There has been a lot of speculation surrounding what the world of financial advice will look like as countries begin to recover from the pandemic and slowly move towards easing their various restrictions.
Some believe (or hope) that advisers will go back to meeting clients face-to-face. -while others are adamant that the new world of video calls will prevail and become the norm.
Having borne the initial brunt of the virus; countries across south-east Asia have, for the most part, been working their way back to some semblance of normalcy. This progress has seen companies unveil products, joint ventures and expand.
But with Hong Kong still in the midst of political turmoil, can Singapore finally stake its claim as the prime location for financial advice in the region?
International Adviser spoke with several industry players to understand what their outlook for a post-covid Singapore is and what the future holds for the profession in the Lion City.
A ‘safe harbour’
Gary Harvey, chief executive of St James’s Place Singapore, said: “Long before the pandemic began, Singapore had already established itself as a regional financial services hub and an important Asian gateway for global capital. The country’s pro-business fundamentals, highly-skilled workforce in financial services and reputation for tax competitiveness make it an attractive destination for Asia’s affluent. Over the years, we have seen a large number of family offices and wealth management firms setting up in the country.
“Singapore’s stable governance and strongly regulated financial markets ensure that investors can be comfortable about various economic, financial and regulatory risks when investing their money through Singapore companies. Particularly in the backdrop of a covid-impacted world, that is seeing increasing geopolitical tensions and market volatility, Singapore is seen as a safe harbour for investors navigating turbulent seas.
“Singapore has a unique proposition in that it is part of Asia and has strong relationships with all countries across the region.
“This allows it to maintain its position as an attractive and secure destination for many of Asia’s affluent, allowing them to stay closely connected to some of the fastest growth regions in the world.”
He continued: “Talent is another important consideration for Singapore’s success. Not only does Singapore boast a highly-educated and skilled local labour force but it is also an attractive destination for many senior executives in financial services. This helps to concentrate the best talent available in the region and establishes Singapore as a preferred destination for clients and advisers alike.
“Thanks to strong governance and management through the pandemic by the Singapore government, and a clear direction, Singapore is already experiencing recovery in the post-covid world. Singaporeans are also more financially sophisticated and digitally savvier than their regional peers.
“They understand the importance of innovation and need for engaging financial advice in times of uncertainty. Also, consumers have embraced a hybrid approach to financial advice that combines face-to-face engagement and technology. This has proved successful over the past year with clients getting the important advice and support through this turbulent year – this can only bode well for financial practitioners of the future.”
Training
Eryk Lee, chief executive of AAM Advisory, believes that not only does the Lion City have the potential to become a wealth hub, but its government is also stepping up efforts to help train and develop professionals to boost the industry’s capabilities.
“There is big opportunity for Singapore to be a wealth management hub and specifically one that specialises in catering to HNW clients, as these types of clients have the financial capability to shop around the various regions to get the best advice and service.
“The political stability of Singapore and the government’s drive to grow the wealth management sector through 13X and 13R tax incentives schemes makes it an attractive place to do business.”
The 13R scheme facilitates the domiciliation of funds into Singapore and attract funds of non-Singapore investors; whereas the 13X scheme provides enhanced flexibility for Singapore-based funds to source for investment mandates. The latter scheme has no restrictions or financial penalties on the investments made by Singapore residents.
“In addition, the government is also promoting training and development in this space to ensure that our workforce is equipped to manage the rising demand. For example, the Wealth Management Institute of Singapore (WMI) offers certification courses for family office advisers as well as other private banking and trust services certifications. These courses are eligible for funding by the Institute of Banking and Finance and course fees are heavily subsidised.
“Singapore is a member of the Financial Action Task Force (FATF) and is compliant with OECD standard for effective exchange of information, making it a legitimate jurisdiction for wealth management, asset protection, tax and estate planning.
“There is no capital gain tax or estate duties and no exchange control, which means funds can be freely remitted to and from Singapore. Similarly, there are also comprehensive double taxation agreements between Singapore and other Asean countries; which, in turn, attracts a lot of money from neighbouring countries into Singapore.
“There are also other advantages of Singapore as a trust jurisdiction – eg protection against forced heirship, tax exemptions for domestic and qualifying foreign trusts etc. The management of the current pandemic has also shown the world the capability of our Singapore government and further enhances the confidence that clients can have when they place their wealth in this jurisdiction.”
Technology
Huw Wedlock, director at The Fry Group Singapore, said that the regulator’s focus on expanding the fintech, insurtech and regtech sectors will undoubtedly prove beneficial for Singapore’s attractiveness – both in terms of firms and clients.
“Singapore has been a hub for financial services and wealth management in south-east Asia for some time, but the question is how much it can broaden its appeal out to east Asia/north-east Asia and beyond,” he said.
“Recent geopolitical events mean it’s well placed to capitalise on its potential to grow in this area even more, particularly given the escalating tensions in Hong Kong.
“Notably, there is news of foreign currency deposits in Singapore growing substantially in the first half of 2020, with the Monetary Authority of Singapore (MAS) monitoring investment flows closely. One of the main reasons for this is that Singapore is seen by investors and institutions as a neutral territory with good relationships with the US, EU and China.
“Singapore has a solid foundation. It’s home to a strong presence in wealth management, insurance and banking, and is focused on growing its fintech, insuretech and regtech industries too. Regulation is strong, and its stable political and economic backdrop are also positive factors for new investors.
“Increasingly expats from other jurisdictions are viewing Singapore as a good place to base themselves or establish businesses. And success will breed success, as they accrue wealth themselves or extract value from their business the Singapore advice sector will continue to grow.”
From products to planning
According to Andrew Talbot, executive director and co-founder of Avrio Wealth, the focus on selling products is bound to disappear which will make room for true financial planning.
“Clients specifically want to know whether they will be okay and that’s the big question that we always need to ask. And having a pandemic has maybe focused on that bit more, they want to know whether they can give up their current job, do something else, move to another country. And when we do planning, we’re running over those ‘what if’ scenarios for them.
“And that’s the true value of planning, it’s not products.”
But, as the pandemic has showed, these plans need to have various degrees of flexibility built in, Talbot added.
“With cross-border clients, situations can change very rapidly where they might need to leave the country quite quickly.”
This is something Talbot and his team have seen in other countries, with some clients giving only a few days’ notice before moving to another jurisdiction.
“So, having the flexibility in your plan to change that, or having a plan B, is very, very important. It was important before, but I think it is even more so now.
“You don’t want to be in an adverse tax position, you want to be able to have a really good flexibility, you want to be able to change that plan very quickly.”
The Hong Kong advice market has been active lately with firm such as HSBC and Citi undergoing hiring sprees to bolster their wealth operations. But not everyone seems to be on the same wave length. IA revealed in February 2021 that BNY Mellon Wealth Management was closing its Hong Kong branch to focus on other regions.
On top of that, many Hong Kongers have fled the special administrative region due to the political turmoil with China, with thousands turning to the ad-hoc UK visa programme.
As a result, Singapore’s stability and neutrality as a jurisdiction, coupled with several tax incentives, could be key in attracting wealth and business exiting the Hong Kong market and affirming it as the premier financial advice hub in the region.
