Tighter regulations, rising costs of doing business, slower financial markets and a race among financial advisory (FA) firms to invest in technology, are only some of the challenges staring the industry in Singapore in the face.
As FAs navigate their way through this turbulence, the expectation among industry observers is that it will be hard for a certain number of these firms to survive.
But some will. PromiseLand, for example, believes it is well-placed to weather this storm and prosper in this market. With a belief that only the strongest will survive, the firm is focusing on scaling up its operations to stay relevant in the years ahead.
“[FAs] will have to be bigger and more productive,” says David Choo, managing director of PromiseLand. “Firms that have reached a certain size where all their costs are covered will continue to grow. You might have a consolidation but those with 50 or more advisers will be able to make it.”
More specifically, PromiseLand is banking on a combination of the strength of its front-line staff, its overseas collaboration and its technology to find new ways to be able to grow and appeal to a wider cross-section of people.
Quality and quantity
Over the next few years, Choo’s plans include a near-doubling of overall headcount – from 100 today to 200.
This will come at the same time as a keener focus on the quality of advice. A big part of achieving this will therefore involve upgrading the skills of all its advisers; it will provide regular training and prod them to become specialists rather than generalists.
Choo spends a great deal of time also on training the next generation of the firm’s leaders, to ensure that their values are aligned to those of the company. To an extent, his goal is encapsulated in PromiseLand’s tagline: ‘Trusted advice, trusted adviser’.
So far, he has created a mentorship programme to ensure new advisers learn the ropes of the business quickly.
For example, each new adviser is assigned a designated mentor who attends client meetings with them and assists them initially in generating leads.
Choo believes those wealth managers who spend more time in generating leads will edge out the rest.
“The American firms spend 70% of their time on lead generation, whereas an adviser in Singapore spends only 20% on this. This will lead to a pipeline problem,” he explains.
At the same time, Choo’s idea of creating a lasting and competitive business means a focus beyond merely financial planning. He is committed to generating sales which provide a mix of both fees and commissions.
“It is inevitable that businesses will have to move more towards advisory,” he explains. “That’s the thinking of consumers, but it may not go all the way. So we already have a mix of commission and advisory; we do financial planning for a fee, and for investments, we focus more on AUM kind of business. Besides this, we also have a strong general insurance and group employee benefits business.”
Commission is only in question, he believes, if clients don’t trust the adviser; if they do, and know that the advice will not be motivated by revenue targets, it is not a problem.
One of the ways that PromiseLand is engendering trust, for instance, is by ensuring the continuity of the relationship, plus the firm is hiring advisers across age groups to cater to clients in different segments and at different stages of their lifecycle.
Finding new partners
In growing its business, the wealth manager is also looking beyond its own back yard.
It is partnering with other firms in the industry, with a view to adding new skills and raising its own profile.
Apart from other FA firms, it is forging collaborations with brokers that can add to its overall product offering and with whom it can cooperate to tap a wider market. “We only provide services that our partners do not have, and then we share the commission,” explains Choo.
While it also plans to move up the value chain and cater to the HNW segment, PromiseLand has some advantages when competing with private banks, given the high cost of those institutions’ business model.
It is reaching out to clients at the lower end of the HNW spectrum to park a part of their private banking business with the firm while continuing to put the rest of the money elsewhere.
“If we try to replace the private bank, it would not work, so it is more like sitting together with them and giving clients alternative advice,” says Choo.
Working with partners is also key when implementing a digital strategy.
For example, the firm is looking to partner with insurance companies and platforms that are using online systems to sell products and services without giving advice. It will provide them access to PromiseLand’s advisory services.
Yet, while the firm has its own IT department, and it has incorporated digital portfolio management services in its system, it is not particularly gung-ho about digital’s transformative power.
“Computers can do only so much, they can’t do the work of persuasion,” says Choo. “A lot of clients check out things online, but they still use an adviser when it comes to investing and buying insurance. If the client is more discerning, they would use an adviser.”