INTERNATIONAL STUDY TRIP 2016

PRIVATE WEALTH MANAGEMENT

Stakeholders

• High Net Worth Individuals

• Private Wealth Managers

• Regulatory and Taxation Bodies

Customers – High Net Worth Individuals

Customers: Who are you?

HNWI

Business owners/Entrepreneurs Executives, Retirees Multi-Generational

Wealthy FamiliesWidowed Spouses and Beneficiaries

- $1M investable finance

or- Net worth of $3M

Are you the 1% or 2%?

Canada Singapore

HNWI Population 331,000 107,000

HNWI Percentage 0.95% 1.95%

HNWI Total Wealth US $1 Trillion US $543 Billion

HNWI Average Wealth US $3.02 Million US $5.07 Million

Origin of Wealth Canada, USA, Middle East, South America, China

Singapore, Indonesia, China, India

Global market sizes: Population: 14.65 M Wealth: US $56.4 TrillionsGlobal growth: Individuals: 6.7% Wealth: 7.2%

Maple Syrup or Dumplings?

Can

ada

• Pros:• One stop shop• Non-residents investing in

Canada• Stable banking• Mostly neutral politics

• Cons: • Budgetary uncertainties

Sin

gapo

re • Pros: • One stop shop• Strict confidentiality• Generous tax incentives • Socio-political stability• Financial hub in Asia

• Cons:• Shortage of Relationship

Managers • High client acquisition costs

Gimme more!

Asian investors are more aggressive in handling the investments.

Social

Legacy

Intergenerational

Legacy

Wealth Management

Wealth Building

Experience of transition from 1st to 2nd generation wealth

• Asian: Inadequate • Western: Adequate

Source: University of Pennsylvania

You don’t go where you don’t know!

Western Europe Middle East Latin America North America Africa Eastern Europe Japan Asia-Pacific (excl. Japan)

0%

10%

20%

30%

40%

50%

60%

70%

80%

North America Singapore

Diamonds or art?

Sports Luxury goods Art Jewelry, gems, watches Others0%

10%

20%

30%

40%

50%

60%

11.60%

19.10% 16.70%

29.20%23.40%

15.80%

19.20%

12.70%

30.20%

22.30%

North America Singapore

Private Wealth Managers

Let’s be best friends

Business’ perspective

Create and retain a "book" of clients

Manage assets of (U)HNW* individuals or families

Understand products to create portfolio based on client’s goals

Customer’s perspective

Generate steady income through investment in assets

Deliver performance based on return/risk range agreed

Maximize the invertors’ net worth in the long run

* (Ultra) High Net Worth IndividualsSource: Delloite

Standard services Tailor-made services

In-person interaction “Anytime, anywhere” (multi-channel)

Quarterly reports Real-time reports

Limited information Regulation and tax transparency

Offshore Onshore

I feel like I know you!

Source: Delloite

Source: https://geert-hofstede.com/canada.html

We’re not all the same (1/2)

Power distance

Egalitarian

Hierarchical

Individualism

Individualist

Collectivist

Uncertainty avoidance

Open to new ideas

Very open to new ideas

Long term orientation

Small propensity to save for the future

Supporting long-term

investment

Source: https://geert-hofstede.com/canada.html

We’re not all the same (2/2)

Power distance

Free information

sharing

Selective information

flow

Individualism

58% look for personal advice

53% look for family advice

Uncertainty avoidance

45% prefer digital than

direct contact

52% prefer digital

contact

Long term orientation

51% look for wealth

preservation

55% look for wealth growth

Source: https://www.worldwealthreport.com/

Culture has an impact!

Real estate12%

Alternative investment

12%

Equity34%

Cash and cash

equivalents24%

Fixed income

18%Real estate

22%

Alternative investment

13%Equity22%

Cash and cash

equiva-lents27%

Fixed income

16%

Source: https://www.worldwealthreport.com/

For you or for your children?

Retail banksRegistered investment advisorsFull-service wealth managers

Pure private banks

Investment banks or “one bank”“Independent” private banks

Fund-based advisorsBrokers

Flow playersLocal commercial banks

Source: BCG Perspectives

In what forms and shape do we appear?

REGULATORY ENVIRONMENT

TREND

MARKET

HIGH

INCREASING

MATURECOMPETITIVE

MODERATE

INCREASING

GROWINGCOMPETITIVE

Regulators are tough!

OFSI (Office of the Superintendent of Financial Institutions Canada)

• regulates all Canadian federally incorporated financial institutions

• conservative approach • characterized by prudent regulatory

concerns and a focus on investor protection

MAS (Monetary authority of Singapore)

• integrated supervision of financial services and financial stability surveillance

• develop Singapore as an international financial center

• Fraud & Risk management

And they can’t make their mind up in Canada

Gimme your money (but not a lot of it)

• Dual taxation –Federal 29% + Provincial

• 50% taxation for HNWI• Double tax treaty with 92 countries• Stable but high tax regime

• Lower tax rate on income – 20 %• Double tax treaty with 79

countries and international conventions targeting money laundering

• Stability of taxation stemming from the stable politics and economy

Where are we all going?

•TRANSPARENCY

•GROWTH

•CONVERGENCE

•DIGITIZATION

You wanna know more, and more easily

• Major Events: 2008 financial crisis, Madoff Investment

• More risk averse investor base -> Greater Transparency & Thorough due diligence

• Firms must respond to the new regulatory environment

• more disclosure -> proactive reporting• Investor education -> Powerful client

interface tools

It’s a dog eat dog world out there

• Rising Cost of Operations • Increased compliance costs• Increased customer acquisition

costs

• Reduced operating margins

• Firms need to enhance offerings to differentiate their services

So dogs are eating dogs

• Growth through traditional organic strategies is

• Costly • Time consuming

• Industry Consolidation

• Economical, Efficient and Timely Growth

Then there’s robotic dogs eating the bigger dogs

• Technological advances impacting the entire value chain

• Transforming Client-Advisor Interaction

• Reinventing the Business Model: Reduced costs and New Value creation

• Robo-advisors• Data Analytics