Asia’s global families and ESG driving Canadian private bank
Royal Bank of Canada Wealth Management sees the Asian wealth market as a key plank for a true global product offering, with the next generation of wealth holding different values
When diversifying their banking relationships, an increasing number of wealthy Asian clients are opting for their North American bank to be a non-US lender.
According to Mike Reed, head of wealth management, Southeast Asia, and CEO, Singapore branch at Royal Bank of Canada (RBC) Wealth Management, his bank fits perfectly in meeting that preference.
Reed and his team are serving what he calls “Asia’s global families”. It is a specialty client niche, but one that is expanding as more Asia-domiciled families accrue assets and see family members establish their presence in multiple jurisdictions.
“I have heard from our clients that they remember and like the fact that Canada maintained its strong reputation during and after the financial crisis,” says Mike Reed.
“We didn't take any bailouts, we stood solid throughout that whole time, they remember that and they appreciate that stability," he adds.
Committed to Asia
Following the exit out of the Asian private banking business in recent years by France’s Societe Generale and UK institutions Barclays and Coutts, many speculated that RBC might also turn its attention away from Asia to focus on its domestic market.
Reed addresses that issue by pointing out that the bank is actively hiring and expects to make announcements in the near future on bolstering its business in the region.
“We’ve got a great business here and we want to support that, and selectively make sure that we continue to maintain and add services for the really good quality clients that we have now and are acquiring,” Reed says.
“Some people see Asia as an area that stands on its own, we actually see it as an arrow in our quiver, for Asia’s global families, because if you don't have Asia, or you don't have London, or you don't have North America, you're missing a key piece,” adds Reed.
RBC Wealth Management clients - like others in the region - are waking up to the realities and complexities of transferring wealth to the next generations, particularly across borders.
Massive handover of wealth
To help clients find solutions surrounding legacy planning issues, RBC Wealth Management has worked closely with a leading INSEAD Business School professor.
The transfer of wealth in Asia is becoming a more intricate procedure as traditional Asian values shift.
With many of those now inheriting vast amounts of wealth educated overseas and developing markedly different values to the 70- and 80-year olds who built the family fortunes, the process needs to be handled with empathy and attentiveness, Reed believes.
One way RBC has seen families circumvent family issues is to entirely skip a generation. “We have seen a number of clients, particularly within Asia’s global families, set up plans for their grandchildren over their adult children,” comments Reed on an action he says is not uncommon.
Also, some of the second generations increasingly elect not to take on the business or financial responsibilities but opt for quality of life instead.
The attitude of the next generations of wealthy Asian-based clients towards society is a theme Reed and his bank keep a close watch on.
Whereas their grandparents or parents may have generously written a cheque to support their chosen cause, the coming generations have a different outlook.
Sustainability a key focus
“They are more focused on society, focused on doing good, focused on the environment, they see investments as a tool to do that,” says Reed.
A recent report by RBC Wealth Management, in partnership with the Economist Intelligence Unit, revealed substantial support for impact investing, with 76% of next-generation Asian respondents saying they would consider impact investing to be a form of giving in Asia.
“It’s not just about charitable giving, it’s about how you make an impact on society, or the environment, or whatever your causes are. And they actually tie it to what's important to them, whether it’s animal welfare or the environment,” adds Reed.
The RBC Wealth Management's “The New Face of Wealth and Legacy” report, published in 2018, explored the changing needs of wealthy women in Asia as they begin to play an increasing role in managing substantial wealth and legacy planning.
“What our research indicated was when women were asked about wealth transfer, they were primarily focused on transferring wealth to the next generation, plus transferring both the value and values,” Reed explains.
“Millennial women see it slightly different, where maybe it’s not just family now, maybe it’s society too,” he concludes.
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