We talk to the chairman and CEO of a new wealth management business that sets out the idea of "making wealth easy" by cutting through the web of multiple banking relations that many UHNW individuals and families accumulate.
An oft-noted feature of the world’s family offices industry is that organisations will typically have many bank relationships, adding to the time and complexity involved in executing investment decisions, for example.
Adding to the frictional costs is that many offices are still employing Excel spreadsheets and comparable systems to manage invoices, accounts, investments and performance reports. And, in a relatively new family offices market such as Asia, there’s an opportunity to radically change the game, the chief executive of a newly-minted wealth management firm says.
“For families of ultra-high net worth standing, the bigger they are, the more banks or financial institutions they have. Navigating through 10 or 12 bank checking [current] accounts is challenging, so I kept thinking to myself that there must be a better way to do this,” Derrick Tan, chairman and CEO of WRISE Wealth Management, told this news service.
“There is no one developing something for this family office providing an aggregated view of all our portfolios, providing an easy way to consolidate wealth all in one app,” Tan continued.
In August WRISE Group Holdings launched Singapore-based WRISE Wealth Management and its core wealth system, TREX. The TREX system, which works via an API, frees clients from contacting lots of banks in order to execute investment decisions. TREX has a built-in wealth aggregator that enables the consolidation of data from financial institutions. The bankable assets consist of assets managed with the custodian banks and non-bankable assets such as arts, lifestyle investments and others.
And the reliance on Excel spreadsheet-level data entry to manage information has also opened an opportunity for WRISE, Tan said.
“No one is really developing anything specific for family offices to aggregate all their portfolios…some systems work on this but so far only go in a limited way,” he said.
“There are companies that do promise consolidation but only track 10 per cent of the system, but where is the call to action? Even if you will have an aggregator portfolio, if you decide to rebalance your portfolio, you still have to call the alternative banks. Your family office, which is mainly run by people on Microsoft Excel spreadsheets; they have no way out. This is where TREX was born to serve the market need,” he said.
“My ambition is to give UHNW individuals and family offices 24/7 access to total wealth.”
“My definition of `total wealth’ is not just on the bankable side….TREX also encompasses lifestyle investments,” he said (yachts, jets, various types of property, etc). “Whatever the client views as the investment, we will encompass it.”
“We also work with reputable trust companies,” he said. Tan also wants TREX to be used widely in the family office space.
Tan sees big growth potential, particularly given that Asia is one of the world’s top wealth management markets.
As far as the TREX offering is concerned, Tan said it will be an open-access platform, i.e. being open to other external asset managers. Under its business model, clients can choose how much of their money will be overseen by WRISE and how much will be managed by some other party, he said.
“There is no way that one firm can reach the whole world…I don’t see other EAMs as competition,” he said.
Technology is also important for handling talent shortages in the wealth industry as populations grow more affluent.
“Wealth management [in Asia] will double again and there are not enough managers to cope with that demand and there are not enough managers to do the work without the technology,” Tan said.
Among trends that catches Tan’s eye is wealth managers' clients moving more into “non-bankable” areas such as fine art, watches and wines.
“We help with tracking and have actually designed to put these [non-bankable items] within the whole aggregator as well. What we did was to use trust accounting standards to value these non-bankable assets and we follow certain accounting processes to value non-bankable assets. And this is our value proposition at WRISE,” Tan added.
As far as the firm’s revenue model is concerned, TREX is the core platform which WRISE offers to clients as part of it TREX has a built-in wealth aggregator that enables the consolidation of data from financial institutions. The bankable assets consist of assets managed with the custodian banks and non-bankable assets such as arts, lifestyle investments and others – its weath management solution. Payment will be covered in the client’s management fee with WRISE.