HNWI Trends in Asia A Singapore Perspective Presentation to Hubbis Asia Wealth Management Forum 2016 Zurich Chris Burton Managing Director, Vistra Singapore 25 October 2016
Vistra Group (as at June 2016) >200k 64 locations Over 2,500 structures under across 41 employees administration jurisdictions ‘Top Four’ Market leader in corporate and Asia with 14% trust service market share provider globally 2
Vistra’s Four Pillars Company Corporate & Formation Private Clients Alternative International Investments Expansion 3
Vistra Global Network Our main Private Clients Offices 4
Regional Trends 5
Rapid Increase In UHWIs And Proportionally Higher For Asia… UHNW Distribution, by wealth tiers (Global) 20% 16% 15% 13% 12% 7% 7% 7% 7% 7% 6% 6% 5% 4% 3% 1% US$1 Bn+ US$750 - US$500 - US$250 - US$200 - US$100 - US$50 - US$99 US$30 - US$49 US$999 MM US$749 MM US$499 MM US$249 MM US$199 MM MM MM POPULATION CHANGE % WEALTH CHANGE % Historical and projected increase in centa-millionaires (in 000 of people) (1) 51.8 38.3 +57% +24% 15.6 14.3 14.0 12.5 9.1 11.3 0.8 2.5 2.2 1.4 1.7 0.9 1.6 0.7 0.9 0.5 Global Asia Russia/CIS Africa Latin Middle East North Europe Australasia America America Source: Wealth X 2014 Projected 2024 (1) US$ 100MM in disposable assets 6
Asia vs Europe: Vastly Different In HNW Assets By Client Profile… But Entrepreneurship Still Dominates Asia: Europe: “New” Money “Old” Money Entrepreneur / business owner Source: Oliver Wyman analysis 7
Asian HNWIs’ Families And Businesses Becoming More Mature… Global Growing Investments Generations Cross-border M&A Worldwide Private Equity Spread of Family Members 8
Risk Mitigation - China HNWIs Diversify Their Assets Worldwide… Proportion of China HNWIs/UHNWIs HNWIs more international in their outlook with overseas investments and behaviour … Likely reason for HNWIs Europe Asia holding assets worldwide Pacific Offers better opportunities for high 38% 62% returns/interest rates Offers me a safe haven from local 21% 29% economic instability HNWIs have business interests in 33% 27% this / these regions Source: China Merchant Bank, Bain, Bloomberg, Barclays, Oliver Wyman analysis Source: Barclays Wealth Insights 9
More Evolved / Sophisticated Asset Allocation, Not Property Focus… FO Investment portfolio Asset class Europe APAC (in % of global composite portfolio) (%) (%) Bonds 16 16 Surprising similarity in Equities 25 25 asset Alternative investments: 50 47 allocation: - Private equity 23 28 -Private equity 23 28 with PE as -Real estate direct inv. 13 12 -Hedge Funds 8 5 most -ETFs 3 2 common -Other assets (e.g. art) 1 0 choice -REITs 0 0 -Tangibles 1 1 Commodities: 2 4 -Agriculture 1 3 -Commodities 1 1 Cash or equivalent 8 8 Source: UBS/Campden Wealth 2015 10
More Complex Environment….. FATCA Need for Common professional Reporting advice Standards Landscape is Tax Amnesties becoming Ongoing BO ownership compliance more disclosure complex… Exchange of information Integrated advice Abolition of P.I. regime 11
Evolution Of Wealth Management: Asia vs Europe ILLUSTRATIVE Maturity / Sophistication 2000 USA x Europe 1800 x Asia 1600 Europe • Multi-banked 1400 • More likely to single bank • Entrepreneurial wealth 1200 • Inherited wealth •“New” money 1000 •“Old” money • Property-driven • Broad asset allocation 800 • Opaque • Transparent • Family confidentiality 600 • Professionally managed 400 Asia 200 x 0 1 2 3 4 5 6 7 8 9 10 11 12 13 Time 12
Local Trends 13
• Social and severe income inequality • Security issues – CRS reporting • UHNWI – trust/family office for asset protection • Succession planning - less of an issue (one-child policy) • Inheritance Tax (“IHT”) – Shenzhen pilot city to levy IHT • Emigration (Singapore - cultural/language affinity and stable political environment) 14
• Overtook China as world's top FDI destination in 2015 • Highest remittance receiver in 2014 ($ 70bn) and 2015 ($ 69bn) respectively backed by NRIs • 4 th largest population of millionaires in the Asia Pacific region: estimated to increase to 294,000 by FY 2021 15
• Trusts/PTCs already commonly used by HNWI Thai families • Inheritance Tax (“IHT”)/Gift Tax implemented on 1 February 2016 • Triggered a wave of estate planning for smooth succession and IHT mitigation among UHNW Thai families in 2014 and 2015 • Political instability: under military rule since 2014 and recent demise of Royal King Bhumibol 16
• Tax Amnesty – as of Sep 2016, USD273bn has been declared by Indonesian tax residents and USD10.5bn repatriated to Indonesia (~4%) • More assets expected to be declared by March 2017 • Hottest issues: Tax Amnesty and CRS: - HNWI families concerned over confidentiality - Further concern over CRS (Indonesia has undertaken to exchange information by 2017) • Re-structuring ongoing among many HNWI Indonesian families, in particular addressing CFC, family governance and succession planning 17
• 1MDB scandal - Singapore shut down BSI and Falcon Private Bank - Falcon Bank faces Swiss criminal probe • Weakening of currency - USD/MYR 4.20 (some banks predict USD/MYR at 5.00!) • Political uncertainty and a slowing economy • Malaysian families are looking at ways to preserve MYR assets and protect their wealth • Asset leverage being reduced 18
Summary: Regional/Local Trends to Watch… • The rise of the 2 nd & 3 rd generation • Desire to access global capital markets • Concerns over ‘national’/political risk • Movement of family members abroad • Opportunities in India • Asia falling into line with global tax and transparency standards • Emerging tax initiatives (IHT/Amnesty) 19
Questions ? 20
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