With the fourth-largest funds management market in the world, Australia already punches above its weight in the global financial sector.

With the fourth-largest funds management market in the world, Australia already punches above its weight in the global financial sector.

Driven by a decade old compulsory superannuation regime which brings in A$1 billion in new funds each week, and which has already topped A$1 trillion in assets under management, Australia's financial services sector is highly sophisticated and innovative.

That advantage has seen Australia increasingly export its financial services expertise to the world.

At the top end, the Macquarie Bank infrastructure and specialist funds model has had global success and has become widely emulated, but this pattern is also reflected in the private banking and wealth management space.

One firm experiencing this demand at first hand is Sydney-based boutique private banking and wealth management specialist Chipman James & Company, which is increasingly finding its expertise tapped by clients based in the Asia Pacific and the Middle East.

The principals, Greg Chipman and Anthony James, are former co-heads of Goldman Sach's Private Wealth Management business in Australia. Prior to that, they were wealth management and financial market specialists with KPMG, acting for a range of institutional clients and high net worth individuals in Australia, Asia, the US and Europe.

Having joined forces in their own firm, their specialty is to provide strategic, operational, implementation and risk management expertise to a private banking and wealth management players.

"Asia and the Middle East are at an interesting point in terms of the development and growth of their private banking and wealth management industries," says Mr Chipman.

"There are parallels between what's happening in Asia and the Middle East now and problems, mistakes and solutions that have emerged over the years in more developed markets, including the US, Australia and Europe.

"There are a lot of implementation lessons that can be learnt and adapted to local market conditions."

Mr Chipman names a number of critical business model and differentiation issues facing wealth management players.

He cites the expansion of investment choice and product commoditization, client demand for advice, customer segmentation and distribution, pricing, people and operational risk as key issues where lessons from developed markets can be applied.

"The proper consideration of such issues demands a mix of specialist management, consulting and direct HNW advisory experience in a global
context - it also requires nuts and bolts implementation know how" says Mr Chipman.

He is, however, keen to point out that US, Australian or European experience is not necessarily a "panacea" for Asian and Middle Eastern markets.

"Far from it," he says. "There are a number of conflicts and quality issues with the private banking and wealth management industry in these markets, including Australia, that haven't been resolved."

"But the point is that these problems can be highly instructive in determining the best way forward to new and existing players, which is critical given the search for competitive advantage and the level of investment in the region."

So why will the pace and development of Asian and Middle Eastern markets be different? Apart from cultural issues, CJC points to the forecast contribution of these markets to global HNW growth, the intense competition for market share and the expectation that global players will look to leverage their existing service platforms to overcome local distribution problems.

Anthony James, the other principal of CJC, says that while these issues will accelerate the pace of development in Asian private banking in particular, "this is not the whole picture."

"Asia is not one market - it is a complex collection of different investment markets, legislative systems and cultures and HNW populations often exhibit a high level of cross-jurisdictional activity," he says.

"This presents enormous challenges for the private banks and it is fair to say there is currently a mismatch between the needs of HNW clients and service capabilities.

"Those players who can focus on implementing scalable services which genuinely add value will be best placed to capitalise on open architecture trends and direct investment fund placement."

Whilst the CJC mantra of "deliver quality advisory solutions and the assets under management will follow" runs counter to the traditional product sales focus, the partners say it is simply a reflection of the requirement to re-align business models in line with client needs to maximise value.

Globalisation, competition, client sophistication and access to information demand that organisations now understand:
- the integrated wealth management needs of clients in target markets
- What products and services are actually required to meet such needs
- How this can be delivered in a scalable and profitable way
- What operational, risk and performance management processes and resources need to be implemented.

"Previously, client demands, available information, product choice and the competitive environment was such that the command of these issues wasn't a fundamental pre-requisite for financial success," says Chipman.

"The legacy is a reflection of where the wealth management industry is today, the general convergence of business models and the reason why the mantle of 'trusted advisor' and service differentiation remains the holy grail for most market participants."