Monday, 25 January 2021

Asian UHNWIs rethink their priorities for a post-COVID-19 era

Lombard Odier has released the findings of its 2020 study of Asian Ultra High Net Worth Individuals (UHNWIs), undertaken in conjunction with five of its Strategic Alliances in the region, to better understand how Asian UHNWIs perceive the impact the current environment has had on their lives, families and businesses, and what they think the post-COVID-19 pandemic future will look like. More than 150 UHNWIs domiciled in Hong Kong, Indonesia, Japan, Singapore, the Philippines, Taiwan and Thailand participated in the study.

Our findings are presented in four broad categories – technology, investment, sustainability and family services – themes that have gained the most importance for UHNWIs since the COVID-19 crisis began.

The study’s findings elucidate the increasing sophistication of the demands and needs of UHNWIs, reflecting their thoughts on the opportunities and challenges brought about by technological advances, their expectations and needs for investment and family services solutions, and their understanding, willingness and, for some, their enthusiasm being a part of the Sustainability Revolution.

Select insights garnered from Asian UHNWIs as part of the study include:

  • 78% of Asian UHNWI participants in the study believe that lasting low interest rates will be part of the new norm after the pandemic and could stay low for the next decade. With interest rates at such low levels, traditional asset allocation between bonds and equities might be challenged.

  • The need for advice from UHNWIs has increased with the world becoming more complex. In this context, discretionary mandates are favored by UHNWIs: 58% of respondents said that, going forward, they will most likely choose discretionary mandates, of which 44% a mix of discretionary and advisory mandates.

  • 89% of respondents believe that the sustainability trend is here to stay, with UHNWIs conveying a desire to better understand the options available to them when it comes to sustainable investing. In that matter, sustainability is a core driver for Next Generation UHNWIs, and they are looking to incorporate their convictions to create lasting impact through their actions.

  • 55% of UHNWIs said they are expecting an acceleration of measures to combat climate change. The main concern among UHNWIs interviewed is whether countries globally will be able to coordinate themselves in their effort to fight climate change. The (mis)management of a country’s natural resources and its consequences are also a concern.

  

  • 61% of participants take ESG / sustainability into account when making investment decisions. Despite this, 56% of the participants who responded that they had not yet actively increased the proportion of sustainability factors in their portfolios are still unsure or do not plan to do so, amid some skepticism and belief that sustainability will not generate superior returns.

  • -  81% of participants think that there will be more digital, less physical human interactions following the pandemic. However, many participants highlighted the importance of in person meetings to them, with the human experience arguably valued more now than it has ever been. There may also be a tradeoff between limiting office presence and reducing related costs, and losing the intangible asset created through the physical interaction of employees.

  • -  87% of participants noted that a bank’s degree of digitalization will matter going forward, which speaks to UHNWIs’ desire for banks to offer IT-related banking services and new ways of communicating as next steps in the evolution of banking.

  • -  83% of participants acknowledged that increasing inequalities will likely continue in the post- COVID-19 world. While the relationship between technology and equality is complex and multi- faceted, many participants responded with hope that developments in technology could help to close the gap, with IT infrastructure upgrades leading to wider access to education.

  • -  46% of UHNWIs surveyed think that the future will see a “more local and less global” world, while 42% do not. The actual consensus among participants is that globalization will persist but probably under a different structure, with UHNWIs reflecting a strong desire for a trusted local advisor that helps them navigate and access markets they can no longer travel easily to.

  • -  Families are still considering to put governance structures in place, and many do not see the value of doing so. 50% of respondents have not structured their family governance, of which only 36% indicated that the pandemic prompted them to consider putting a structure in place.

Jean-François Aboulker, Head of UHNW Offering, Asia at Lombard Odier, said: 

“The world is now collectively trying to envision what happens next in a post-COVID-19 era. The findings illuminate the expectations and roles that private banks play in this new reality – the ability to leverage technology as a conduit in building relationships and providing enhanced service offerings; quality investment advice and discretionary offering, and the ability to facilitate extra financial services, including financing; more engagement and guidance in topics such as sustainability; and a strong expertise and understanding in managing and protecting wealth through generations. ”

Vincent Magnenat, Limited Partner and Chief Executive Officer, Asia at Lombard Odier, commented: “The disruptions and impact of the pandemic are manifold, and have forced leading families and entrepreneurs in the region to rethink everything - not only on the way they are driving their businesses, but also on which values they are willing to drive their life. One thing is clear – UHNWIs have reflected a strong desire for a trusted local adviser that helps them navigate and access markets they can no longer travel easily, and for banking relationships with banks that are aligned with their principles and convictions. Banks that have values that they feel connected with. At Lombard Odier, our privately-owned structure and DNA of innovation and sustainability puts us in good stead to help clients navigate uncertainty in this ‘new normal’, as they seek to protect, grow and transmit their assets and legacies across generations.”

Lombard Odier first established its Asian presence in 1987. Today, it manages private client and institutional wealth while offering solutions for global wealth planning. Lombard Odier delivers these services to entrepreneurs and family businesses from its three offices in Asia – Singapore, Hong Kong and Tokyo, as well as to its network of strategic alliances in Asia, who are leading financial institutions in the region.

Re-disseminated by The Wealth and Society



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