WM Market Reports

Asian Wealth Firms' RMs Under Pressure To Deliver Growth Goals; Gen AI Tools Eyed

Tom Burroughes WealthBriefing Group Editor 4 October 2024

Asian Wealth Firms' RMs Under Pressure To Deliver Growth Goals; Gen AI Tools Eyed

This news service interviewed Accenture about a report issued a few weeks ago outlining how wealth management firms are positioning in the APAC region, their approach to AI, offshore investment, and more.

Asia’s wealth firms are pushing for aggressive revenue targets, often more than 15 per cent growth annually, depending on the business and market segment. Across the market, firms are aiming to double assets under management to almost $260 trillion in aggregate by 2026, global accountancy and consultants Accenture says. 

RM productivity remains a “major challenge,” the firm told this news service in the wake of its report, issued in late July. 

WealthBriefingAsia asked Accenture about some of the conclusions reached in the report, including its views about the challenges that RMs face in hitting growth targets.

David Wilson, Accenture growth markets wealth management lead, said that “as the main drivers of new and expanded business, relationship managers are under pressure to deliver almost all of that revenue lift, which we calculate at about 95 per cent based on input from bank leadership teams.”

“For RMs, productivity remains a significant challenge; productivity threatens to deteriorate further as firms dial back their revenue ambitions, yet still seek to hire more RMs,” Wilson continued. “While firms last year expected revenue per RM to climb from $1.8 million to $2.1 million in the period to 2025, they now expect a decline from last year’s $2.4 million, which was driven by a lower rate of RM hiring than planned, to $2.2 million. That translates to a deterioration during the period to 2026 of 3 per cent compound annual growth rate.”

The research report had noted that RMs intend to use emerging generative AI tools to augment their client-facing content workflows. The report also found that delivering enhanced investor content (market outlooks, analyst reports, investment proposals, etc.) at scale is one of the biggest revenue opportunities for firms adopting gen AI. Clients say that content is the most important element of a firm’s investment proposition, but nearly half said they do not receive relevant, personalised content from their firms, while 37 per cent said that firms do not send content regularly.

Accenture’s Future of Asia Wealth Management report is based on a survey of more than 4,500 investors and 650 RMs and 16 interviews with senior executives of wealth firms across 10 APAC markets. The report is a reminder that APAC is one of the fastest, if not the fastest, wealth management growth markets, fuelled by the rise of a large middle class in recent years, witnessed by the rise of hubs such as Singapore and Hong Kong, and an influx of international firms into these places.

The report also examines how artificial intelligence fits into the picture and provides possible tools for RMs wanting to become more productive. The Accenture report noted there is a problem – RMs and senior executives do not always see eye-to-eye on which gen AI use cases should augment the client journey.

Another finding of the report is that investors seeking to place money outside their home market are a priority for firms aiming to grow revenue – already 11 per cent of Asia’s total investable assets are invested that way.

Asia’s growth ambitions
This news service asked Wilson about the extent of Asia’s wealth management growth goals.

“Compared with other regions, Asia tends to have more aggressive growth goals than markets like Western Europe or North America. Asia’s wealth management market is expanding rapidly, driven by strong economic growth trends enabling entrepreneur-led wealth creation, rising middle-class affluence and wealth transfer from older generations,” he replied. “In markets such as Singapore and Hong Kong, there is also a significant focus on offshore wealth flows to capture the benefits of booking assets in these jurisdictions – such as the access to a sophisticated ecosystem of advisors and specialists. These factors are creating pressure to capitalise on growth while the opportunity is ripe. In contrast, markets in Western Europe and North America tend to be more mature, with slower organic growth potentials.” 

The conversation switched to what the report said about generative AI.

“Generative AI as an origination and production tool has tremendous potential to transform how investor content is delivered at scale,” Wilson said. “The report points out that 73 per cent of advisors already use gen AI in their professional capacities, signalling they understand its value already. AI can sift through vast amounts of data to identify insights that make for valuable content such as real-time investment trends, market opportunities, and even market-shifting news events – delivering highly relevant content personalised to the individual client's needs.”

In terms of suitability, RMs remain crucial in interpreting and contextualising AI-driven insights. AI can quickly process client data, but it’s the manager's judgment that determines which pieces of information are most pertinent based on the client’s financial goals, risk appetite, and investment horizon. Gen AI serves as a powerful resource for firms, but it’s the combination of gen A1 and a “human in the loop” that creates a potent tool that can help drive growth. 

Gen AI needs to be part of a broader solution including operating model considerations to ensure it aligns with suitability, cross-border rules on data flow and other factors. In addition, firms need to ensure that RMs only use approved and vetted gen AI platforms and tools to minimise risk and ensure compliance with regulations and responsible AI practices.

Wilson was asked how RMs and top executives could reach a closer agreement of how they view which AI use cases apply and which ones are too remote or unrealistic to deploy, if at all?

“Getting RMs and executives on the same page about AI really comes down to better communication and collaboration. The report shows that while both groups see the potential of AI, they often prioritise different things based on their view of the business,” Wilson responded. “RMs are more focused on how AI can help them connect with clients and get their day-to-day work done quickly to focus on important tasks while executives might be looking at the bigger picture challenges, like efficiency and scaling.

“One way to close this gap is by involving RMs early on when testing new AI tools. If they can try things out and give feedback before a formal rollout, it helps everyone figure out what works in real client interactions. Piloting AI use cases together also ensures that the tools are practical and not overly complicated. Plus, if RMs see clear benefits – like saving time or getting better insights – they’re more likely to embrace the technology which is critical as adoption drives ROI from these investments.” 

Offshore opportunities
Accenture’s report also shows that firms must target high net worth investors seeking offshore investment opportunities more accurately - as 11 per cent of Asia’s HNW individuals’ assets are invested this way – and it outlines the top offshore corridors by size, led by China (mainland) to China (Hong Kong), Indonesia to Singapore and Malaysia to Singapore.

Asked whether investors who want to deploy capital overseas feel that they have too few options from their wealth managers, Wilson said: “The report does indicate a rising interest in cross-border investments, particularly as clients seek diversification and higher returns amid domestic economic volatility. However, many investors feel constrained by the limited international investment options provided by their wealth managers. As these markets mature, we are seeing increased demand for exposure to not only the finance hubs of Asia, but the markets in North America and Europe as well. 

“Beyond the significant wealth flows from mainland China to Hong Kong, Singapore continues to be one of the most active destinations for investors throughout the continent and particularly for those living in the ASEAN corridor. The report highlights that Singapore continues to be a major hub for cross-border investments for countries like Indonesia, Malaysia, Thailand, and Vietnam.

“This corridor remains robust as investors from these countries seek to diversify their portfolios, often attracted by Singapore's stable regulatory environment, financial infrastructure, and strong investment opportunities. While overall offshore wealth allocations have slightly decreased from previous years, these ASEAN flows into Singapore continue to grow,” he said.

(Note: This news service will look at other aspects of the report and Accenture's views on its findings. Stay tuned for a separate article.)

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