Soon after the business relocated to Singapore, where it already had an office, founders Bruce Barron and Ian McMahon decided to sharpen the firm’s focus, turning its attention from clients across Asia to those solely in Singapore.
Hitting the sweet spot
The British-born pair were drawn in by the region’s strong regulatory culture which kicked in during the mid-2000s. This was a significant pull factor, explains GFC’s operations manager Andrew Shaw.
“The move was a strategic decision and an obvious choice,” he said. “Ian and Bruce, who have been in financial services all of their lives, are entrepreneurial by nature. They are focused on providing a high quality financial advisory service that meets the needs of clients.
“Previous to the move we were working in places like Borneo and East Timor where there was no reliance on good service.”
"The streets are not completely paved with gold, but there are lots of economic opportunities here, and people can advance their careers relatively quickly"
He said Singapore is a competitive market, but the region’s requirement for a minimum standard of financial advice suited GFC’s style of business.
Several ‘sweet spot’ industries thrive within the shores of Singapore: banking and finance, oil and gas, and the high-end engineering markets, such as the shipping industry. “These are highly paid industries and majorly capitalist and we see that in a lot of our client demographic,” said Shaw.
The firm’s 15 advisers are accustomed to working with clients all the way up the wealth scale, from young expatriates and Singaporeans just starting out on their financial journey, up to top-end customers who could easily afford private bankers.
“Singapore has a low income tax environment and many people have a lot of disposable income,” he said. “When we speak to advisers around the world, some are shocked at the level of wealth within Singapore’s market.
“Though the streets are not completely paved with gold, there are lots of economic opportunities here, and generally people can advance their careers relatively quickly. The business world can’t afford for most talented people to leave so it’s still a good place to live and work.”
United front
Cultural diversity is also a prominent feature of the city state, reflected in GFC’s 31 employees who originate from countries all around the globe. “We have a united nations, which is indicative of the change in market here. Singapore has become a more diverse environment so it helps for our team to know different languages.
“We started off servicing the Australian and British markets seven or eight years ago, because that’s all there was. Now there are various large segments of Western Europeans, Japanese and Chinese, as well as a large non-resident Indian population.
“Our intention is to pick out the segments where we can give those clients a good service and really target them as a business demographic. We have got a whole gamut of advisory experience and people who have been exposed to different cultures. It’s quite an exciting time for the market in Singapore.”
Singapore bounced back fairly quickly after the global financial crisis and, according to Shaw, this resurgence was a huge boost for its economy and for the financial advisory industry. After the crisis, Singapore reinvented itself as a financial hub, rivalling other expat hot-spots like Dubai and Hong Kong.
However, he admits their business is not directly affected by the financial markets. “Most of our investments and clients are long-term so in essence what we do is relatively risk-averse. Short-term situations in the financial markets don’t really have a great deal of impact on us because we are helping advise clients on long-term success.”
That’s not to say that macro-economic issues do no impact on GFC’s business, and Shaw explained that uncertainty means clients might delay making decisions. “Singaporean residents who work in the oil industry might be concerned about the longevity of their employment and not want to make investments at this stage.”
He also said the continual changes around UK pension transfers, particularly with the new legislation for qualified recognised overseas pension schemes (QROPS), have hindered investment decisions.
“Uncertainty is the killer in all businesses. But while the QROPS legislation and economic uncertainty seem to be holding a few people back, it’s not having a huge impact on our business luckily.”
Singapore shift
Singapore’s financial industry has surfed through waves of change over recent years, most notably with the Financial Advisory Industry Review (FAIR) changing the make-up of financial products and the way they are sold.
“I think it’s an evolution in Singapore. It’s not seismic change, but is more subtle and spread over a long period of time,” said Shaw. “I also think it will be more equitable than the Retail Distribution Review was in the UK.
“Singapore regulators are quite smart in that they will look at both sides of the story and observe what effect it had on the market in the UK. They will take the best bits and leave out the things they didn’t like.”
One thing he expects to see develop further over the next two to three years is the range and flexibility of products on offer. “There are some really innovative products in the market and this is evolving at a rapid rate, increasing the range of offerings available. Ultimately this means we can give clients a broader and better service.
“A few years ago protection was the responsibility of the employer, who would look after you with expat packages that would include life insurance and all-singing, all-dancing medical cover. But that is no longer granted through your employer so we are now finding more people – particularly in the expatriate side of the market – who are not adequately covered.
“This means more people need to buy that kind of service or need to be advised on that kind of service, and with the ever-expanding number of affluent nationals and expatriates in Singapore, it’s a nice position to be in as a business.”
Leading the change
Regulatory control has kept the number of licences and advisory firms in Singapore relatively constant. Companies have to consolidate in order to enter the market, and Shaw believes this will eventually reduce the number of firms doing business, therefore making GFC more attractive to potential customers.
That’s not to say GFC are overly concerned about rival businesses. “Competition is fair and equitable; it’s a level playing field unlike some other expat destinations,” he said. “It means there is enough business to go around so we don’t need to worry too much about other firms. Of course we want to think of ourselves as innovators and people who lead change rather than follow it.”
“What differentiates us is the way we do business,” he said. “We are very proud of our portfolio management, which is often a bit of an unseen benefit to potential customers because they don’t get to see that side of it until after they’ve become a client.
“But the quality of our service helps us retain clients and obtain referrals so we can build our business up fairly organically. Quite a lot of our business comes through the referral network and I think that indicates we’ve got happy clients because it’s a big commitment to recommend somebody to trust their life savings with us.”
Future aims
GFC has grown in leaps and bounds over the past 18 months and the company is now looking to increase its advisory headcount to around 20-25 advisers in the next year. Though still in the early stages, the firm is also considering setting up an additional office.
But Shaw stressed that there is no rush for the company to expand further afield as there are still many ways to develop the business around the core of what it does in Singapore.
“Expansion planning at the moment is under the radar and a little bit further away, but exciting none the less. We are targeting different segments of the Singaporean and expat demographic onshore before we start opening offices in other locations.
“We need to see how FAIR effects us and look carefully at the market conditions to see how much business we can win.”
