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Continued from
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Speech by Mr
Ong Chong Tee,
Deputy Managing Director, MAS
at Private Wealth Management Conference
Distinguished Guests, Ladies and Gentlemen
1. I am delighted to be
here with you this morning at this Private Wealth Management
Conference, jointly organised by CFA Institute (CFAI), Wealth
Management Institute (WMI) and the Singapore Society of Financial
Analysts (SSFA).
2. I will begin by
outlining some of the key trends presented by Asia's rapid growth
and wealth creation. I will then highlight some of the recent
developments in Singapore, riding on these trends. Of the number of
issues, human capital development stand out, so in keeping with the
conference theme of "Creating the Best Wealth Managers in Asia", I
will then focus the rest of my speech on building a world-class
talent pool to raise wealth management in Singapore to the next
higher plane.
Opportunities and Challenges Presented by Asia's Wealth
3. Asia is doing well economically, powered by the rise of China and
India. With the growth in wealth of Asian High Net Worth
Individuals (HWNI) at 7% a year, the latest Merrill Lynch Cap Gemini
World Wealth Report estimated that Asia's wealth is expected to
reach US$10.6 trillion by 2010, from about US$7.1 trillion in 2004.
4. As Asia's economic
growth story unfolds, new opportunities will arise. The business of
Wealth Management will also have to adapt to tap this growth. HNWIs
in Asia are getting increasingly sophisticated. Perhaps partly
reflecting the acceleration in intergenerational wealth transfer to
those who are younger, or who have lived and studied abroad - the
trend is toward a more comprehensive service model. HNWIs are
looking for complete, integrated and global wealth management
solutions, instead of opportunistic investments. This has prompted
more active client roles in the management of their wealth, by
diversifying their investments both across asset classes and across
geographies; and adopting more complex investment strategies and
products.
5. It has also been
observed that high net worth portfolios have increased allocations
into higher-yielding alternative asset classes such as hedge funds,
private equities, commodities and real estates, from an estimated 3%
to the current 20% over the last 5 years. According to the World
Wealth Report that I referred to earlier, allocations to private
equity in particular dominated, rising from US$42 billion in 2004 to
US$174 billion in 2005. This is a 314% increase over just one year!
As alternative investment allocations approach some optimal levels,
other emerging areas will include international philanthropy and
even more interesting investments like Art or Wine, which are much
less correlated to the traditional investments in conventional
markets.
6. So to summarize :
a) At the business level, there will be increasing competition to
provide comprehensive and integrated services. Private banks are
pursuing ambitious growth strategies in Asia by competing for new
clients, and at the same time, angling for a greater share of
existing clients' wealth;
b) At the investor
level, Asian clients are becoming more sophisticated and demanding
of their private banking relationships.
Singapore
as A Leading Wealth Management Hub
7. These trends favour Singapore as a leading wealth management
centre, not just in Asia, but also globally. Rising wealth in
Asia, and the focus on Asian growth prospects have seen total assets
under management in Singapore's fund management industry grow from
about S$280 billion in 2000 to much more than S$600 billion now.
Growth in private banking assets under management has also been
strong, with anecdotal feedback suggesting Singapore private banking
AUM averaging 20% per annum over the past few years to about US$200
billion currently.
8. This strong
performance can also in part be credited to Singapore's solid
fundamentals. Our location facilitates ready access to global and
regional financial markets. Our reputation for high standards of
regulation and supervision and a robust legal and judicial
framework, is trusted by financial intermediaries and clients alike
to conduct wealth management activities. Apart from our political
and economic stability, HNWIs value our respect for customer
confidentiality and the fact that besides being able to bank, they
can school their children in reputable institutions, carry out high
quality medical checks and enjoy the shopping and other amenities in
a safe and friendly environment here in Singapore.
9. Many of the major
private banks are already here in force and growing rapidly. This is
complemented by the expertise of more than 300 asset management
firms investing throughout the region. Moving forward, we expect an
enlargement of the wealth management eco-system. This will include
trust companies, philanthropy, family offices and the ancillary
service providers such as tax, legal advisors, consultants and
technology platform providers. Together, these specialists will help
deepen and broaden our offerings as a global wealth management
centre.
