Nurturing a New Breed of Competitor in Thailand’s Wealth Management Market

Since 2016, Dr. Win Udomrachtavanich has been Executive Chairman of KTB Securities (Thailand) PCL, and in this role, he has been aiming to project a more holistic vision of finance than the combination of greed and excess that helped bring about the Asian crisis of 1997, which is when the firm was first created. He and his Korean and local partners restructured the firm in 2016, and the new shareholder group has a shared vision of building an institution that they hope helps clients, both individual and corporate, nurture a more sustainable relationship between both sides of their balance sheets. Win, an accomplished pianist in his spare time, met recently with Hubbis to elaborate on the type of financial institution he and his partners are orchestrating.

KTB Securities (Thailand) PCL, or KTBST Sec as the firm is now known, provides securities brokerage services, covering securities and derivatives trading, investment banking, commodity brokerage, underwriting, mutual funds, wealth management, and advisory services to investors.

KTBST Sec is owned by KTBST Holding PCL (KTBST), which is 70% owned by Seoul-based KTB Securities and Investment, with the rest owned by several Thai investors, including 13% held by Win himself. The firm, in fact, dates back to 1997, but in its current form and ownership dates only to 2016, when Win and his local Thai partners joined with the Korean majority shareholder to restructure the business and the shareholding.

The KTBST Group today comprises the holding company KTBST, KTBST Sec, KTBST REIT Management Co Ltd and We Asset Management Co Ltd. Although the firm effectively began its new life only in 2016, Win aims to file for a listing on the Stock Exchange of Thailand this year, or next, following completion of a restructuring and the launch of KTBST Lend, a new personal loan and white collar welfare lending unit that is soon due to commence operations.

Building the base

The company has stated that the group is aiming to achieve a 26.3% rise in total revenues to 1.4 billion Thai baht (almost USD49 million) in 2020, with a net profit of 101.6 million baht (USD3.26 million).

Some 42% of total revenue comes from commission fees from trading services for securities and derivatives, while 38% derives from commission fees for fixed-income business, mutual fund sales agents, private funds and investment banking services. Fees from foreign investment, block trades, interest income and dividends make up the other 20%.

Wealth management opportunities

While the main source of revenue remains commissions and fees earned on trading services for securities and derivatives, Win and colleagues are keen on expanding in the field of high-net-worth wealth management, given Thailand’s dramatic increase in private wealth in the past 15 or so years.

In 2019, the KTBST Group had 80 billion baht (USD2.56 billion) in assets under advisory which is related to private wealth management and investment advisory and mutual fund sales, while discretionary assets under management for private investors totalled roughly 2.5 billion baht, or USD80 million.

A holistic perspective on wealth

“We define wealth management as services and advisory for both individuals and for corporates, so we look to advise on both the assets they could acquire and the funding that they might require,” Win reports. “And we look at the clients, individual or corporate, holistically, seeing their balance sheets and how those should be managed effectively and sustainably.”

Win explains that KTBST also tries to take this holistic viewpoint to the company’s lending, where the firm seeks out interesting medium to larger sized enterprises in Thailand that are out of favour with their traditional lenders, perhaps for example because their industry is in a down cycle, but where KTBST believes there is room for recovery if supported by the right loan structures.

“There are some opinions that this approach is risky,” he concedes, “including from the regulators, but we do our analysis thoroughly and there are considerable opportunities in this segment if approached judiciously. Moreover, the commitments we make drive real relationships that endure, not only with these businesses but with their owners and families, who then tend to be loyal to us.” The new KTBST Lend business will complement this activity.

Apart from the crowd

Win explains that the firm broadly aims to distinguish itself clearly from the rest of the market by promoting the holistic view he had mentioned earlier through just one relationship point at the firm.

