Chia Sows the Seeds of Optimism: Vital Wealth Management Insights from SingCapital’s CEO
Alfred Chia, Chief Executive Officer of SingCapital, boasts a long list of qualifications and certifications. What he does not list on his business card is his deep understanding of the world of wealth management in Singapore and Asia, but that is what shines brightest out of the interview he conducted with Hubbis in early March. He has more than 25 years of experience in the financial advisory field serving both individuals and corporations, and today he is not only CEO of SingCapital but also deeply embedded in Singapore’s business and institutional community, sitting on the board of various real estate funds as an independent director and advisory board member, as well as serving currently as the President of Financial Planning Association of Singapore (FPAS). He has even found time to author three books dedicated to holistic financial and estate planning. Chia’s vision is of a positive future for Singapore and the wealth management community, but there will be many challenges ahead.
Chia begins by highlighting efforts the Singapore government and the regulator have been making to boost forward planning for retirement and estate transitioning. “They have introduced policies in order to boost people’s CPF contributions and to help them realise that they need to carefully manage their later life,” he explains.
CPF, or Central Provident Fund, is the government’s retirement fund which is retained in individual accounts that the retiree can withdraw in whole or in part from the age of 55. “For example, DPM and Finance Minister Heng mentioned in the recent Singapore Budget that a decade ago, 4-in-10 CPF Members could set aside a Basic Retirement Sum (BRS), compared to 7-in-10 from the 2021 and 2022 cohorts. This is a remarkable increase! It highlights the Government’s concerns as fulfilling BRS doesn’t provide retirement adequacy. There is a lot more work to be done!” Chia explains.
Preparing for the future
Chia highlights another report that shows that Singaporeans’ property holdings represent a significant amount of wealth and that there are more schemes now to release funds from that asset base and also to help people ‘right-size their property’ later in life to better reflect their needs. “this is also another bedrock of future planning in Singapore of course, providing the real estate market stay solid,” he comments.
Another area on which the government has been focusing is the insurance sector, aiming to boost awareness of the solutions available and their links to retirement planning. “The government is pushing this type of greater awareness,” he explains, “but there is also much more that the financial advisory industry can do, including significantly upgrading our collective competence and offering a more relevant and broader suite of products.”
Progress has its price
A concern for Chia and colleagues is that the improvement in professionalism in the wealth management sector must be paid for somehow, but that will require more people actually paying for advisory services.
“This is what we have been advocating for some time,” Chia explains, “as advice should be objective and promote the most appropriate solutions. We have seen some progress in this regard, but it is very slow, as most consumers are still reluctant to actually to engage or pay people to conduct financial planning. We have to hope that the very gradual progress in this regard, aligned with the efforts of the authorities here, will make things better over time.”
As incumbent President of the Financial Planning Association of Singapore, which is an affiliate of the Financial Planning Standard Board, Chia has a remarkable overview of the progress taking place in Singapore, and a close rapport with the government and the bodies that are working with the private sector to promote more holistic financial planning.
“One initiative,” Chia reports, “is the SkillsFuture Credit, where they actually give every Singaporean SGD500 to develop skills. Finance Minister had just announced further credit up to SNG1,000 in recent Budget. But we need more programmes and training to help people in our industry to actually upskill themselves and to thereby help improve our industry and improve outcomes for the end customers. All the programmes, of course, must be endorsed by the authority in order to set the right standards throughout.”
Smaller can be better
SingCapital is a boutique sized FA that services both individuals and corporations across a wide range of financial services.
Chia believes that the trends and the impetus could result in the smaller, boutique type financial advisory firms faring better than the industry at large, as long as they stick to their core expertise and values. “In many respects,” he observes, “these types of smaller firms uphold some core values in this whole ecosystem. As independently owned firms, their values should be aligned to the clients, and they should be ensuring that they continually create and provide trust.”
Chia notes that the private banks or the priority channels of the banks have clients that do actually pay for the ‘business’ or ‘premium economy’ type services those banks offer.
“They know they are being charged fees for those services but are actually prepared to pay as they like the attention, prestige, and comfort,” he observes. “Independent FAs cannot offer the same, but they can offer a highly personalised service, integrity, expertise and build genuine trust. That is exactly what they must strive towards. As fees at the smaller advisory firms tend to be lower, they are well placed to offer value and tailored service, providing they ensure they also offer top quality advice and execution.”
