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Principles of Practice - Private Wealth Management

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Association of Private Bankers in Greater China Region launched the Principles of Practice - Private Wealth Management for upholding the ethical conduct and prudent practice for the industry who are serving the significant wealth holders, the families and corporations.

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Principles of Practice - Private Wealth Management

  1. 1. Principles of Practice -Private Wealth ManagementEva LawAssociation of Private Bankers in Greater China Region
  2. 2. Eva LawAssociation of Private Bankers in Greater China is a non profit making professional groupwhich has been established by Eva Law, the founder and the chairman in early 2010.Eva has served the industry for more than 16 years. During the time she has set up theAssociation, she worked in the head office of Bank of Communications in China,responsible for the strategic development and the P&L performance of private bankingand cross-border financial services. She has been with Oriental Patron, a Chineseboutique investment banking house, through leveraging Swiss EAM private bankingplatforms to serve the Ultra HNW clients in great China region. She also served Fortune500 companies, such as Standard Chartered Bank, AXA, AIA and Pegasus FundManager Limited. Eva owns wealthy of management experience, she has won the BestMaster Trust Award and Wealth Management High-Flyer Award for her served company.Eva studies MBA and Master of Science with University of Iowa and Edinburgh NapierUniversity. She has awarded FLMI certificate, Bachelor of Art (Hon) and severalprofessional diplomas in investment banking, mergers & acquisition and assetmanagement professions.
  3. 3. The Association & our missionAssociation of Private Bankers in Greater China Region is a professional groupin the industry. We have mission to develop and promote the Principles ofPractice to foster responsible wealth management and to protect the privatewealth owners and their beneficiaries.In this connection, the Association has good will to advocate the followingparadigms: ● Prudent management of the private wealth management practice ● Full transparency of fees and commissions ● Full disclosure on material information that are of interests of wealth owners and their beneficiaries ● Dedicated effort to avoid conflicts of interest ● Caution of investment not offering transparency or liquidity ● Customized solution addressing unique and in-different needs of wealth owners and their beneficiaries
  4. 4. The Principles of PracticeThe Principles of Practice are a set of best practices intended to create ethicaldiscipline, process and transparency in private wealth management in greaterChina region. The Association encourages the members and professionals whomanage significant wealth to adopt and implement the practice following ourvalued principles.Supporting members and professionals can sign the Charter of Private WealthManagement Practitioners to signify their conviction and buy-in to the paradigmsand the principles.The Principles of Practice are focused on the key areas of wealth management :● Governance● Service Approach● Investment Management● Oversight and Monitoring
  5. 5. GovernancePrinciple 1Practitioners should maintain financial stability. There should be a track recordof consistent growth in assets and relationships over a period of 3-5 years. Thepracticing institutions should present the sustainable corporate ownership, theprudent governance structure and the proven firm profitability.Principle 2Practitioners should demonstrate commitment in fulfilling the ulti-generationalneeds of wealthy family. The practicing institutions should develop their missionthat reflects this commitment. Prime focus should be given in cultivating long-term and trustful relationships, attaining diversified goals of wealth owners andassisting in wealth and business transition.
  6. 6. GovernancePrinciple 3Practitioners should employ competency and stable senior management andstaff. The senior management and the responsible officers should demonstratethe conviction to high ethical standards and display the integrity in all the waysof managing the private wealth management practice. The execution staffsshould carry recognized industry credentials and adequate experience in theprivate wealth management field.
  7. 7. Service ApproachPrinciple 4Practitioners should adopt a client-centered relationship management approachand practice in the way that reflect this live philosophy.Principle 5Practitioners should adopt an integrated service delivery process. This holisticapproach to the wealth management process should consider the entirety ofthe clients’ situation and their best interest. The execution should reflect thislive philosophy.
  8. 8. Service ApproachPrinciple 6Practitioners should adopt a disciplined investment process. The practicinginstitutions should establish the well-documented investment strategy, developand maintain the investment policy statements. The investment committeeshould be set up for supervising and monitoring the investment.Principle 7Practitioners should maintain a diversified menu or platform of investmentproducts. The practicing institutions should get the access to a broad range ofinvestment product, asset management services, financing solution anddiversified asset classes.
