Asian-based investors are more interested in expanding wealth than their more cautious counterparts in the West, reflecting the contrasting fortunes of both regions, the chief executive of Principal Global Investors Asia said

Asian-based investors are more interested in expanding wealth
than their more cautious counterparts in the West, reflecting the contrasting
fortunes of the regions after 2008, the chief executive of
Principal Global Investors Asia said after her firm released a report
highlighting global trends.

The observation is not all that surprising in a world where
Western investors still appear in some respects to be shell-shocked by the
effects of the 2008 financial crisis and its aftermath. A report issued
recently by RBC Wealth Management and Capgemini also pointed to how Western
investors are, in contrast to Asian counterparts, more concerned about wealth
preservation.

Even so, the structure of wealth holdings in Asia are changing as the region develops, Andrea Muller
told this publication in an interview.

“It is used to be that money in Asia
was all family wealth and about the next generation….there is now a new
generation of first-time wealthy and they tend to be very hands-on,” she said.  

“They are going to have a different focus and different
dynamic, looking for high-Alpha strategies. It is about risk-aversion in the
West and the search for yield and returns in the East,” Muller said, adding
that more needs to be done in Asia to improve
financial literacy.

The stakes for getting strategy right in Asia
are huge. According to the RBC/Capgemini report mentioned above, there are
estimated to be a total of 3.68 million high net worth ($1 million+ investable
assets) individuals in Asia, as of 2012, a
rise of 9.4 per cent year-on-year. And those persons hold $12 trillion of
assets, not far behind the North America
total, of $12.7 trillion.

Muller spoke after her firm commissioned a report, produced
by CREATE-Research, stating that decisions of central banks will be the main
force driving global markets for the next three years, according to 62 per cent
of asset managers, fund firms and other investment professionals together
overseeing $27.4 trillion of assets.

Getting personal

Among the report’s findings were that investment risks and
demands have become more “personalised”, while asset managers have to ensure
that their marketing does not become conflated with genuine thought leadership
if they want to build trust with clients over the long term.

And Muller repeated a point made by others in the industry about
how firms must not churn out products that clients don’t necessarily need.

“Investors don’t want product-push. What investors and
institutions want are cutting-edge ideas and insights and they look for
thought-leadership. We do more things that assist in education and thought
leadership,” she said.

It makes sense for a firm such as Principal Global
Investors, part of New York-listed Principal Financial Group, to stress thought
leadership. PFG has $403 billion in assets under management and serves some
18.3 million clients from offices in Asia, Australia,
Europe, Latin America and the US.
In other words, it is a global big hitter.

Closer to its original home turf in the US, Muller
pointed out that an obvious, but important trend has been the impact wielded by
the Baby Boom Generation now entering retirement.

“They [Boomers] are going to be looking for investment
solutions that satisfy a variety of GOALS, such as capital protection,
dividends and low-volatility products,” she said, explaining that the type of
products that will be sold include income-oriented products, target-date funds.

Given the sheer complexity of finance today, asset managers
and advisors had to recognise there are limits on what clients, even supposedly
more sophisticated ones, can cope with, Muller said. “Baby Boomers don’t want
to have to figure all these details out. They want solutions containing
embedded advice,” she said.

“Over the next 5 years almost 75 per cent of retail investor
wealth will be held by Baby Boomers,” she said, with many of those people
classified as high net worth.