A survey by Endowus finds that regional high-net-worth investors believe digital platforms provide better product and fee transparency than private bankers do.
The legacy private banker, the human ones at least, seem to be ceding their place to more humanoid counterparts, at least in certain quarters.
That, at least, is the take from a new study (registration required) released Wednesday by Endowus Private Wealth related to the investment preferences of high-net-worth individuals.
Clear Preference
The company, which calls itself Asia’s leading digital wealth platform, polled 500 high-net-worth respondents and found that 37 percent of Singapore-based investors and 57 percent of Hong Kong ones preferred accessing the private market and hedge funds by way of digital investment platforms.
That is because they believe that those kinds of platforms offer more transparency related to product information and fees when compared to bankers or relationship managers.
Marked Shift
Only 1 in 5 Singaporeans surveyed preferred a relationship manager, which Endowus believes is a marked shift towards self-directed investment by the ultra-high net worth.
Overall, better investment returns were the top priority for investors in Singapore, ahead of inflation, excessive risk-taking, diversification, and high fees. In Hong Kong, however, the top concerns indicated were greater portfolio diversification and succession planning.
Getting Into It
Somewhat surprisingly, one in three Singapore respondents said that they had never invested in private market strategies or hedge funds while only 8 percent of Hong Kongers indicated the same thing.
About 45 percent of those in Singapore maintained that they currently used private bankers when investing in private assets but only 21 percent of them believed it was the best way, or their preferred way to access, those markets.
Increased Sophistication
«The waning dependence on relationship managers may suggest increased sophistication in the client base, sensitivity to fees, a desire for lower minimum ticket sizes, information transparency, and being served through conflict-free business models,» Endowus indicated.
About 44 percent of Singaporeans wanting to invest in private market strategies and hedge funds identified high fees as the largest barrier, just in front of a lack of expertise and knowledge. Almost 40 percent relayed doubts because of the lack of publicly available information including fund performance data and prospectuses.
Clear Messaging
Still, this should all be taken with a pinch of salt. It has to be kept in mind that the survey was compiled by a digital wealth platform, and they are unlikely to loudly signal that the role of the human private banker remains unreplaceable in an era of virtual assets, and digital banks.
But it is a shot across the bow, sending a clear message to the legacy institutions out there, and one that they should pay close attention to in the immediate future, particularly when it comes to fees and transparency.