In 2013 there was an annual 9.3 percent increase in the Asia-Pacific region of high-net-worth individuals (HNWI) – those with assets of more than $1m – which is now second only to North America. This year high growth of the population in the region continues, according to Capgemini (see sidebar). The 2014 report flags an explosive 17.3 percent growth rate to some 4.32 million individuals for the region, approaching North America’s 4.33 million, thus narrowing the gap of the world’s HNWI population.

In term of the asset holding growth, the statistics show a 10.4 percent annual average growth rate in the Asia Pacific region, which is larger than eight and 8.9 percent of the global and North American average ratio respectively. The growth in population and wealth accordingly, points out the great opportunity for HNWI in Asia Pacific region.

Compared with other countries in the Asia Pacific region, Thai HNWI are worth watching both in terms of their population growth and asset holdings. The Thai HNWI population increased an average 12.7 percent annually over the past five years, outpacing Asia Pacific’s overall 9.5 percent. Moreover, the growth of annual asset holdings for Thai HNWI increased in wealth, averaging a whopping 14.4 percent, beating the regional 10.4 percent. These statistics explicitly show economic growth in the Asia Pacific region, and also add up to a significant opportunity among HNWI customers in the rapidly expanding Thai market.

Gaps in the Thai HNWI market
In spite of five years of stellar growth in both population and holding assets, most of the customer segment continues to rely on normal or basic financial products, such as bank deposits over financial investment products, like mutual funds. This preference is consistent with regional trends, particularly in emerging economies like Indonesia and Malaysia, where most HNWI opt to hold cash and cash equivalents or fixed income products rather than higher-risk financial products, like equities. In Thailand, this trend may be due to the fact that most HNWI lack of knowledge of available financial products and tend to view banks as convenient channels for making daily transactions rather than as venues for investment.

Over 70 percent of Thai HNWI earn their wealth through entrepreneurship, and their main focus is managing and expanding business. Such entrepreneurs may not have the requisite time to study the financial markets and to follow the financial news in any detail. When it comes to investment, they tend to invest in ways with which they are already familiar and in which they have confidence, such as business expansion.

Banks, in turn, are seen as little more than potential sources of financing support, rather than fields for the cultivation of wealth. It is a great opportunity for banks themselves to seize the opportunity, change this perception and fill the gap through wealth management services.

These services include personal savings and investment planning assistance by investment experts. Normally, a customer of this service has a relationship manager to coordinate with the bank’s various teams in developing and implementing saving and investment plans tailored to each individual customer. Kasikornbank believes that wealth management services are the key to meeting the needs of HNWI. Not only can such services cut the time required for making and managing investments, but they can meet the customer’s individual needs and also reinforce their confidence to invest in a bank.

In Kasikornbank’s model, customers enjoy the personal attention of a relationship manager (RM) conversant with national, regional and global markets, financial products and economies. With an understanding of individual clients, including risk appetite, expectations and more, RMs develop investment strategies tailored to clients for optimal returns. They then keep abreast of market movements along with their portfolios, easing the burdens of financial management for the clients. At the same time, customers still have the power to control their investment portfolio. Every investment decision is still made by customers based on information RMs have prepared. These comprehensive services, therefore, support customers to make effective decisions with less required time for management.

Beyond customised investment planning, HNWI clients enjoy personalised attention from investment experts with close attention to their needs. With a financial management expert and advisor on hand, clients can invest with increased confidence. The implementation of this model of wealth management services provides customers with better experiences of investment, and should work to alter their expectations and perceptions. Customers then see banks as venues for enhancing wealth through investment, rather than as no more than channels for daily transactions.

Finding the right policy
The HNWI group of customers has been the valued target group of both banking and financial institutes. Many banks have instituted wealth management services to high-end customers as a strategic response to the needs of HNWI. Wealth management is not new to the Thai market. Still, it is not widely known, and many HNWI in the market are not familiar with the details and benefits. Some even harbour a definite misperception.

In fact, the wealth management services offered by Thai banks are often neither robust nor aggressively promoted. With the Thai HNWI market in its infancy, many service providers have promoted their brands through offering privileges as an easy way to generate awareness and quickly reach a broad market. The results are that most Thai HNWI customers understand the brand, and compare brands based on the privileges they provide.

However, initially the wealth management service was offered as a complementary service, which only a limited portion of the HNWI market had knowledge or interest in. Moreover, the supplementary service was based on customer satisfaction, and did not include overall portfolio planning and management, or the aim to generate optimal benefits. In the past, the RM acted as little more than a convenient liaison between the customer and the bank. Therefore, most customers in the past might not see a significant difference from general banking services. All of these deviated the perception and expectation of customers from what there really is available.

Recently, the increasing Thai HNWI market captured the interest of banks, both locally and internationally, at a time when reaching out to privileged customers became saturated. Consequently, wealth management services become more focused in areas many financial institutions are now seeking to differentiate and attract high-end customers. Wealth management services are now widely present as the main services which banks provide HNWI.

Introducing the service to customers, however, is not a simple switch over, as it means altering the HNWI perception of banks. Moreover, it also includes changing the views of banking services to customers from a convenience oriented to their benefits oriented services.

To differentiate the wealth management service from regular banking services, it additionally requires banks to step back from a narrow focus on financial products, and recommend financial products as the primary concern. These are the major challenges to cultivating the HNWI market in Thailand.

Overall, the statistics point out that the HNWI market in Thailand is a great opportunity for the wealth management service providers. These are believed to fulfil the need of the customers who mostly lack financial knowledge, insight information and managing time. The service allows customers to trust in banks, and gradually change the perception from seeing banks as sources of financing to a place in which their wealth could be grown. However, since the Thai HNWI market is still at its infancy, simple but comprehensive wealth management services would be crucial for any provider, and can be perceived as the key to win the HNWI market in Thailand.

At Kasikornbank, we place a high priority on giving customers an understanding of wealth management benefits, and on providing services. Advice should be easy to understand, while being based on thorough analysis of what will give optimal benefit, taking into account customer expectations, risk appetite and investment profiles. This kind of service will inspire trust and confidence in customers, encouraging them to let us help manage their portfolios and deal with all complicated information.

That, in turn, frees the customer from the time-consuming tasks of financial management. Indeed, we believe that beyond generating additional wealth, one of the significant benefits of utilising wealth management services is the worry-free time gained to enjoy with family and friends.