As the number of high net worth (HNW) individuals in Thailand continues to rise despite the uncertain global investment environment of the past few years, HNW wealth management matters have become more complex.
This fast-growing segment of the finance industry is now seeing the emergence of a rapidly growing sub-segment of wealthy second- and third-generation members of HNW families highlighting the issue of trans-generational wealth transfer. Meanwhile, the nature and challenges of HNW wealth management increasingly revolve around differentiation of client demands and consequent need for customisation.
“The usual demands of HNW clients include asset security, wealth protection, family office, children’s education, and wealth inheritance,” reveals Ms. Lalitphat Toranavikrai, Chief Executive Officer, SCB-Julius Baer Securities Co., Ltd. “However, the approaches must cater to different individual needs and risk tolerances.”
“Now,” she adds, “an evolution of the segment is facing a demographic change with more younger generation members, starting younger and averaging early 50s, forcing wealth management to adapt to a new set of demands.”
Ms. Lalitphat shared some of SCB Julius Baer’s insights into Thailand’s HNW market, including that, “Over 80 percent of the wealth of Thai millionaires and billionaires is kept in the country, mainly in Thai baht currency. The majority of them stay in Thailand, so having an advisor in the country is best suited to their demands.”
Unless one is a seasoned investor, Ms. Lalitphat recommends access to expertise as being key to successful investing.
“Understanding what you are investing in will help you stay invested with a long-term mindset which ultimately enables you to ride out the inevitable cycles and reap higher returns.”
With this in mind, SCB Julius Baer offers a one-on-one, custom-made class for all investors. This not only keeps pace with investment trends and asset classes but offers essential insights into family offices, tax planning, retirement planning, and wealth transfer, all according to each client’s life stage and goals.”
“Wealth transfer is particularly important for Thai HNW individuals. Statistically, some 70% of inherited wealth is lost by the following generation, and 90 percent by the generation after that. With this in mind, Julius Baer specialises in wealth transfer to help our clients pass on their accumulated wealth in a sustainable way.”
The sector is no longer limited to large families but includes many nuclear families seeking consultations on setting up inheritance matters and other affairs with tax efficiency.
“Younger generations who inherit wealth these days tend to be more active in their investment decisions,”
Ms. Lalitphat continues. “They are keener to take purpose-driven approaches that don’t only create value in their portfolios. They are looking for more comprehensive information such as about Environment, Social, Governance (ESG) sustainable investment options. So, providing all these services is absolutely essential.”
SCB Julius Baer sees a perfect fit between HNW individuals and wealth advisors as being crucial to preserving wealth, expanding investment horizons, and navigating volatility. “A good Thai advisory needs to be a global player with a deep understanding of the Thai context,” says Ms. Lalitphat.
“Most Thai HNW investors have reached the limits of the domestic investment landscape. Diversification into foreign assets and currencies is important but since many live here and spend Thai baht, a fusion of global and local plays is needed.”
At SCB Julius Baer, HNW clients are entitled to SCB’s private banking services that support investment in baht-based transactions and have expertise in high-growth frontier markets such as Vietnam, which might be overlooked by bigger global management firms. On the other hand, through Julius Baer, they also have access to global allocations, all asset classes and currency hedging. Moreover, they can significantly benefit from added value services like holistic family wealth planning, taxation, and wealth transfer strategies, and even things like luxury vehicle leasing and other matters that facilitate their lifestyle.
“Ultimately, in the long run, global allocation, including currency allocation, is safest,” Ms. Lalitphat stresses.
SCB Julius Baer is a joint venture between SCB, a leading Thai bank, and Julius Baer, a Swiss pure-play wealth management bank with a legacy of more than 130 years. A full-fledged global wealth management house hosting all key functions under one roof, SCB Julius Baer has developed a strategic focus on the Thai market for which the entire internal value chain is run from within Thailand. This ensures that relationship managers are embedded in the local financial culture and supporting infrastructure.
“As an offshore bank with a headquarters in Thailand, we are ideally placed to take care of Thai clients. During the first wave of Covid-19 when the global market took a deep plunge, many clients had the opportunity to conveniently revise their strategies and relieve their anxieties at our offices. This is because we believe in handholding our clients throughout their entire investment journey across multiple generations. The human touch cannot be replaced by technology. Rather, it is a matter of enhancing investment proficiency with technological advances.”
SCB Julius Baer’s past performance eloquently testifies to its competitiveness.
“Our unique positioning has proven itself,” explains Ms. Lalitphat. “Our new client base has doubled every year since our inception. Our US dollar diversification approach helped preserve wealth, and earlier this year, we recommended Swiss franc diversification because of its fixed income stability with higher yields which can be leveraged to ensure stable cash flow. As such, even in the immediate wake of the Covid-19 market crash, our client portfolios still posted profits. Most importantly, we always communicate to our clients that investment is not only about risks but also stability and diversification.”
Going forward in 2023, SCB Julius Baer is poised to officially launch a formal next generation programme reflecting its success in building savvy young second-generation communities. The programme will include hosting exclusive classes with customised curriculums for second-generation clients. These will be conducted by in-house experts on a group or individual basis. With SCB toting the largest platform in Thailand, clients can opt for one relationship manager within the SCB universe to look after their offshore and onshore needs, giving them access to a cache of over 49,000 products and solutions.
“Many of our relationship managers are seasoned bankers from offshores banks while others have experience
with corporate clients. We know how to bundle private and personal wealth of entrepreneurs as well as business owners. Thanks to Julius Baer’s young partnership programme, we can offer more value to younger generations who need to expand their network internationally. The key question in the HNW market is what value we can bring to the table with our education, connections and exposure to global markets.”
Ms. Lalitphat concluded by giving an overview of SCB Julius Baer’s 2023 market outlook. “Following the valuation reset
we saw in the runup to 2023, rates of both growth and inflation are likely to slow, and do so increasingly as the year progresses. With interest-rate tailwinds increasingly easing, we think that the strength of
the dollar has peaked and may well weaken further from here. Against this backdrop, investors should look to capture the attractive yields offered in segments such as high-investment-grade bonds and quality stocks. Given the high volatility
in public markets, investors can also consider alternative investments such as the private investment market and hedge funds to access uncorrelated sources of return.”
