The COVID-19 pandemic spared no one. It affected even ultra high net-worth individuals (UHNWIs) in the Asian region. UHNWIs are individuals who usually have investible funds of about US$ 30 million.
UNHWIs are some of the wealthiest people in the world. In this class of people, you often will find people who are major decision-makers and whose investments can have a global impact. Unlike most of us who probably invest in term deposits or mutual funds, these UNHWIs often put their money in different baskets including property, equities, bonds, private equity, collectibles (like paintings), cryptocurrencies, and precious metals.
According to Unionbank Private Banking Senior Vice President Atty. Arlene Joan Agustin, their definition of UNHWIs in the Philippines is those with approximately PhP 10-100 million or more in investible funds. She says that Filipino UNHWIs still look at the long-term and weigh yields vs risks. This pandemic has made Filipino UNHWIs rethink their investment strategies but they have not changed their long-term outlook.
In order to understand exactly what the changing needs and priorities of the UHNWIs are in the region and in the Philippines, UnionBank Private Banking partnered with a leading global wealth and asset manager. Lombard Odier, to conduct a study of UNHWIs throughout the Asian region to understand their changing needs and priorities.
More than 150 UHNWIs living in the Philippines, Hong Kong, Indonesia, Japan, Singapore, Taiwan, and Thailand participated in the study. The findings are presented in four broad categories – technology, investment, sustainability, and family services –- themes that have gained the greatest importance for UHNWIs since the COVID-19 crisis began.
Here are some insights from that study:
- 78% of Asian UHNWI participants in the study believe that lasting low-interest rates will be part of the new
norm after the pandemic and could stay low for the next decade. With interest rates at such low levels, traditional
asset allocation between bonds and equities might be challenged. - The need for advice from UHNWIs has increased with the world becoming more complex. In this context,
discretionary mandates are favored by UHNWIs: 58% of respondents said that going forward, they will most
likely choose discretionary mandates, of which 44% a mix of discretionary and advisory mandates. - 89% of respondents believe that the sustainability trend is here to stay, with UHNWIs conveying a desire to
better understand the options available to them when it comes to sustainable investing. In that matter, sustainability
is a core driver for Next Generation UHNWIs, and they are looking to incorporate their convictions to create
lasting impact through their actions. - 55% of UHNWIs said they are expecting an acceleration of measures to combat climate change. The main
concern among UHNWIs interviewed is whether countries globally will be able to coordinate themselves in their
effort to fight climate change. The (mis)management of a country’s natural resources and its consequences are
also a concern. - 61% of participants take Environmental, Social and Governance (ESG) / sustainability into account when making investment decisions. Despite this, 56% of the participants who responded that they had not yet actively increased the proportion of sustainability
factors in their portfolios are still unsure or do not plan to do so, amid some skepticism and belief that sustainability will not generate superior returns. - 81% of participants think that there will be more digital, less physical human interactions following the
pandemic. However, many participants highlighted the importance of in-person meetings to them, with the human
experience arguably valued more now than it has ever been. There may also be a tradeoff between limiting office
presence and reducing related costs and losing the intangible asset created through the physical interaction of
employees. - 87% of participants noted that a bank’s degree of digitalization will matter going forward, which speaks to
UHNWIs’ desire for banks to offer IT-related banking services and new ways of communicating as next steps in
the evolution of banking. - 83% of participants acknowledged that increasing inequalities will likely continue in the post-COVID-19 world.
While the relationship between technology and equality is complex and multi-faceted, many participants responded
with the hope that developments in technology could help to close the gap, with IT infrastructure upgrades leading to
wider access to education. - 46% of UHNWIs surveyed think that the future will see a “more local and less global” world, while 42% do not.
The actual consensus among participants is that globalization will persist but probably under a different
structure, with UHNWIs reflecting a strong desire for a trusted local advisor that helps them navigate and access
markets they can no longer travel easily to. - Families are still considering putting governance structures in place, and many do not see the value of doing so.
50% of respondents have not structured their family governance, of which only 36% indicated that the pandemic
prompted them to consider putting a structure in place.
You can download the full report from this site.