“Our RMs cover all the disciplines of the client relationship,” he elucidates, “so, in other words, the asset relationship, the funding relationship and the wealth management relationship. Whereas our competitors tend to split these responsibilities amongst different teams, we work with clients through just this one relationship, through which we endeavour to offer ideas and solutions that fit them ideally and that work well for them.”

Target - sustainable business

He adds that whereas other firms might have targets to meet quarterly profit expectations, quotas on products, funds, insurance, and so forth, KTBST does not set out any KPIs for its staff. “Actually,” he comments, “you could say in fact that our KPI is sustainable growth for the firm and for our clients so that we identify the products and solutions that are right for the client, then growth looks after itself, in a more sustainable way.”

Win elaborates, explaining that the RMs are encouraged and trained to have broad expertise across all product types, and then tailor products and solutions from across that suite directly to the clients, with relevance.

Win and win again

“We do not say we must be in the top 10 in Thailand for this or that product or category,” he explains. “We do not set targets for sales, or lending or for structured products, as actually, we do not care about those numbers. But we do greatly care about the number of clients we have, measured by those who repeat business with us and those who are new to us. It is a win, retain and win again strategy, sustained largely by reputation and word of mouth.”

Enduring good advice

He explains that he and the firm at large focus on the values of independence, professionalism and ethics. “As I said, we do not believe in simply growth for growth’s sake. We want to build a firm where we are offering good advice that endures, not simply promoting products or ideas because they produce the highest short-term returns for the RMs and the company. This is what I mean by a sustainable business.”

Win sees great potential for the wealth management market in Thailand. “The market size here is second only to Singapore in Southeast Asia, and our wealth management market is considerably more advanced than, for example, the other populous ASEAN countries such as Indonesia, the Philippines and Vietnam. Moreover, we have the opportunity to expand in the neighbouring countries of ASEAN, in fact, our mutual funds are already well established in markets such as Singapore and Malaysia, and the Thai baht bond market is liquid and active for foreign issuers.”

Great potential

 While Win is reasonably encouraged by the activities and prescience of the Thai regulators, he does feel that there is considerably more to be achieved. “We want to see more promotion of the markets by the authorities, not simply greater regulation. It is not just about the right regulations, it is also about the right follow-through, in other words really encouraging the further development of the market.”

Win feels that greater coordination amongst the regulators, not just in Thailand but further afield across ASEAN, could help advance both the regulatory environment and also the market’s overall development.

“We could think about streamlining in the country and across the region,” he comments. “Or at the least, we might see more coordination between the various bodies; many believe this would significantly help the progress in the capital markets, not just in Thailand but across wider ASEAN, leading to a more thriving financial sector region-wide.”

Faith in people

Win is a believer in people. “We believe in technology, but we do not believe digital and robo-advisory will replace the touch of people in this industry,” he comments, “We believe that wealth management, as well as financial services, require immense trust in people, essentially the RMs, so we continue to really emphasise the quality of our people, and actually we think that this will be seen more and more across the whole world of financial services in Thailand in the next few years.”

He observes that the current environment in Thailand is not so conducive for major foreign players, as the market is too small and the regulatory environment too intense and costly to make it worth the while for those global players to bother competing as actively as in the past. Instead, those major institutions are focusing more on the major IPOs and M&A and international debt issuances, while the locals dominate the brokerage and wealth management scene.

“That is why we see more of the domestic securities firms move into the wealth management business in recent years, hiring a lot of RMs from the banks and competing more aggressively in this segment,” he reports.

More global in outlook

Win also sees considerable opportunity as the wealth management market in Thailand becomes ever more global in outlook. “In fact,” he reports, “we see more and more Thai money moving to international assets rather than Thailand attracting more foreign money to our capital and investment markets, as it is simply a matter of the scale available and the size of the economy. There is not enough depth or scale in the financial markets of Thailand to allow the local money to do really interesting things, they really have little choice actually.”

