Strategies that navigate today’s fraught market conditions, supported with informative client communications, are a must for the region’s wealth managers and private banks — as they strive to stay relevant and grow the region’s wealth
By Holly Huang
The way Asians are managing their wealth is rapidly evolving.
On one hand, today’s severely volatile and unpredictable markets are forcing wealth managers to boldly readjust their client portfolios; while on the other hand, the changing and somewhat incessant demands of high-net-worth individuals (HNWIs) are prompting firms to go way above and beyond the call of duty.
As such, many in the wealth management space are calling for a complete rethink of where their clients are invested; and crucially, how they are serviced.
How should wealth managers and private banks adapt their messaging?
Returns first, purpose second
Prior to a few years ago, when times were good, the wealthy were able to capitalise on appreciating public market assets to achieve satisfactory financial returns — even during COVID-19 — to invest with purpose. They could afford to park money in feel-good projects with the likelihood of it marginally delivering a return, if any, as investments elsewhere would cover these. Not anymore. (More on sustainable investing later.)
Exhausted economies, combined with recently introduced and ever-changing trade tariffs, have wreaked havoc in conventional wisdom and resulted in muted financial returns across primary asset classes. The S&P 500 has been all over the place of late, while alternative asset classes, including real estate, are widely seen as the only real way to generate satisfactory returns.
The case for private markets (privates), especially, is compelling. Notably, they have the ability to generate far higher returns of on average over 15% versus around 10% for public equities, when looking over the past decade. As such, over 50% of Asia’s wealth managers are now investing in privates on behalf of their clients. Furthermore, it’s not only about returns. Some 60% are ploughing money into privates because of their diversification qualities.
Unsurprisingly, the number of Asian privates participants is expected to rise exponentially in the near future.
Countering investor anxiety
That’s not to say that privates are an easy sell for wealth managers. Consistently, HNWIs cite a lack of understanding, a lack of liquidity, and the opaque nature of privates investments as key concerns when considering the asset class.
Clear communication is vital to overcoming these roadblocks. By law in most Asian jurisdictions, asset managers and fund companies must disclose their risks, and ensure that that they don’t oversell their products. Wealth managers and private banks, however, can play the role of educator, highlighting both these risks as well as the potential upside based on historical data, as well as projected future trends that might influence asset value growth in future.
For example, a private equity fund focused on renewable energy can highlight the projected growth trajectory of Asia’s energy transition, which is expected to expand rapidly in the coming decade.
Handling out-of-favour sustainable assets
Once the darling of investment portfolios, sustainable assets have since fallen from grace. A few years ago, there was talk of ESG screening becoming so embedded into the investment processes that all investments would be classed as sustainable ones. Waning interest has been happening for years, made worse by the Trump administration’s rebuke of anything ESG-related.
Not too long ago, most private banks chased Asia’s next generation of family wealth with the promise of being able to invest with purpose, with abundant returns. Many of the industry’s major players were of the view that as long as they were able to appeal to the ‘giving’ ideology of Millennials and Gen Z, clients would hand over cash willingly, albeit with an advisory mandate.
Fast forward to 2025, and the market is in a much different position. Recent Stanford Graduate School of Business research found that interest in sustainable investments has dramatically dropped, particularly among the younger demographic. In 2022, 44% of young investors thought it was “extremely important” for their investments to lead to positive environmental, social and governance outcomes; last year, a mere 11% said the same. For social causes, the fall in interest is much starker: from 47% to 10% over the same timeline. On top of these findings, research conducted by the Fraser Institute consistently finds there is no evidence that ESG investing produces above-average financial returns.
This doesn’t mean that sustainable investing is dead. Like most shiny new toys, the market will likely correct itself, find genuine meaning and value, and make a reappearance in future, only this time without the hubris and greenwashing that has accompanied such assets of late. When this happens, clear and honest communications strategies are needed. Ones that acknowledge both the good and aspirational qualities of these investments, and avoid overselling.
New servicing models
The same can be said for use of AI and other technologies. Driven by client demand for both hyper-personalisation and convenience, a lot is being said about the ability of technology to tailor investment portfolios to unique client preferences, provide real time performance insights, and allow HNWIs to manage their wealth freely, anywhere in the world with a click of a few buttons.
There is no question that this utopian concept of wealth management is where the industry is heading. But managers advocating such technology should exert caution for two reasons.
First, much of the technology is nascent and largely untested. According to SaaS platform Avaloq, almost two-thirds of wealth managers believe their tech systems are not fit for purpose, highlighting issues with navigation, integration and functionality. Moreover, it would seem some 78% of industry professionals are not keen to use their investment advisory apps during client meetings due to poor user interface design, while 65% find these apps too confusing or challenging to use. If wealth managers don’t feel confident in their own technology, neither will their clients. Clearly, there is room for improvement.
Second, for all the wonders of technology, it cannot replace the human touch. A 2023 Wall Street Journey study confirms this. Yet involving human interaction might not be enough. Consistently, clients complain about the commoditisation of wealth management and the lack of differentiation between providers, as well as inconsistency in client servicing. Plus, HNWIs desire meaningful and frequent interactions with their relationship managers, irrespective of whether they will part with more money.
The irony is that most providers have their own culture, unique identity, and are able to offer tailored and unique offerings while allowing time to mingle with clients. And good communications can be critical in meeting these needs.
Parting thoughts
On the technology front, managers should be transparent about the technologies they utilise, how they are deployed, and their involvement in decision making. For example, not wholly relying on AI to build an investment portfolio isn’t seen by HNWIs as backwards; human input is still viewed extremely positively by clients.
In terms of differentiation, managers should talk more about their unique identity, how they approach matters differently, and critically, demonstrate how clients are front and centre to their mission. Personality is key in any relationship, and managers shouldn’t shy away from promoting this in their communications.
Indeed, as proven in past times of volatility and unpredictability, brands that have a strong identity, balance technology with personality, make bold and informed investment decisions, while avoiding the latest hubris, are typically the winners.
Afterall, as the Chinese adage goes: 塞翁失马焉知非福. In this case, these volatile times may be a blessing in disguise. Change is in the air, and those that recognise today’s status quo are in pole position to better communicate their offering and thrive.