A new chapter for advisory firms in Hong Kong & Singapore.
Hong Kong’s decisive action to outlaw indemnity commission with only five months notice in 2014, led to a marked evolution within its IFA community since then as the sector endured a period of consolidation.
In Singapore, the city-state’s version of the UK’s Retail Distribution Review has been applied more slowly, but with similar pressures on smaller IFA practices.
It was insightful therefore to be involved in International Adviser’s Future Advisory Forum in Hong Kong and mix with delegates at their event in Singapore, both in early October.
The mood among attending advisers was bullish – both among local firms and expats, and with an acknowledgement that traditional approach to business is facing pressures to change – both in how IFA businesses derive their income and the value proposition they offer clients.
In Hong Kong, MitonOptimal’s MD & CIO Scott Campbell took the stage to explain how DFMs must identify value at a time when many asset classes are deemed expensive. Scott considered how advisory firms are working in partnership with DFMs to provide professional, regulated expertise to clients in jurisdictions around the world. The increase in focus on costs leading to an acceptance that client fees should be fair and investment vehicles more transparent.
International Adviser, a trade magazine for the international adviser industry spoke recently to some of the winners of their Best Practice Awards in Asia. The concensus was that adaptability is key, and standards need to continue to be raised. Byron Murphy, Globaleye’s global MD explained, “There is no excuse not to be qualified. Those that are only reactive to change and do the bare minimum won’t survive, let alone thrive”. Fry Group CEO David Pugh said, “the standard of advice in Singapore has improved in the past couple of years, but we’ve still a long way to go. For that to happen, it requires regulatory change. Without regulatory change, people won’t change the way they are doing business.” In Hong Kong, Just Service HK Chief Executive Phil Nielson said that “IFAs in Hong Kong needed to invest in and embrace technology and knowledge” to remain competitive.
As Asia’s two most established and well-regulated jurisdictions look to the future, further change is inevitable. Regulatory evolution continues to influence the nature of investment products available to advisers and their clients, and to their benefit.
Both Hong Kong and Singapore are some way along their regulatory journey. For the other largest offshore IFA region – the Middle East – it is only just beginning.
Our experience in highly-regulated jurisdictions has shown that DFMs have an important role to play in working with advisers, trust cos and family offices to support their clients. We look forward to the challenge.