Human
Capital - The Key to Differentiation and Business Growth
10. Good infrastructure and sound fundamentals will continue to
propel the wealth management industry forward, but at the heart of a
successful industry or financial sector is the need for skilled
manpower. This is crucial for the wealth management industry, which
is a people-centric business built on trusted advice and deep
relationships. Private banks compete for clients based on
differentiated service. Integral to this strategy is talent, which
is the key enabler to delivering differentiation services,
innovation and growth.
11. This leads us back
to the conference theme of "Creating the Best Wealth Managers in
Asia". We first need the warm bodies - and more of them - to make
them the best. To succeed as a leading wealth management hub, it is
critical to strengthen and grow skills - both quantity and quality.
Ideas and execution are what will set one apart from the
competition, and in aggregate, will take the industry to the next
stage of growth. The MAS is therefore taking steps with industry to
build the wealth management talent pool in 2 broad ways:
a) First, by focusing on
the pipeline of talent flowing into the industry.
b) Second, by raising the capabilities of our existing talent stock.
Let me elaborate briefly
on each.
a) Building a Strong Talent Pipeline
12. Private bankers have to think of expanding operations beyond
recruiting relationship managers who bring existing clients along.
It is vital that we build a strong pipeline of fresh blood and
increase the inflow of new but competent people into the industry.
This is a key challenge since the industry is facing competition not
only from other financial segments, and non-financial industries,
but also across borders. In other words, it is the cliche "the
global war for talent". The battle for experienced wealth
managers in this part of the world is an intense one, as private
banks gear up to capture a larger slice of the Asian wealth. If
left unaddressed, the talent squeeze will lead to wage spirals, that
are unsustainable in the long run, and even in the interim, can lead
to a dip in service levels; for example when wealth managers seek to
cope with expanding business by increasing the number of accounts
managed per wealth manager.
13. In view of the tight
manpower market, MAS and industry players have heightened our
collective efforts to expand the talent pool. Let me highlight
some of the initiatives.
14. At the
pre-employment stage, we must continue to attract good graduates
from our Universities, Polytechnics and so on, to enter the finance
sector. According to the Department of Statistics, the financial
services industry has the highest average monthly earnings amongst
all other industries in Singapore. Despite the sector's
attractiveness as a paymaster, it should not be complacent and leave
recruitment to chance. The MAS on its part have stepped up efforts
to profile career opportunities in key finance growth sectors such
as wealth management, through campus outreach events at the local
Universities and business schools such as INSEAD. These efforts have
to go beyond merely raising the profile and awareness of the range
of job opportunities in the industry. To keep pace with the rapid
changes, it is imperative for students to understand the latest
market developments, and be equipped with relevant competencies such
that they enter the finance sector more job-ready. To this end, the
Institute of Banking and Finance have recently established a
Taskforce involving financial industry players, institutions of
higher learning and MAS and WDA, to collectively address the
manpower and skill needs of the financial sector, with focus on the
pre-employment talent pool. This partnership is an important first
step towards bridging the training curricula with the demands of the
finance industry, and sets the stage for future collaborations
between industry and academia.
15. Besides building a
pipeline of bright young graduates into the sector, there are also
specific efforts to attract working professionals from other
financial segments, and non-financial industries to join the wealth
management sector. One key area is in skill conversion training. The
Financial Sector Manpower Conversion Scheme that MAS launched two
years ago has already prepared some 500 participants for entry into
growth areas such as wealth management, settlement operations and
middle office product control. The wealth management programme
offered by Wealth Management Institute (WMI) alone has trained over
150 trainees for entry into the sector to-date. I encourage the
industry to tap on these conversion graduates as an additional
resource pool to support your expansion. The conversion graduates,
having undergone rigorous selection tests have been identified to
have high potential.
16. Apart from grooming
our own pool of indigenous talent, it is equally critical to keep
attracting top people and good talent from all over the world. They
add not just numbers, but also bring diverse perspectives,
experiences and ideas. Singapore has always welcomed talented
individuals to complement domestic talent. Our position as a choice
location for global talent has been noted by The Economist's "World
in 2005" Publication which rated Singapore as the best Asian city to
live in; and the IMD World Competitiveness Yearbook 2005 which
declared Singapore as the most attractive Asian economy to
foreign-skilled professionals. In the past year, MAS had also
partnered some financial institutions in various overseas outreach
events to showcase the opportunities in our financial centre. We
will continue to work with industry to participate in outreach
events in major cities around the world to engage overseas
Singaporeans and foreigners alike.
