Singapore and the future of private banking

Offshore Investment’s Singapore Conference, which took place 8-9 February, highlighted how the industry is awaiting its ‘Uber moment’ in wealth management.

Family offices, UK property and the future of private  banking were among the topics discussed at the 5th Offshore Investment Conference Singapore in February.

Singapore is an important financial hub, attracting HNW individuals and wealthy families keen to enjoy its favourable tax regime, strong laws and lack of corruption. The 5th Offshore Investment Conference Singapore 2017 featured experts on family offices, tax regulations and succession planning who passed on  their insights and views to delegates.

The tax and regulatory landscape in Asia is changing at such a fast pace that the industry faces a challenge keeping up to date, making this a must-attend event.

Michael Olesnicky, a Special Advisor to KPMG in Hong Kong, has been in the industry for more than 35 years. Opening the Offshore Investment Conference Singapore, he said: “We have seen so much activity and change in the last few years. Now we are going to see a lot of those changes being implemented. There will be a lot more pressure on the wealth management industry in particular.”

The future of private banking in Singapore sparked a lively discussion among delegates. Cliff Go, CEO of Swaen Capital, said the industry is having to invest more in systems and compliance as regulation grows, thereby increasing overheads. He said: “The wealth management industry faces increased challenges with higher costs but lower margins. This will see business models change and industry players will have to scale up.” He has observed the workforce in Singapore’s private banking sector is also changing to adapt to the new environment.

“The number of people involved in the business is changing towards support-driven away from relationship-driven. Relationship managers (RMs) are also being challenged to step up or leave the industry”. He added, “We are in a very disruptive period. We are waiting for an “Uber moment” to happen in wealth management. Despite the challenges and changes, a real solution hasn’t been found yet.”

Swaen Capital is a small independent player and recognises the need to offer a holistic package to clients that includes legal, tax and asset management in a harmonious and synchronised way. “Where am I adding value? I need to have a wider perspective as a trusted adviser and be able engage the services of the best lawyers and tax experts for my clients.”

Despite its growing prominence as a financial hub, Singapore’s asset management industry is still in its infancy. However, Mr. Go feels Singapore is “better positioned” than Hong Kong as a hub for asset management.

Delegates were keen to hear more about family offices as an increasing number base themselves in Singapore. Patricia Woo, of Squire
Patton Boggs in Hong Kong, said  family offices in Asia are different from those in European and America.

“They are a bit of everything really and the regulations surrounding them are unclear, which has its pros and cons.”

The lack of clear-cut regulations for family offices can make it hard for firms advising their clients in the region. “There are no dedicated family office regulations in Singapore or Hong Kong. Why is that?” she asked delegates.

 Feedback
Roman Granatov, Director at Far East Alliance “I was interested in international tax laws and company structure in Singapore. It was good to hear from the experts here who can help us in the future.”
Christos Kakourides, Director at AMK accounting services “It was a very targeted event. There were some good speakers and good networking opportunities for us. This is my fifth year now attending.”
Emma Green, Trust Manager at Hawksford “I was very interested to hear about cyber-crime and how things can quickly go wrong. I also enjoyed the talk on matrimonial cases, comparing divorce law in Singapore with the UK.”
Patricia Woo, of Squire Patton Boggs “What I really found interesting was Cliff Go’s talk on private banking and his idea of launching
a fund with no management fees, just performance fees. That could really change things in the industry.”

Answers included so many changes in other regulations, not being a high priority and perhaps regulators being over-worked. She predicted that family offices will still not be covered by any specific regulations over the next three to five years. “Asia’s uncertain regulatory landscape differs from the US where a clear line has been drawn. Which is the better model?” she asked. Ms. Woo updated delegates on recent developments affecting family offices, such as those in Monaco, where the financial authorities have defined two types of multi-family offices, each with differing sets of rules.

Delegates were keen to know about the shifting tax regime amid a culture of greater disclosure. Shantini Ramachandra, Partner, Tax, at
Deloitte in Singapore, gave a very informative talk on common reporting standards (CRS) and their impact on financial centres. As the
education theme continued, Paolo Panico, Chairman of Private Trustees, based in Luxembourg, talked about the history of trusts and how most major offshore jurisdictions now have their own foundations acts including Gibraltar, Jersey, Isle of Man and Anguilla. However, the British Virgin (BVI) and Cayman Islands have yet to enact foundations acts.

Sharanjit Kaur, a Partner at Withers KhattarWong, talked about matrimonial assets and trusts, with regard to pre-nuptial agreements.

“For clients and trustees, it’s very important to highlight these types of situations. We had a case of a man setting up a trust after filing for divorce, but the beneficiaries were his children. The welfare of children is paramount in Singapore so the courts allowed it.”

The two-day conference was capped off with a talk by Marcus Hinkley, Trust Lawyer at Withers KhattarWong, who spoke about the rise of midshore jurisdictions such as Singapore, Hong Kong, Dubai, Dublin and New Zealand. He said midshore financial centres tend to have real economies and cannot be pushed around like offshore centres can.

“Hong Kong and Singapore have benefitted from their lack of corruption and chaos, along with the other attributes of low tax regimes, good infrastructure, deep talent pools and strong legal systems. Trust companies have piled into these Asian giants.”

 

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