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WEALTH REPORT


to rebalance their portfolios. However, the relative share of real-estate holdings is expected to decline ... as HNWIs look to liquidate some of their holdings and take profits after the run-up in prices. Home-region allocations are also expected to decline as Asia-Pacific HNWIs pursue returns and opportunities elsewhere, especially in the emerging markets of Latin America and Africa.”


Real estate With a projected eight percentage point decline to 18 per cent in the 2011 share of real estate in the region’s HNWI portfolios, the report says “HNW investors will increasingly be looking to advisers and wealth management firms to handle and integrate their real-estate holdings into an overall portfolio discussion ... as they seek to diversify and optimize risk-adjusted returns”. Firms will need to offer innovative, more accessible products; involve specialist advisers in their product development and the services they offer; and pay particular attention to the region’s emerging real estate investment trust (REIT) market.


Tangible assets Asia-Pacific HNWIs have always been disproportionately attracted to collectibles and other tangible goods – partly for cultural reasons, partly because of the relative paucity of alternative investment options, and partly due to wariness of sophisticated financial instruments. This interest has been growing strongly in recent years, which gives “wealth management firms an opportunity to offer more services related to these asset classes, including storage services, diversification services and advice on regulatory and tax implications ... The main challenge lies in building requisite expertise, since their experience with these services has often been limited to date.”


After the crisis While many of the Asia-Pacific stock markets rebounded strongly in 2009, HNWIs generally did not rush headlong into the recovery. Rather, post-crisis, “Asia-Pacific HNWIs are more sensitive to the threat of losses than the hope of returns ... [illustrating] the new awareness ... that any upward market trend can be fleeting given the staggering losses many markets suffered during the crisis”. This “marks a distinct shift in psyche among Asia-Pacific HNWIs compared with before the crisis”. They are also “more aware of their true risk appetite


... more engaged in interactions with advisers and wealth management firms ... [and] more focused on balanced asset allocation”. In short, their post-crisis attitudes “reflect their fundamental need to better understand what they are investing in, where it’s held and how it is valued, as well as their desire for value-added advice and investment choices that are consistent with their risk profiles and investment goals”.


16 FAMILY OFFICE: ASIA TOMORROW


“Post-crisis, Asia-Pacific HNWIs are more sensitive to the threat of losses than the hope of returns”


What this means for the wealth management industry These needs translate into new demands in three areas. ƒ Transparency and simplicity: “Many HNW clients felt blindsided by crisis-related losses because they had not fully understood the products, valuations, risks, performance and fee structures in which they were involved. Now, they expect fuller product


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