During the week of the Singapore Fintech Festival 2022, Finextra met with Saxo’s APAC CEO Adam Reynolds and regional head of Saxo Institutional Ivan Chang at their Singapore offices to discuss the launch of SaxoPartnerConnect.
This innovative digital advisory solution aims to empower wealth managers by offering self-directed, advisory, and discretionary services, while addressing operational, productivity, business, and relationship challenges. Wealth management services are currently dispersed across five different channels: banks, brokers, independent financial advisors, external asset managers, and robo-advisors. Despite this diversification, significant challenges remain. Wealth managers urgently require digital tools to scale their business models, comply with regulatory requirements, maintain technological infrastructure, and ensure integration of services.
Chang emphasized Saxo’s commitment to making investment opportunities accessible to curious individuals, reflecting on the company’s 30-year history in the industry. While Saxo has historically offered individual features, this marks its first launch of a comprehensive solution aimed at enhancing the wealth management landscape.
Reynolds noted that while Saxo has a strong presence in Singapore, there is significant potential for expansion into the independent financial advisor market, enabling advisors to scale their client bases from 20-30 clients to 80-100 clients—making it possible for them to serve more individuals with less effort.
He highlighted the current market conditions, where both equities and bonds are experiencing downturns. This shift challenges traditional portfolio diversification strategies, as both asset classes have faced declines of over 20%. “Clients suffer when they see such substantial drawdowns, especially in an inflationary environment, which can significantly erode the value of their portfolios,” Reynolds explained, emphasizing the importance of managing client anxiety during these challenging times.
The situation varies by country. In Australia, stringent consumer protection laws prevent wealth managers from receiving trailing commissions from insurance or fund-type products, leading to a shortage of financial advisors as they can only earn through client fees. Conversely, in Singapore, financial advisors predominantly rely on trailing commissions, which may not always align with the best interests of their clients.
Reynolds pointed out the necessity for regulation to address profit motives within advisory relationships, stressing that while digital wealth solutions offer more transparency in fee structures, challenges still persist.
Chang underscored the personal nature of wealth management, which significantly impacts individuals’ and families’ futures. The traditional reliance on face-to-face meetings and printed materials is becoming obsolete as clients now expect digital accessibility and transparency. “People don’t want information in print anymore; they expect mobile access and real-time portfolio insights,” Chang said.
Financial advisory services must evolve to ensure transparent communication. However, regulatory restrictions can impede providers from developing comprehensive technology solutions across multiple asset classes, often resulting in wealth managers having to engage with multiple providers to meet client needs. SaxoPartnerConnect seeks to address this issue.
For advisory firms lacking the budget to maintain in-house portfolio management systems, identifying a technology provider that ensures asset safety while offering a unified platform for managing various asset classes is crucial. The ability to strategically capture, organize, and interpret data will be vital for differentiating wealth management services, particularly as AI and machine learning become more integrated into the sector.
Reynolds stated that data plays two critical roles: aiding investment decision-making and enhancing business management. He also noted the necessity of tailoring AI to help advisors evaluate portfolios effectively. The Asian market shows a promising response to technology trends that improve customer experience, although risk and reward considerations remain paramount when it comes to ESG adoption.
In Chang’s perspective, ESG awareness is still in its nascent stages and will gain traction as knowledge about ESG standards becomes more refined. Reynolds, however, expressed concerns over whether investor adoption is keeping pace with regulatory developments. He observed a wide spectrum of investor attitudes towards ESG, driven by varying motivations and the fiscal policies favoring ESG investments like clean energy and electric vehicle infrastructure which are expected to enhance industry returns.