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     FrontPage Edition: Fri 30 June 2006

Singapore as A Leading Wealth Management Hub


Speech by Mr Ong Chong Tee, Deputy Managing Director, MAS at Private Wealth Management Conference
An Excerpt
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...
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...
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;
At the investor level, Asian clients are becoming more sophisticated and demanding of their private banking relationships.
Singapore as A Leading Wealth Management Hub
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.
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.
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
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...
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
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.
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.
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...
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...
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...
b) Raising Capabilities of Existing Talent Stock
...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...
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...
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.
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...

Full Text of Speech

Source: News Release 29 Jun 2006

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