17. It is worth
reiterating that it is not in our collective self-interest for each
firm to embark on aggressive musical chair hiring, by poaching teams
from one another as the only way to grow capability. MAS will
continue to work with the industry to enlarge the wealth management
pool, to upgrade skills and raise capacity.
b) Raising
Capabilities of Existing Talent Stock
18. Let me now elaborate on the second priority of raising the
capabilities of our wealth management professionals who are already
working in the industry. In line with clients' growing
sophistication, the demands and expectations of wealth managers have
increased. They are expected to be knowledgeable about not only of a
broad array of financial instruments, but also have the critical
'soft-skills' to deepen client relationships. These factors
translate into greater demands for well-trained wealth managers, and
pressures on the industry as a whole to raise the quality of
training.
19. As we set the stage
for further growth in wealth management and private banking,
Singapore is well placed as a training ground for wealth
management. This will not only raise the quality of our workforce,
but also attract professionals from all over the world to upgrade
and excel in the trade. The Singapore Management University (SMU),
Wealth Management Institute (WMI) and the Credit Suisse Business
School are shining examples of the diversity and depth offered by
the wealth management training network here. Besides training
providers, MAS has been and will continue to work closely with
industry associations and professional bodies like CFA Institute (CFAI),
Singapore Society of Financial Analysts (SSFA), the Association of
Banks in Singapore (ABS) and the Singapore Trustees Association (STA)
to raise the quality and professionalism of our wealth management
professionals.
20. Apart from
establishing a vibrant and self-sustaining training and education
hub, it is equally important to inculcate a systematic and
institutionalized approach to upskill the capabilities of our
financial sector workforce. With this in mind, the Institute of
Banking and Finance, with the support of MAS and industry, launched
the Financial Industry Competency Standards (FICS) last year to
benchmark competency standards of financial professionals, including
wealth managers, to international best practices. Wealth management
has been identified as a key component of the initiative, and
competency standards have been established for the full range of job
families in the industry - from relationship management to product
development to trusts and estate planning. To add momentum to the
effort, the FSDF, which is the MAS-administered Financial Sector
Development Fund, will co-fund 70% of the training and assessment
fees for FICS-accredited programmes incurred by financial
institutions for their Singapore-based staff. I strongly urge your
firms to make use of the funding scheme and to encourage your staff
to consider the FICS certification.
21. At the macro-level,
I have briefly outlined the steps being taken to broaden and deepen
skills. Yet, we all know that equally if not more important, each
financial institution will need to review and fine-tune its own HR
policies - to attract, develop and retain staff. In other words, it
makes good business sense for industry participants to focus on
proactive employee retention programmes that go beyond dollars and
cents. Banks would need to look at the "hygiene factors" of people
management and offer their staff opportunities for personal and
professional growth. This does not refer only to training and
promotions, but also involves other aspects such as flexible work
arrangements, possibility of new assignments and even the chance to
work overseas.
Conclusion
22. To conclude, the wealth management industry is in an exciting
phase of growth. There are many priorities and challenges to be
considered, alongside the strategies to be taken. However, I cannot
emphasize enough the importance of devoting sufficient management
time and corporate resources to grow and develop talent including
fresh ones. People are, and will remain the most important factor
in delivering quality advice and solutions, and cultivating valued
client relationships - key elements to give a private bank that
sustained edge in this competitive business.
23. MAS remains
committed to creating a pro-business environment where the different
players in the wealth management community can thrive and succeed
but without compromising on high professional standards and
conduct. We look forward to continued partnerships with key
industry stakeholders and industry associations in the area of
financial manpower development.
24. Allow me to thank
the organisers again for inviting me here to share my thoughts this
morning. I know that there is an exciting programme ahead covering
investment and other themes. May I close with a quote : "If you're
happy, you're wealthy. Happiness doesn't need a bank account". So
have a happy time, not least over the next two days of the
Conference.
Source:
www.mas.gov.sg News Release 29
Jun 2006
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Singapore as A Leading Wealth
Management Hub
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