|Allen Lo is responsible for leading the wealth management business. He is also a member of the board of directors of UBS International Hong Kong Limited. Here, he shares with UBS Perspectives his opinions on wealth management trends, investment opportunities and the global economic outlook for 2012.
Allen Lo was appointed Hong Kong Country Head and Chief Executive of UBS AG in 2009. He has been with UBS since 1997 and has 35 years experience in the financial industry, including positions at Citibank and Coopers & Lybrand.
He has a Bachelor of Commerce from Concordia University, Canada; a Graduate Diploma from McGill University, Canada; and is a graduate of the Global Leadership Program from Harvard University, the US.
How do you see the wealth management industry in Asia developing for the remainder of 2012?
We think the macroeconomic environment will continue to be challenging, dominated by a recession in the eurozone and slow economic growth in the US. However, we believe Asia will continue to be the growth engine for the private banking industry. The movement of wealth from the West to the East is not just about individuals moving their investments to Asia, but also that the wealthy population is growing faster in Asia than anywhere else in the world.
As new wealth continues to be created in Asian emerging markets, increasingly more high net worth individuals in Asia appreciate professional advice in protecting or growing their assets, and there is increasing awareness of the importance of diversification and asset allocation. Asian wealthy families are also seeking advice on non-financial services. We anticipate greater demand for wealth planning, succession planning and philanthropy services in the future.
One thing we should keep in mind, especially in a challenging market, is to remain close business partners with our clients and help them navigate through periods of uncertainty.
Do you see any interesting trends in the Asia-Pacific wealth management industry?
Asia’s attractive investment environment has attracted more foreign banks to open wealth management units in the region. Margins are being squeezed from increased competition as more firms come to Asia. These newcomers face steeper uphill battles — as regulatory requirements for investor protection are increasingly prescriptive, it takes significant investment and resources to adapt swiftly to the evolving industry guidelines and stay competitive.
Furthermore, private banking is a very personal business — it requires interpersonal understanding and, above all, trust. Not only is Mandarin one of the required languages when servicing a client from Beijing, fluency in a client’s industry lingo and the expertise to provide comprehensive financial solutions to a client’s business and personal investment needs are equally crucial. However, talents with such a quality profile are very few and far between, and newcomers therefore face the challenge of building a competitive team.
The long-term opportunity in Asia is extremely attractive, but poses short-term obstacles. If Asia’s economy continues to slow in the next three to five years, only firms with a strong platform and scalability can withstand the challenge.
What is your view of competition from local banks in Asia?
Technology has enabled clients to be more informed and has made them more global. Clients are constantly being exposed to and affected by daily global events. A strong private bank must have a global perspective and an international network to truly provide top-quality advice.
As the complexity of clients’ investment needs increases and as they become more global, a good private bank must be able to provide extensive expertise, covering clients’ local and global needs. We have been servicing our clients in Hong Kong for almost 50 years now. We have helped our clients navigate through the various financial cycles with solid wealth management advice built on our experience and worldwide coverage. At UBS, we work as business partners with our clients, from the early stages of wealth creation to wealth preservation and succession.
What would you say is one of the challenges for the wealth management industry today?
With the rapid growth of the wealth management industry in Asia, there is an increasing demand for well-qualified professionals.
As an industry leader, UBS continues to attract and retain high-caliber talents, still we have to build a pipeline. A client advisor needs to notch up years of experience and go through several market cycles to acquire the depth and breadth needed. In response, we launched the Wealth Management Associate Program, which aims to groom mid-career hires into client advisors.
Are private banking clients in Asia seeking more diverse investment opportunities?
Today’s clients take an active interest in their investments and expect a greater level of service and value. We work alongside each client on asset-allocation decisions to optimize their risk-reward balance. Our primary objective is to help our clients achieve their investment performance.
What is UBS currently doing to strengthen its leading position in the Asia-Pacific?
We see unprecedented opportunities arising from Asia’s growing wealth. However, this is accompanied by challenges from increased competition, margin erosion and tighter regulation. We must strengthen ourselves by adapting quickly to market changes. In this way, we can help clients respond to changing market situations in real time and present them with a cohesive financial solution. That is when we truly add value.
Our established platform and capital strength have allowed us to adapt swiftly to the evolving private banking regulations. We fully believe our continued best-practice approach will set us apart from our competitors in the long run and we will continue to lead the private banking industry through solid, timely investment advice and seamless execution.
This vision has enabled us to build a strong, long-lasting relationship with our clients. The continuity of our dedicated team exemplifies this and I am proud that the average tenure of our senior management in Hong Kong is 12-plus years. This speaks volumes for our commitment to delivering a consistent and solid performance in building our strong franchise and establishing trusting relationships with clients.
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