Chia mines down further into what he means by the need for change. Transparency, he says, is improving. “The CPF, for example, has taken the first leap to actually ban sales charge, to lower the fees CPF Members pay for investments, and while the industry may not fully agree yet, the investment platforms will allow the advisers to use it to have a win-win situation with their customers.”
Not yet ready for total change
However, he does not then extrapolate that the wealth industry can migrate to a few for AUM or fee-for-advice model at this stage.
“There are many different tiers of consumer, different segments,” he notes. “There are also more product choices, and some can be complex, such complications deter consumers to invest, so financial literacy needs to rise in tandem with such complications. Accordingly, like everything they purchase, they appreciate that there is a fee for advice in the form of product commissions, as long as the industry becomes more transparent, that will help build confidence and participation. And at the same time, consumer financial literacy and sophistication have to evolve, so it is hand-in-hand really.”
To achieve such advances in financial literacy, Chia maintains that the financial educators and trainers themselves must belong to an accredited body within a defined regime. “This must all be conducted professionally,” he states. “These people must be qualified to actually conduct the education; they cannot prey on the consumer’s eagerness to get rich quick, that kind of mentality, as that is counter-productive to the government’s goals and to the real needs of the clientele. Moreover, there must be a framework to actually refine and maintain quality.”
Pressure to evolve
Chia is certainly not of the belief that the FAs in Singapore are threatened by the evolution of the market and regulation. “We are under some pressure,” he says, “as it is very tough to hire the right people these days, and training is costly, so we need to decide, carefully, where we allocate resource and investment, as returns do not always add up. But we are not under threat of extinction as a result, definitely not, because the people we have are able to contribute to the business, and this industry, for many more years to come and their knowledge and experience will just become better and better.”
“Many insurance companies have set up Tied FA firms where their Reps can distribute wider range of investment products. This will enable them to offer wider range of financial planning advice. This is part of the evolvement of financial advisory landscape,” explained Chia.
There is no doubt that the ever-growing compliance requirements in Singapore have added to the cost of doing business for FA firms. Combined with this greater regulation, which also extends to life insurance, the result, Chia argues, is rising pressure for the FAs in operation to up their game in all respects. And he believes it is generally positive for those firms that take a longer-term perspective, and for the country’s position as a regional and global financial centre.
Making real progress
“While this all presents a dilemma for the wealth industry in Singapore, the government is addressing the need for greater state and state body support in providing training and offering subsidies for private sector firms to take their businesses to the next level,” Chia observes. “Digital transformation, greater transparency in offerings and pricing, a vigorous thrust towards a more bespoke and personalised service and platform, and a broader range of products and advisory services will all help the FA business develop. Combined with a needs-based protocol starting with a deep understanding of the client’s context, we can provide a more holistic approach to the whole industry, focusing increasingly on financial planning to drive financial well-being.”
Looking ahead for the next five to 10 years, Chia is convinced the wealth management industry can survive and be reasonably prosperous, provided standards rise. “the customers are becoming more sophisticated, and that results in them being more demanding, which is actually good for the industry,” he explains. “As this happens, I believe Singapore will at the same time become an even stronger financial hub attracting more international investors from the world over, especially within Asia and particularly China and Hong Kong, in fact, you know the reason Hong Kong, a lot of people are actually coming here, making inquiries. These people will use Singapore increasingly for managing their wealth, and some will also apply to move their businesses or family offices here as well.”
He also notes many more Hong Kong parents sending their children to Singapore to study, due to the perceived safety, quality, political certainty, and so forth. “We are also seeing Taiwanese parents increasingly looking at Singapore, so the impetus for our country and our wealth market here will, I believe, continue for many years ahead.”
Chia’s seeds of optimism
Chia concludes the discussion by reiterating his optimism about Singapore and the industry in which he is clearly a key figure. “Singapore continues to be a great centre of excellence for wealth management,” he states, “with a stable, positive political environment, great infrastructure, and improving competency, so we will continue to do well, especially as we become an ever more central focal point for Greater China. Yes, there are many challenges along the way, but the rewards will be there to make it all worthwhile.”
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