  9. 9. Investment ManagementPrinciple 6Practitioners should adopt a disciplined investment process. The practicinginstitutions should establish the well-documented investment strategy, developand maintain the investment policy statements. The investment committeeshould be set up for supervising and monitoring the investment.Principle 7Practitioners should maintain a diversified menu or platform of investmentproducts. The practicing institutions should get the access to a broad range ofinvestment product, asset management services, financing solution anddiversified asset classes.
  10. 10. Investment ManagementPrinciple 10Any investment portfolio shall be designed taking into account the assets,objectives, needs, and character of the wealth owner and/or beneficiary; andshould be monitored with those in mind; and a Foundation shall have a processto determine whether the investment program reflects the values of its missionand its philanthropic grant program.Principle 11There shall be clear, disciplined, and objective process for selecting,monitoring, removing, and replacing investment managers, custodians, banks,trade execution, accounting, and other professionals.
  11. 11. Investment ManagementPrinciple 12Any investment manager or specific fund to be used shall have a strategy andstyle which can be easily understood and explained to others by the Wealthowners and their beneficiaries or by one of the trustees, directors, or staffmembers of the Trust, Foundation, or Family Office. If no one other than theInvestment Manager or the fund representative is able to explain the strategyand style, the manager or fund shall not be used.Principle 13Special scrutiny and limitations should be applied to any Investment Managerwho does not offer complete transparency, or whose portfolio is not liquid. Suchinvestments are not prohibited, but should be limited in proportion to totalportfolio investments.
  12. 12. Investment ManagementPrinciple 14Custody of assets, accounting for assets, and investment managementservices shall each be performed independently and separately.
  13. 13. Oversight & MonitoringPrinciple 15The wealth owners and beneficiaries, the Trustees of a Trust, or the Directorsof a Foundation shall articulate purposes, goals, expectations and risktolerance with respect to the Wealth; and shall be ultimately responsible formaintaining the currency of that articulation.Principle 16With respect to a Family Office, a Trust, or a Foundation; the governancestructure together with various governance roles and responsibilities shall beclearly set forth and shall include provision for the communication of those rolesand responsibilities and assurance that they are understood and accepted.
  14. 14. Oversight & MonitoringPrinciple 17Any Trust or Foundation and any Trustee or Director shall adhere to bestfiduciary practices; and there shall be established process for monitoring thedischarge of fiduciary duties by the Trust, Foundation, a Trustee, or a Director.Principle 18Succession shall be set out where possible and shall be considered. For theWealth owners and their beneficiaries, provisions shall be in existence fordisposition of assets and management of affairs from and after death or in theevent of incapacity. For the Family Office, Trust, or Foundation; provision shallbe made for succession of governance and management.
  15. 15. Oversight & MonitoringPrinciple 19Practitioners should establish a process for reviewing the governancemechanism, the work policies and procedures. There shall be a method formanaging and monitoring internal and external resources.Principle 20Practitioners should maintain comprehensive financial reporting to enableclients to understand their consolidated and latest financial position.Principle 21Practitioners should comply with all regulatory and financial requirements. Thepracticing institutions should be able to demonstrate the evidence ofcompliance with regulatory agencies and reliance on routine internal controlprocedures, such as financial, security and technology audits.
  16. 16. Oversight & MonitoringPrinciple 22Practitioners should develop their robust technology platform. The practicingshould hold reliable hardware and software systems that support the complexneeds of multi-generational wealth owners and their beneficiaries.Principle 23Practitioners should enable full transparency of fees, commission andexpenses. Full disclosure and clear explanation must be offered to the wealthowners and their beneficiaries prior to the execution and the disclosure shouldbe arranged on an on-going basis.
  17. 17. Oversight & MonitoringPrinciple 24Practitioners should maintain an equitable policy where the compensation andfees paid to staff, directors, and governors of Family Offices, Foundations, orBoards shall not be calculated on the basis of “investment return” of shorterduration than five years.Any salary, bonus, or fee must be fully disclosed as to its amount and itscalculation. Any direct or indirect payment to or for staff or governors other thana payment designated salary, bonus, or fee (or similar designation) isdiscouraged.
  18. 18. Oversight & MonitoringPrinciple 25Practitioners should maintain a staff dealing policy where the self-dealing bystaff, trustees, or directors of any Family Office, Trust, or Foundation is strictlyprohibited.Investment portfolios of these parties shall be subject to strict disclosure ruleswhich ensure compliance with the prohibition against self-dealing.Any grant or payment to any agency or company in which such a party has anyinterest whatsoever should clearly reflect that interest in the deliberationrelating to that grant or payment.
  19. 19. Contact Us www.private-bankers.net (852) 3499 3851 (86) 147 1433 406 admin@private-bankers.net 14/F Broadway, 52-64 Lochard Road, Wanchai Eva Law - Founder & Chairman evalaw@private-bankers.net Cammay Lo - Secretary General cammaylo@private-bankers.net

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