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| Date: 28/04/2009 |
Type: Article |
Language: English |
Source: straitstimes.com |
THE private wealth management industry may have to tackle three key areas as a different post-crisis financial landscape begins to unfold: rebuilding trust and confidence, having proper risk management and corporate governance and focusing on competence.
These points were raised by Monetary Authority of Singapore executive director Ng Nam Sin in his opening address at the Shorex Wealth Management Forum in the Suntec convention centre on Tuesday morning. He said: 'One potential driver of change is the shift in investor mindset.' Mr Ng added that investors are adopting a 'more holistic view' on their wealth protection needs, and are asking for 'even more transparency' on account management.
'These suggest the renewed emphasis on building trust, enhancing transparency and proper risk management and market conduct,' he said. Thus, financial bodies will have to review the way in which they deal with clients to 'provide real value and restore confidence'. For instance, they must ensure that investment advice dished out is 'fair, objective and in the best interest of clients'. Having pay structures that rely mainly on commissions or are biased towards recommending specific products is 'untenable', he said, adding: 'It will inevitably elicit a culture where the institution and its representatives are more concerned about their own revenue interests, as opposed to having clients' interests at heart.'
The industry must also progress to one with more emphasis on the safekeeping and handling of client funds, especially in the wake of the Madoff and Stanford frauds. Thus, financial institutions must have proper systems and processes to safeguard client's interests and keep abreast of new regulations. Senior management must recognise their role in 'setting the right tone at the top', instilling an 'ethics-based' corporate culture built on integrity, said Mr Ng.
Financial institutitions must also focus on 'continuous skill upgrading', added Mr Ng, as the need for a high level of competence has become 'more acute' given the industry's current challenges. |
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| Opening address by Mr Ng Nam Sin at Shorex WMF Singapore 2009 |
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| Date: 28/04/2009 |
Type: Article |
Language: English |
Source: Mondo Vision
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A very good morning to everyone. To our guests from overseas, a very warm welcome to Singapore. I am most delighted to join you at this inaugural Shorex Wealth Management Forum in Singapore.
Global Impact of Crisis
The current financial crisis is unprecedented. The speed at which events unfolded has been exceptional. The scale of impact has also become global. As an illustration of its extra-ordinary impact, world equity market capitalization has plunged to less than US$31 trillion, from US$62 trillion just 20 months ago – investors and households across the globe have been affected significantly.
Singapore’s financial system remains healthy. We are spared partly because our financial institutions have very low non-performing loans, minimal exposure to toxic assets, and are well-capitalised. In addition, our regulators are alert and pro-active, and have always upheld high standards of supervision and risk management. While our banks are holding up well, there is still substantial risk in the global financial system - which is undergoing significant, structural changes. We thus need to remain vigilant.
While Asia’s financial system is relatively unscathed, we are getting the second-order effects on our real economy. With the collective drag of falling export demand, lower commodity prices, and much tighter external financing terms, economic growth is slowing significantly.
Addressing the Challenges
It is premature to ascertain how the new financial landscape, post-crisis, is going to look like. However, we can infer this somewhat from key agendas being debated by policy-makers, regulators and industry players. One potential driver of change is the shift in investor mindset. Industry feedback suggests that investors are now asking for even more transparency on the management of their accounts. In addition, given the pain of wealth destruction arising from this crisis, investors are taking on a more holistic view on their wealth protection needs.
These suggest the renewed emphasis on building trust, enhancing transparency and proper risk management and market conduct. It also brings into sharper focus what should be a long term sustainable business model within the private wealth management industry. A brokerage, highly transaction-based model no longer looks sustainable. In this respect, allow me to share 3 key areas the industry may have to address, as a different financial landscape starts to unfold.
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