International life companies, meanwhile, see great prospects for the country and wider region. So, what is it that’s getting them excited?
Hansard has been active in Malaysia for more than 10 years while the new kid on the block is RL360°, having set up a branch office in December last year following the granting of a licence by the Labuan Financial Services Authority.
Global sales and marketing director Graham Morrall can barely disguise his pleasure in the fact that business is booming.
“We are getting very good levels of business through south east Asia. Present Value of New Business Premiums (PVNBP) growth is 37.7% in Asia and we’ve just had our best year ever for that region. Globally, our top 20 distributors account for 70% of new business and 22% of that comes from Asia and 27% of our total new business is from Asia.”
Over at RL360° chief executive David Kneeshaw, chief executive says Malaysia has a lot of potential.
“Why not go there, basically? It is relatively well off among south east Asian countries and has a growing middle class who are doing the things middle classes do – buying cars, taking out financial products like mortgages, pensions, savings and investments.
“There’s good infrastructure, a well-educated, low-ish cost workforce, it has a decent expat community, a large oil and gas industry, and there is a proper regulated financial system, which means there are clearly defined rules of engagement in terms of who we can deal with and distribute to.”
Lovely place to live
So why not, indeed; especially as it is also “a lovely place to live,” according to Matthew Green, 20-odd year resident of the country and director of Holborn Assets Malaysia.
“We’re a few degrees north of the Equator, the average temperature is about 32c, year-round. It never goes much above or below that,” he explains.
But just as the hot and humid conditions do not fluctuate much, Green says the local expat advisory market is also somewhat stale and ripe for change.
“Most of the expat-focused advisory businesses here are what I would call your stereotypical offshore brokers. They have a couple of principals and a handful of advisers, and are old-fashioned in the way they operate, their customer services, marketing and systems.”
Holborn Assets’ entry into the Malaysian market comes through the acquisition of the local firm Green co-founded, Greenwood Private Wealth Management. Green says the country has great potential as a regional base for a well-resourced, modern, technology-equipped advisory firm like Holborn.
“Three or four years ago my business partner and I came to the conclusion that those stereotypical offshore brokers, including our own, would cease to exist a few years down the line, so we started to look for opportunities through which we could take the business forward.”
Green was put in touch with Holborn’s founder Bob Parker through a mutual contact and, in the course of rounds of talks in the UAE, his “eyes were opened” about how an advisory business could be run in a modern and effective way, that is good for clients and your own firm.
Big plans to grow
Holborn has big plans to grow in Malaysia, with a target of 15 advisers in its new Kuala Lumpur headquarters by next April. Green says there are many very good advisers locally who will be attracted by what Holborn has to offer them in terms of modern business practices, training and career development – elements he feels are lacking in many local expat-focused firms in Malaysia.
“I think there is a pent-up demand for a good place to work. Most firms are small and there’s not much of a career path once you are established and have gone so far. We’re already recruiting a lot of good advisers from within the Kuala Lumpur pool who are attracted to what we are going to be doing.”
A strong and progressing advisory market will also be good news for RL360, which opened its office in Kuala Lumpur at the beginning of the year. Kneeshaw says business has been good, though will not disclose figures at such an early stage.
Interestingly, he says the initial expectation that the business would be largely expat focused are beginning to change in the face of levels of higher than anticipated custom from locals.
“Our distribution base is weighted towards expats but that is changing quite quickly and we’re increasingly working with local advisers who serve the local market, By the end of the year I expect it will be around fifty-fifty.”
RL360°’s licence with the Labuan Financial Services Authority allows it to sell products and administer policies in the country. Labuan is a Malaysian island territory in which an international business and finance centre was established two decades ago to attract foreign companies and financial services providers.
Labuan is also the regulated route by which Holborn Assets is licensed to operate in Malaysia as an advisory firm, and so too Hansard International, which, like RL360, is an Isle of Man-domiciled international insurance company.
Local, high net worth investors
Hansard’s Morrall says the majority of Hansard’s Malaysian business comes from local, high net worth investors, who tend to choose its products to save, invest and protect their wealth in stable major currencies such as US or Aussie dollars.
“We serve the HNW market that is looking for something that they cannot get from the local retail market. For example, lots of Malays send their children to school or university outside of the country, so they want to save in the currencies in which they will pay those fees – that is a big area for us in terms of the middle and upper classes.”
In the past year, Morrall says a relatively simple tweak to an existing product, by which investors have been given more flexibility in how they save, has been a big hit.
“The Malaysian ringgit has devalued a lot over the past few years – and that is a trend that people tend to think will continue – and so they are increasingly looking to invest in non-local currencies. By adapting our product so people can start and stop investing more easily, without the type of inflexibility you might associate with some insurance plans, we have generated some traction and given a whole new dimension to the business, really.”
Holborn’s Green is also bullish about the country’s prospects. He says new regulations coming into force, particularly in the Isle of Man that will require insurance companies to only deal with licensed advisers wherever they operate around the world, will benefit Malaysia, as a regulated environment.
“That’s going to have a big impact in the Asia Pacific region. There’s undoubtedly going to be some consolidation and that’s part of the reason Holborn was attracted to Malaysia. Expat advisers based in non-regulated environments such as Thailand, Indonesia and Vietnam, are probably going to struggle to get terms of business with Isle of Man insurance companies, but that is not the case if you are based in Malaysia and so that is an opportunity for us to leverage that regionally.”
Regional expansion is also eyed by RL360, particularly if plans to create an Association of South East Asian Nations (ASEAN) trading bloc one day come to fruition.
RL360° chief executive Kneeshaw says: “When that happens, if you have a hub in one of those countries you will be able to use that as a base to operate throughout the region. So, we see Malaysia as a hub for south east Asia. It’s a longer-term prospect, but when this takes off and the walls go up, we want to be on the right side of them.”
Hansard’s Morrall agrees: “Labuan was chosen because it gives a lot of scope to expand across the ASEAN region. Perhaps south-east Asia is not quite the same place it was five or 10 years ago in terms of economic growth, but, in fact, you certainly don’t sense that in Malaysia, or get an impression of a country that’s doing badly – there’s a lot of infrastructure being built, it’s a vibrant place, and our levels of business across south east Asia certainly don’t suggest that either, so we are very optimistic about the future for Malaysia and the wider region.”
