HNWI Trends in Asia A Singapore Perspective Presentation to Hubbis - - PowerPoint PPT Presentation

HNWI Trends in Asia A Singapore Perspective

Presentation to Hubbis Asia Wealth Management Forum 2016 Zurich Chris Burton Managing Director, Vistra Singapore 25 October 2016

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Vistra Group (as at June 2016)

>200k structures under administration Over 2,500 employees ‘Top Four’ corporate and trust service provider globally 64 locations across 41 jurisdictions Market leader in Asia with 14% market share

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Vistra’s Four Pillars

Company Formation Corporate & Private Clients International Expansion Alternative Investments

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Vistra Global Network

Our main Private Clients Offices

Regional Trends

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7% 20% 15% 7% 6% 7% 4% 7% 12% 16% 13% 3% 5% 6% 1% 7%

US$1 Bn+ US$750 - US$999 MM US$500 - US$749 MM US$250 - US$499 MM US$200 - US$249 MM US$100 - US$199 MM US$50 - US$99 MM US$30 - US$49 MM

POPULATION CHANGE % WEALTH CHANGE %

Rapid Increase In UHWIs And Proportionally Higher For Asia…

38.3 9.1 0.9 0.5 1.7 1.6 12.5 11.3 0.7 51.8 14.3 1.4 0.8 2.5 2.2 15.6 14.0 0.9

Global Asia Russia/CIS Africa Latin America Middle East North America Europe Australasia 2014 Projected 2024

+57% +24%

UHNW Distribution, by wealth tiers (Global) Historical and projected increase in centa-millionaires (in 000 of people) (1)

Source: Wealth X (1) US$ 100MM in disposable assets

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Asia vs Europe: Vastly Different In HNW Assets By Client Profile… But Entrepreneurship Still Dominates

Source: Oliver Wyman analysis

Entrepreneur / business owner

Asia: “New” Money Europe: “Old” Money

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Asian HNWIs’ Families And Businesses Becoming More Mature…

Global Investments Worldwide Spread of Family Members Private Equity Cross-border M&A Growing Generations

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Risk Mitigation - China HNWIs Diversify Their Assets Worldwide…

HNWIs more international in their outlook and behaviour…

Likely reason for HNWIs holding assets worldwide Europe Asia Pacific Offers better opportunities for high returns/interest rates 38% 62% Offers me a safe haven from local economic instability 21% 29% HNWIs have business interests in this / these regions 33% 27%

Source: Barclays Wealth Insights Source: China Merchant Bank, Bain, Bloomberg, Barclays, Oliver Wyman analysis

Proportion of China HNWIs/UHNWIs with overseas investments

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More Evolved / Sophisticated Asset Allocation, Not Property Focus…

FO Investment portfolio Asset class (in % of global composite portfolio) Europe (%) APAC (%)

Bonds 16 16 Equities 25 25 Alternative investments:

• Private equity
• Real estate direct inv.
• Hedge Funds
• ETFs
• Other assets (e.g. art)
• REITs
• Tangibles

50 23 13 8 3 1 1 47 28 12 5 2 1 Commodities:

• Agriculture
• Commodities

2 1 1 4 3 1 Cash or equivalent 8 8

• Private equity 23 28

Source: UBS/Campden Wealth 2015

Surprising similarity in asset allocation: with PE as most common choice

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Landscape is becoming more complex…

FATCA Common Reporting Standards Tax Amnesties Abolition of P.I. regime BO ownership disclosure Exchange of information

Need for professional advice Ongoing compliance Integrated advice

More Complex Environment…..

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ILLUSTRATIVE

200 400 600 800 1000 1200 1400 1600 1800 2000 1 2 3 4 5 6 7 8 9 10 11 12 13

USA Europe Asia

x x x

Time Maturity / Sophistication Asia

• Multi-banked
• Entrepreneurial wealth
• “New” money
• Property-driven
• Opaque
• Family confidentiality

Europe

• More likely to single bank
• Inherited wealth
• “Old” money
• Broad asset allocation
• Transparent
• Professionally managed

Evolution Of Wealth Management: Asia vs Europe

Local Trends

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• Social and severe income inequality
• Security issues – CRS reporting
• UHNWI – trust/family office for asset protection
• Succession planning - less of an issue (one-child policy)
• Inheritance Tax (“IHT”) – Shenzhen pilot city to levy IHT
• Emigration (Singapore - cultural/language affinity and stable political

environment)

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• Overtook China as world's top FDI destination in 2015
• Highest remittance receiver in 2014 ($ 70bn) and 2015 ($ 69bn)

respectively backed by NRIs

• 4th largest population of millionaires in the Asia Pacific region:

estimated to increase to 294,000 by FY 2021

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• Trusts/PTCs already commonly used by HNWI Thai families
• Inheritance Tax (“IHT”)/Gift Tax implemented on 1 February 2016
• Triggered a wave of estate planning for smooth succession and IHT

mitigation among UHNW Thai families in 2014 and 2015

• Political instability: under military rule since 2014 and recent demise of

Royal King Bhumibol

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• Tax Amnesty – as of Sep 2016, USD273bn has been declared by Indonesian

tax residents and USD10.5bn repatriated to Indonesia (~4%)

• More assets expected to be declared by March 2017
• Hottest issues: Tax Amnesty and CRS:
• HNWI families concerned over confidentiality
• Further concern over CRS (Indonesia has undertaken to

exchange information by 2017)

• Re-structuring ongoing among many HNWI Indonesian families, in particular

addressing CFC, family governance and succession planning

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• 1MDB scandal
• Singapore shut down BSI and Falcon Private Bank
• Falcon Bank faces Swiss criminal probe
• Weakening of currency - USD/MYR 4.20 (some banks predict

USD/MYR at 5.00!)

• Political uncertainty and a slowing economy
• Malaysian families are looking at ways to preserve MYR assets and

protect their wealth

• Asset leverage being reduced

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Summary: Regional/Local Trends to Watch…

• The rise of the 2nd & 3rd generation
• Desire to access global capital markets
• Concerns over ‘national’/political risk
• Movement of family members abroad
• Opportunities in India
• Asia falling into line with global tax and transparency

standards

• Emerging tax initiatives (IHT/Amnesty)

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Questions ?