Rich 'open to tech giants managing funds'

56.2% of the wealthy polled will consider it and 72.5% of them are from Asia-Pacific

Tech firms like Google, Apple, Facebook and Amazon already rule much of our lives so it is no great surprise that many wealthy people around the world are open to them organising their finances as well.

Indeed, 56.2 per cent of the well-heeled polled would consider such services from tech giants. Perhaps more telling, 81.7 per cent of those amenable to the idea comprise young rich individuals under 40.

And around 72.5 per cent of that 56.2 per cent came from the Asia-Pacific, excluding Japan, noted the annual poll from consulting firm Capgemini, which surveyed around 2,500 high-net-worth individuals in 19 countries, including about 1,100 from the Asia-Pacific.

The findings point to the risks confronting the traditional fund management industry, which could face the same sort of online disruptions that have roiled industries such as travel and retail.

The report looked at those with investable assets of US$1 million (S$1.36 million) or more, excluding items such as their home, and also wealth managers.

Capgemini noted: "So far, only a few Big Tech firms such as Alibaba and Amazon have made forays, or signalled an intent to make forays, into the business of wealth management in a significant way. But the knowledge that they could do so - and do it well - is a threat that looms large over the industry."

Capgemini's Asia wealth management head, Mr David Wilson, said the 56.2 per cent who were open to such financial management was one of the more surprising points of the survey. "It's more a case of when we look at the potential of disruption on the horizon. Wealth management for many years was relatively calm, you had human-led delivery of wealth management and there wasn't a lot of competition from outside," he added.

"We're seeing now a lot more activity of these so-called Big Tech players, entering and disrupting the industry. And if they ever really decide to offer wealth management services at large, that would significantly, negatively impact many players in Hong Kong and Singapore."

The number of wealthy people in the Asia-Pacific grew 7.4 per cent - "a modest deceleration from about 9 per cent in 2015" - and their wealth expanded 8.2 per cent in 2016 compared with 2015.

Singapore's wealthy population grew 6 per cent - a rate higher than Hong Kong's - to 109,800 people last year, compared with 103,600 in 2015 and 107,400 in 2014.

Wealthy people across the world voiced two major concerns about tech firms going into wealth management, with 53.6 per cent raising data privacy and security issues.

Product transparency was more of an issue in Singapore, with 50 per cent citing it.

On the back of such concerns, the uber-rich worldwide have "boosted their allocations towards equities and cash at the expense of alternative investments and real estate in 2016, as they sought to maximise investment opportunities and avoid losses", said the report.

Alternative investments were unusually significant here, with 14 per cent listing them as a key driver.

One way to reach out to clients is through what Capgemini calls "hybrid-advice models" that employ both humans and digital tools.

About 70.6 per cent of the wealthy in Asia-Pacific, excluding Japan, were the most satisfied with hybrid models, for instance. Mr Wilson said that while firms such as Google have yet to make it clear if they want to enter financial services, traditional players must stay relevant.

"For the traditional firms, the implications are similar regardless of model. They've got to do a much better job of building their hybrid advice proposition, which is based on strong data, analytics, and being able to customise based on your understanding on client."

A version of this article appeared in the print edition of The Straits Times on September 29, 2017, with the headline 'Rich 'open to tech giants managing funds''. Print Edition | Subscribe