trends. On the other hand, it is also important to keep in mind that wealth managers should always be transparent and advise their clients carefully about the volatility and risk level of this kind of asset.
In order to do so, systematic research and training should be implemented for advisors. As suggested in the Digital Wealth Management in Asia Pacific report from KPMG, “to tackle the intense competition in the Asian wealth management market, banks must strengthen the digital capabilities of their advisors”, and train them on virtual advisory skills as virtual interactions were required during the pandemic.
“Technology can assure advisers that what they are saying is allowed and correct”, explains Alan Blanchard. A great way to give wealth managers the assurance they are giving valid advice to their clients is to have up-to-date regulatory knowledge embedded directly into their existing processes. By embedding compliance, wealth managers can quickly access regulatory answers that are always up-to-date and verified by trusted law firms.
How APAC wealth managers benefit from technology
The APAC region possesses an incredible potential for the wealth management industry thanks to its exceptional economic and demographic growth. To help them overcome challenges and seize every opportunity to come, advisers need to rely on technology and compliance automation solutions.
It does not mean wealth management companies should adopt and invest in every innovation. It is important to build a foundation before anything else. But it is true that without digital disruption, advisers won’t be able to compete with WealthTech newcomers.
COVID-19 has encouraged tech-savvy investors in this part of the world to take control of their investments, get personalised services, and communicate with their advisors through different channels.
Regulation, similarly, will progressively become more digital. We can easily imagine a future where banks and wealth managers no longer have to search for new regulations manually.
Apiax already flags regulatory and tax implications right in the tools wealth managers already use, completely removing manual and printed compliance processes.
Nevertheless, it is important to keep in mind that the roadmap of technology in the future should always be customer-centered and aim to improve their investing experience. This will be the path to follow with digital solutions, making investments more accessible to clients, easily tracked on a multitude of channels.