Against the backdrop of #TheZero environment and the many complexities of investing in the world today, what does the future hold for wealth solutions?
In the closing session of Schroders’ flagship investment conference for clients in the Asia Pacific region#, Chuck Ng, Head of Global Private Banks Distribution, Asia, Schroders, led a panel discussion with Andrew Connell, Head of Portfolio Solutions, Schroders and distinguished guests Gregory Gibb, Co-CEO of Lufax Holding and co-chairman & CEO of Lufax and Rodolphe Larqué, Head of Managed Solutions Asia Pacific, Credit Suisse, with the aim of providing structure and clarity to the future of wealth solutions by exploring the potential challenges and opportunities through three lenses: The Future of Investment Products, The Future of Client Engagement, and The Future of Investment Management.
Chuck Ng, Head of Global Private Banks Distribution, Asia, Schroders, commented:
“With every new generation, investors gain new expectations for the investment industry in terms of how advice and investment products are being delivered. And with every financial crisis, we are held against new standards and safeguards. The increasing regulatory responsibilities and emergence of non-traditional providers all come together with other disruptions to present challenges as well as opportunities for our industry. Against this backdrop, imagining possible futures is highly daunting, but we believe this is not impossible.”
Throughout the two-day conference, speakers discussed the levers investors can pull to access returns in #TheZero environment, with a particular focus on investments in thematics, sustainability, China and private markets. There are clear opportunities, but providers have had to innovate to design investment vehicles that will perform in this environment, while taking rising regulatory hurdles and fee compression into account.
One opportunity from an Investment Products lens is providing investors greater access to alternative asset classes.
Andrew Connell, Head of Portfolio Solutions, Schroders, commented:
“Accessing alternatives has always been a challenge for investors in the intermediary and wealth channel. It is often a lack of liquidity and transparency that has limited access to opportunities like private equity, infrastructure and natural resources. However, there are technologies available today that could improve delivery of these assets to investors. One of these is the tokenisation of assets. If successful, this could improve liquidity and transparency as tokens can be traded on a secondary market. Even so, this technology is not the “magic bullet” for all alternatives quite yet. One reason for this is that some alternatives are inherently heterogeneous and opaque so it will always be a struggle to tokenise a unique asset like a private loan agreement. The most important hurdle yet to be overcome is the development of the appropriate regulatory frameworks, but concrete steps have been taken, notably in Singapore and Japan, to make this happen. If tokenisation can overcome the technical and regulatory hurdles, it has the potential to offer the benefits of greater diversification and new sources of return, which are all the more welcome in #TheZero environment. We are still in the early days, but tokenisation is an area which we should be watching closely to generate new investment products.”
Client Engagement has always been a crucial aspect of wealth and investment management, but with the proliferation of digital adoption and rising investor demand for more flexible and personalised solutions, how can providers better engage with their clients?
Gregory Gibb, Co-CEO of Lufax Holding and co-chairman & CEO of Lufax, commented:
“Across all market segments, we are not only seeing a shift in what people invest in as they manoeuvre #TheZero environment, but the interface of how they are making these choices is also changing. What matters most is empowering clients with content in order to help them compare and select products that are right for them. And once they have made an investment, it is equally important to give them the information and content they need, ideally in real-time and in a simplistic way, to stay the course amidst more volatile markets.
“As more investors now demand advice and solutions that are personalised to their life circumstances, it is crucial that we deliver this personalisation with simplicity. Technology will play an integral role in this; behind that simplicity are enormously complex algorithms driven by big data to help create a highly personalised investment experience for clients efficiently and at scale. The other layer we need to think about is how to help clients formulate their investment goals beyond the traditional ‘retirement’ and ‘children college education’ objectives – it’s more about generating reasonable and safe returns over certain time periods, and having the right diversification mechanisms or portfolios in place that can help them achieve their short and long term goals.”
Rodolphe Larqué, Head of Managed Solutions Asia Pacific, Credit Suisse, added:
“As a wealth manager for high-net worth and ultra-high net worth clients, we work in close partnership with our clients and have good insights to their needs as well as their desired wealth outcomes. It is our duty to dissect and analyse these information before we advise them on their next steps. We need to look deeper at our communication channels with our clients, be it digitally or in-person, as different clients may respond to these approaches differently. Personalization, digitalization, data-driven analyses – I agree with all of these and they are fascinating topics, but we are just scratching the surface and there is much more that needs to be done to work through the ‘how’ of client engagement.”
As for the Future of Investment Management, all panellists emphasised the importance of delivering added value to clients.
Gregory Gibb said:
“When we're moving to a world where 80% or 90% of transactions are done online, there will always be people looking for the best quality at the cheapest price. But over time, I think customers will stick with one platform, one channel, and one provider if they are getting good outcomes.”
Rodolphe Larqué added:
“At the core of all this is customisation and demonstrating to clients the value-add we can offer, whether it’s in using technology to streamline all processes or in the investment solutions we provide.”
Andrew Connell concluded:
“Today’s investment industry is facing incredible change. Technology is transforming the ability to keep pace with the evolving needs and expectations of investors. To achieve success tomorrow we need to collaborate today and harness technology to generate better outcomes for investors. When we look back in five years’ time, the current status quo will seem like the distant past.”
#On 29 and 30 June 2021, Schroders engaged financial industry professionals and business leaders at its flagship investment conference for clients across Asia Pacific to discuss the potential levers investors can pull to drive sustainable investments in #TheZero environment – whether it is in the interest rate policy, return on traditional income investments, the rising urgency to reach net zero emissions, or in a world where zero action means zero results.
A diverse line-up of thought leaders discussed a range of topics, from the role that policy makers and investment managers play, to exploring new investment themes and solutions that have opened up for investors in the dynamic age of #TheZero, with a particular focus on private markets, income investing, China, thematic investing, energy transition and climate change.
The contents of this document may not be reproduced or distributed in any manner without prior permission.
This document is intended to be for information purposes only and it is not intended as promotional material in any respect nor is it to be construed as any solicitation and offering to buy or sell any investment products. The views and opinions contained herein are those of the author(s), and do not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. The material is not intended to provide, and should not be relied on for investment advice or recommendation. Any security(ies) mentioned above is for illustrative purpose only, not a recommendation to invest or divest. Opinions stated are valid as of the date of this document and are subject to change without notice. Information herein and information from third party are believed to be reliable, but Schroder Investment Management (Hong Kong) Limited does not warrant its completeness or accuracy.
Investment involves risks. Past performance and any forecasts are not necessarily a guide to future or likely performance. You should remember that the value of investments can go down as well as up and is not guaranteed. You may not get back the full amount invested. Derivatives carry a high degree of risk. Exchange rate changes may cause the value of the overseas investments to rise or fall. If investment returns are not denominated in HKD/USD, US/HK dollar-based investors are exposed to exchange rate fluctuations. Please refer to the relevant offering document including the risk factors for further details.
This material has not been reviewed by the SFC. Issued by Schroder Investment Management (Hong Kong) Limited.