A comparison of the Private Wealth Management Industry in Canada and Singapore

1. INTERNATIONAL STUDY TRIP 2016
PRIVATE WEALTH MANAGEMENT

2. Stakeholders
• High Net Worth Individuals
• Private Wealth Managers
• Regulatory and Taxation Bodies

4. Customers: Who are you?
HNWI
Business
owners/Entrepreneurs
Executives, Retirees
Multi-Generational
Wealthy Families
Widowed Spouses
and Beneficiaries
- $1M investable
finance
or
- Net worth of $3M

5. Are you the 1% or 2%?
Canada Singapore
HNWI Population 331,000 107,000
HNWI Percentage 0.95% 1.95%
HNWI Total Wealth US $1 Trillion US $543 Billion
HNWI Average Wealth US $3.02 Million US $5.07 Million
Origin of Wealth Canada, USA, Middle East,
South America, China
Singapore, Indonesia,
China, India
Global market sizes: Population: 14.65 M Wealth: US $56.4 Trillions
Global growth: Individuals: 6.7% Wealth: 7.2%

6. Maple Syrup or Dumplings?
Canada
• Pros:
• One stop shop
• Non-residents investing in
Canada
• Stable banking
• Mostly neutral politics
• Cons:
• Budgetary uncertainties
Singapore
• Pros:
• One stop shop
• Strict confidentiality
• Generous tax incentives
• Socio-political stability
• Financial hub in Asia
• Cons:
• Shortage of Relationship
Managers
• High client acquisition costs

7. Gimme more!
Asian investors are more aggressive in
handling the investments.
Social
Legacy
Intergenerational
Legacy
Wealth Management
Wealth Building
Experience of transition from 1st to
2nd generation wealth
• Asian: Inadequate
• Western: Adequate
Source: University of Pennsylvania

8. You don’t go where you don’t know!
0%
10%
20%
30%
40%
50%
60%
70%
80%
Western Europe Middle East Latin America North America Africa Eastern Europe Japan Asia-Pacific (excl.
Japan)
North America Singapore

9. Diamonds or art?
0%
10%
20%
30%
40%
50%
60%
Sports Luxury goods Art Jewelry, gems, watches Others
11.60%
19.10%
16.70%
29.20%
23.40%
15.80%
19.20%
12.70%
30.20%
22.30%
North America Singapore

11. Let’s be best friends
Business’ perspective
Create and retain a "book" of
clients
Manage assets of (U)HNW*
individuals or families
Understand products to create
portfolio based on client’s goals
Customer’s perspective
Generate steady income through
investment in assets
Deliver performance based on
return/risk range agreed
Maximize the invertors’ net
worth in the long run
* (Ultra) High Net Worth Individuals
Source: Delloite

12. Standard services Tailor-made services
In-person interaction
“Anytime, anywhere”
(multi-channel)
Quarterly reports Real-time reports
Limited information
Regulation and tax
transparency
Offshore Onshore
I feel like I know you!
Source: Delloite

13. Source: https://geert-hofstede.com/canada.html
We’re not all the same (1/2)

14. Power
distance
Egalitarian
Hierarchical
Individualism
Individualist
Collectivist
Uncertainty
avoidance
Open to
new ideas
Very open to
new ideas
Long term
orientation
Small
propensity
to save for
the future
Supporting
long-term
investment
Source: https://geert-hofstede.com/canada.html
We’re not all the same (2/2)

15. Power
distance
Free
information
sharing
Selective
information
flow
Individualism
58% look for
personal
advice
53% look for
family
advice
Uncertainty
avoidance
45% prefer
digital than
direct
contact
52% prefer
digital
contact
Long term
orientation
51% look for
wealth
preservation
55% look for
wealth
growth
Source: https://www.worldwealthreport.com/
Culture has an impact!

16. Real estate
12%
Alternative
investment
12%
Equity
34%
Cash and
cash
equivalents
24%
Fixed
income
18%
Real estate
22%
Alternative
investment
13%
Equity
22%
Cash and
cash
equivalents
27%
Fixed
income
16%
Source: https://www.worldwealthreport.com/
For you or for your children?

17. Retail banks
Registered investment advisors
Full-service wealth managers
Pure private banks
Investment banks or “one bank”
“Independent” private banks
Fund-based advisors
Brokers
Flow players
Local commercial banks
Source: BCG Perspectives
In what forms and shape do we appear?

19. REGULATORY
ENVIRONMENT
TREND
MARKET
HIGH
INCREASING
MATURE
COMPETITIVE
MODERATE
INCREASING
GROWING
COMPETITIVE

20. Regulators are tough!
OFSI (Office of the Superintendent
of Financial Institutions Canada)
• regulates all Canadian federally
incorporated financial institutions
• conservative approach
• characterized by prudent regulatory
concerns and a focus on investor
protection
MAS (Monetary authority of
Singapore)
• integrated supervision of financial
services and financial stability
surveillance
• develop Singapore as an
international financial center
• Fraud & Risk management

21. And they can’t make their mind up in Canada

22. Gimme your money (but not a lot of it)
• Dual taxation –Federal 29% +
Provincial
• 50% taxation for HNWI
• Double tax treaty with 92 countries
• Stable but high tax regime
• Lower tax rate on income – 20 %
• Double tax treaty with 79 countries
and international conventions
targeting money laundering
• Stability of taxation stemming from
the stable politics and economy

24. Where are we all going?
•TRANSPARENCY
•GROWTH
•CONVERGENCE
•DIGITIZATION

25. You wanna know more, and more easily
• Major Events: 2008 financial crisis,
Madoff Investment
• More risk averse investor base ->
Greater Transparency & Thorough
due diligence
• Firms must respond to the new
regulatory environment
• more disclosure -> proactive reporting
• Investor education -> Powerful client
interface tools

26. It’s a dog eat dog world out there
• Rising Cost of Operations
• Increased compliance costs
• Increased customer acquisition
costs
• Reduced operating margins
• Firms need to enhance
offerings to differentiate their
services

27. So dogs are eating dogs
• Growth through traditional organic
strategies is
• Costly
• Time consuming
• Industry Consolidation
• Economical, Efficient and Timely
Growth

28. Then there’s robotic dogs eating the bigger dogs
• Technological advances impacting
the entire value chain
• Transforming Client-Advisor
Interaction
• Reinventing the Business Model:
Reduced costs and New Value
creation
• Robo-advisors
• Data Analytics