Young wealthy people in Asia Pacific have been rising in line with the region's strong economic growth, which has created a new breed of entrepreneurs.
About 41% of high-net-worth individuals (HNWIs) are 45 or younger, according to Capgemini and Merrill Lynch Global Wealth Management's 2011 World Wealth Management Report.
Asia Pacific has around 3.3 million people whose financial assets are each at least US$1 million, ranking the world's second largest behind North America and ahead of Europe.
The combined wealth of Asia-Pacific HNWIs has topped Europe's since 2009 and the gap widened in 2010. From 2008-11, the growth rate of wealthy customers in the region was 41.6%. Those aged 45 and younger represented just 17% of all such people in 2010, up from 13% two years ago. Of the total in 2010, 41% were 55 or under, up from 37% in 2009, the report said.
The 2008 US economic crisis made investors aware of risk management and investment diversification. Hence, wealthy individuals all over the world have redistributed their assets into emerging markets to capture higher returns as investment alternatives. Asia Pacific is the key region for their asset allocation.
The proportion of asset allocation in Asia Pacific in 2010 was 22%, compared to 39% in North America amd 21% in European assets, 13% in Latin America and 3% in the Middle East. HNWIs in each region have preferred their home-region investments.
The report also said wealthy individuals invested up to 56% of the total portfolio values in home-region assets in 2010 and the remainder outside their home regions.
The World Wealth Report 2011 covers 71 countries, accounting for more than 98% of global gross national income and 99% of world stock market capitalisation.
With the high growth potential of wealthy people in Asia Pacific including Thailand, Bank of Ayudhya has rebranded its Exclusive Banking wealth management business as Krungsri Exclusive. The bank will mainly focus on younger wealthy clients in keeping with the global trend, said executive vice-president Kris Chantanotoke.
The bank's wealth-management clients average around 40-50 years old currently.
The bank requires minimum assets under management of 5 million baht for each customer, and the average assets under management of its HNWI clients are around 10 million baht, Mr Kris added.
Apart from the rebranding of its wealth management unit, special privileges and benefits including investment advisory services will attract more high-net-worth customers.
The bank can better respond to customers' requirements under the rebranded wealth management business unit. "Our survey founded that capital protection is the first requirement for HNWIs, followed by professional management, transparency and reputation," he said.
It has developed privileges to cover four areas. The first one is relationship sales and services, with customer's wealth managed by the bank's professionals. Second, investment advisory services will ensure its customer success in every life stage.
The third one is the improved customer touch points and locations through Krungsri Exclusive service centre and the last one is strong segmentation through special privileges for customers in this segment.
BAY, the country's fifth largest bank in terms of total assets, began its wealth management business in 2008 with 10,000 customers and 150 billion baht in assets under management. This year it has 25,000 customers with assets under management of 270 billion baht. It aims to become a top three bank for wealth management within three years.
Foreign property is an important part of Mr Korn’s portfolio, but be mindful of increased risk investing in assets in the West.
Investment tips from Korn
Here are some tips by former finance minister Korn Chatikavanij, a wealthy individual, for allocating assets.
For investors, acceptable risk level is a key factor for portfolio allocation, which depends on personal investment behaviour, age, and investment knowledge.
"Prospective return is another important area to focus on for investors," he said.
More than 50% of his total investment portfolio is in overseas assets because of the higher return objective and for risk diversification. This offshore investment is largely allocated to property and equity, he added.
"Foreign property is an asset used by my children who are studying abroad. It's also convenient when I visit them. For equities in overseas markets, my main objective is risk diversification, especially during global economic uncertainty," he said.
The Bank of Thailand has encouraged individuals to invest more in offshore markets.
However, Mr Korn advised investors to consider the foreign exchange issue when making overseas investments. Higher risks incur from Western economies because of their outlook and stronger growth potential is projected in the East, so Asia is an attractive market for investors.
The formation of the Asean Economic Community (AEC) in 2015, especially the Asean Linkage Trading policy, will provide greater investment opportunities for both regional and Thai investors. The Thai financial and equity markets will be attractive but they need to improve in product variety, in particular long-term investment alternatives, he said.
The Thai market has shown significant development the past decade. In the past, investment choices consisted of only deposits and equities. Now there are complicated financial products and attractive returns, said Mr Korn.
For wealthy individuals without the time to monitor their investment portfolio, they should consult with professional financial advisers. Mr Korn has used such services.
These advisers help investors manage risks and achieve their return goals. In addition, wealth management service fees are reasonable when compared to the wealth and fortune of affluent individuals, Mr Korn concluded.