Consolidation has been a huge trend across every financial centre since the financial crisis. Stricter regulations and rising costs have made business owners reassess their strategies, with many opting to sell up.
And Singapore has been no exception. But every sale has an acquirer, often meaning fewer but bigger players in the market.
It was first announced in August 2018 that the client book of advisory firm IFS would transfer to Meyado Private Wealth Management Singapore.
The deal saw Meyado bring across three advisers, taking its headcount to 10 advisers.
Zurich and St James’s Place alum Nick Glover moved to the city state in November 2013 after a five-year stint in the Middle East. A chance meeting with Meyado chief executive Mark Paine, in November 2018, saw him join the London-headquartered firm in January.
He has taken over the day-to-day running of the Singapore operation to allow Paine to “focus on the firm’s global acquisition strategy”.
“I was really brought in due to the dramatic growth over the last three years,” Glover told International Adviser just five weeks after starting his role. “We’ve gone from being a boutique advisory firm in a couple of jurisdictions to growing our AUA by five times since 2015.”
Globally, the firm has around S$500m of assets under advice, of which about S$350m is in Singapore. The remainder is mostly from the UK and then the Philippines.
“We’re targeting S$1bn (£571m, $737m, €652m) by the end of 2020,” he added.
But this ambitious growth is not unique to Meyado, with Schroders also looking to build on its recently announced expansion.
Simon Lints, head of wealth management for Singapore, told IA that he “has had a lot of positive feedback” following Schroder’s acquisition of the wealth management arm of Thirdrock.
He describes the deal as “certainly not the last, this is just the start of my journey here”.
“I think there is going to be a lot of opportunity. We’ve already had a lot of contact from people in the market and other businesses wanting to have a chat.”
Originally from Scotland, Lints moved to Singapore because he could “see the ascent of Asia”.
“This is where new wealth is being generated and this is where entrepreneurs are really making new money. In Europe and the UK, it is old money that is just being moved around. You see the mess that is Brexit and what is happening across Europe – over here there is a lot of positivity.
“It’s a very vibrant market.”
The number of big European banks that have withdrawn from Singapore is a strong indicator for Lints that Schroders, which operates under a merchant banking licence, has the right model.
“They came over here to try and take on the local banks but on a more transactional basis. There was no real added value and they weren’t making money, as it is a very costly centre.
“The local banks are extremely well capitalised and very well run. The regulator likes that and encourages them. As a consequence, the European banks have been less successful here.”
He continued: “I came here two and a half years ago to build the business in Asia. I think that there are more opportunities for niche players like ourselves; that are strong, have a good following, know what they are doing and actually treat clients well.
“To a large extent, the big banks commoditise their clients. Whereas we, given our size and set up, can be more hands on, more relationship driven. That’s why we can charge relatively decent fees for our services and we are growing our client base, revenues and profitability.”
Turning to technology
Rising costs and regulation mean that businesses need to think smarter. For Schroders, Lints says the company’s name, history and close client relationships set it apart from its competitors.
For Meyado, Glover firmly believes that it’s the company’s use of technology.
It copes with the ever-strangling regulatory conditions in Singapore by having “much more efficient processes than our peers”.
Having travelled from the Isle of Man, to the Middle East and then on to Singapore – Glover is adamant that “we, as an industry, don’t use technology to its full potential”.
“We have to have the ability to allow our advisers to see their clients effectively and efficiently, without being dragged into the paperwork that bogs them down.
“If you consider the structural changes to commission and the need for more compliance – obviously costs are getting bigger and income is shrinking. It all comes down to making the most out of what you have available to you.”
What that means for Meyado is freeing up its advisers to do the face-to-face trust building around financial planning, and “use technology to do all the other elements – some of the more generic things that will naturally come out of those processes”.
“When I hear Mark’s growth story for the next five years, and what we’ve actually got now, in terms of our adviser capacity and our client bank, there is a huge amount of potential for us as a business. Particularly in this market,” Glover added.
Consolidation is going to continue and costs are going to keep rising, said Lints.
“Compliance is becoming tougher in Singapore because they want it to be a good, well-regulated centre. They don’t want any dirty money. As a consequence, the compliance costs increase and, for some of the smaller players, it becomes uneconomic to operate here.”
He sees fintech becoming the biggest disrupter, as it is something the local regulator is encouraging.
“It will become more consolidated, in terms of the more traditional, old-fashioned banking adviser model. But I think there is going to be lots of new, different types of financial offerings out there that are going to attract millennials.”
Lints believes it is those returning to Singapore following stints abroad at university or for work who are driving the demand for more modern solutions.
“Those people are talented, very driven and pretty wealthy, but they want to engage with financial practitioners in a very different way to their fathers and grandfathers. Singapore is very good at encouraging and supporting fintech and innovative thinking.”
According to Lints, the city-state has the ambition to be the top financial centre in the world. While the Monetary Authority of Singapore (Mas) has been quiet of late, that doesn’t mean further regulatory change is not coming.
As a result, firms currently in the market, and those eyeing it as a potential destination, are unlikely to see a softening of this approach any time soon.
But that doesn’t mean there aren’t opportunities for growth – as evidenced by Meyado and Schroders.