How would you like to command an income of more than $500,000 per year? An established financial adviser managing $50m from 50 high net worth individuals (HNWI) can easily accomplish that. A more average financial adviser managing 100 client accounts each $200,000, manages $40m, and can earn $200,000 per year from wrap fees.
Of the three segments of the financial services market: mass market, mass affluent (between $80,000 to $300,000 per year income) and accredited investors or High Net Worth Individuals (personal net worth above S$2m or income above $300,000 per year), the last two represent great opportunities for you to build a profitable financial advisory career and business.
And just how many HNWI are there in Asia Pacific? Well, Asia Pacific has one of the fastest growing HNWI populations, accounting for 27.7% of HNWI population and 23.3% of Global HNWI wealth. In the Meril Lynch, Capgemini World Wealth Report 2008, listed Asia-Pacific wealth at US$9.5 trillion, with Singapore, Hong Kong, Japan having the highest density of HNWI (over 1% of population, that’s one every 100!).
In Singapore, you will not only be riding on the fastest growing HNWI market in the world, but the stable political, economical environment, and favourable tax treatment has also attracted HNWI from all over Asia and the world.
While, the ultra high net worth individuals may be best served by private banks, with more sophisticated products and services, the early HNWI however are currently under-served. Can you imagine seeing two to three different bankers in a year each giving you different advice?
In pursuit to increase their market share, private banks are not shy to lure private bankers from competitors by offering better employment terms. In the last few years, many private bankers have been playing musical chairs to the detriment of the client. Incentives to push for sales targets and a lack of a long term intention to stay in the same bank, have resulted in some unsavoury practices of product pushing.
As a result, this group of early HNWI are the best served by financial advisers with high touch and necessary professional skills.
As for the mass affluent, a most startling report published in Straits Times 12 Dec 2008, which surveyed participants earning around $80,000 per year, stated that 49.4% of surveyed have not met an adviser whom they can trust completely. 13.6% replied that they think advisers will put their interest before that of their clients. At least three quarters prefer to have the services of a Certified Financial Planner or equivalent.
New financial advisers can be sure that there is still a big pool of mass affluent investors that are just looking for an adviser they can trust to give objective, competent professional advice, and not merely a product-peddler.
Another interesting study by Nanyang Technological University of Singapore showed that the average Singaporean is under-insured by as much as a whopping 75% of what the dependents need in the unfortunate event of his/her demise. The first point is that there is still a tremendously big personal insurance market. In the study, it was also noted that many insurance products implemented were actually endowment savings plans which has little coverage while being quite high on premiums. This points to questionable advice and poor financial knowledge on the part of both advisers and consumers.
Therefore, while there are sayings that the financial advisory market is saturated, the fact is that if you can be a competent, ethical, objective and professional financial adviser, there will be plenty of people looking for your services.
The pond is big enough, but do you know who are the big fishes and who are the fast fishes? In the next article we look at “What is the Competition Landscape of Financial Services in Singapore?”
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