Win admits his frustrations, as he considers Thailand blessed in so many ways. He considers that Thailand needs to think more about the currency, which has been strengthening for the past 15 years against the major currencies and which remains strong today, even while the economy lags some of its natural peers around ASEAN.

Conducive conditions

“We need to improve our overall competitive position and therefore a weaker baht is probably essential,” he reports. “That is why we think that more foreign investments will be positive for local Thai investors, as those foreign assets will appreciate against the Thai baht over the next decade when we expect the currency to weaken, a move which will actually help the local economy and result in greater wealth accumulation at home. And that is why we are focusing heavily also on global investments for all types of investors here.”

He explains more about how the group has positioned itself to take advantage of the opportunities that lie ahead. “We have the brokerage business, plain vanilla equity, debt and structured products, or hybrid investment,” he reports. “We have the REIT for predictable, income-driven asset-backed investment. We have lending, and the margin business, and we have the asset management and mutual fund investment business. Finally, we have the digital side, which is ahead of the curve as non-conventional and conventional assets are available as digital assets and that will be more prevalent once the regulatory environment is more accommodative.”

He elaborates on this last point, noting that the SEC and SET are supportive of the move to offer fixed income and equities as digitised securities. “Digitised assets are going to happen, there will be an exchange to support this, and there will be plenty of opportunities ahead as blockchain technology helps the digitization of conventional securities products.”

Room to make money

Win concludes the discussion by stating that he does not foresee a race to the absolute bottom in brokerage and other commissions in Thailand.

“This is not the US,” he observes, “we simply don’t have the volumes that allow the major brokers there to offer near or at zero levels, as they have other ways of making money from the money they deal with at such scale, and with the vast funds and traders that they deal with. Yes, commissions will be lower due to natural competitions, but brokers will still be able to trade profitably. To compensate for lower commissions, we will boost the advisory proposition, and that is very simply making sure that clients make money consistently. Our mission is to offer a sustainable product and idea flow for our clients and that will ensure the success of the firm in the years ahead.”

Win’s Key Priorities for 2020

A key priority, he reports, is for KTBST’s teams to learn more about digitised assets. “Technology is evolving so fast,” he observes, “and we want to be at the leading edge of change. We will in the near future see many more assets digitised, bringing liquidity to some sectors and access to those assets to investors that may not currently be available, for example to commercial property, private equity opportunities, collectables and so forth. We want to be ready before the regulations evolve to facilitate this, so our people can have valid and productive conversations with clients about these types of assets.”

A second priority is to revamp the product suite to ensure the firm is ahead of changes in the market. “For example,” he reports, “we want to offer a greater depth of structured products solutions, we want to revamp some of our lending products, and our REIT offerings. We will restructure some of the funds so that the appeals are clearer, they are more secure, more unique, so people do not look at them simply from a cashflow perspective, but from other aspects, and therefore attract more investors to participate through us.”

And the third priority is to boost the IT capabilities at the firm. “We live in a constantly changing world,” Win remarks, “and the upgrading of our IT infrastructure is a constant key issue, we must keep improving. It is a hefty investment, but vital.”

Getting Personal

Win Udomrachtavanich, PhD., is Executive Chairman of KTBST Holding Public Company Limited (KTBST), and Chairman of the Board of KTB Securities (Thailand) Public Company Limited (KTBST SEC).

With 20 or more years of experience in the world of finance, in Thailand and abroad, and with an outstanding academic background – he holds a Doctorate in Economics & Banking - he presents himself as a dynamic, results-oriented leader with a proven track record, a keen focus on best practices, and a strong belief in people skills to drive businesses forward.

Before taking up his current role as executive chairman and also 13% shareholder of the reorganised KTBST in 2016, Win was Chief Executive Officer at One Asset Management (ONEAM), having moved there from a role as Director in private banking at Credit Suisse in Hong Kong. Before that, he had worked as a fund manager at Kasikorn Asset Management (KAsset) and Chief Investment Officer at Asset Plus Fund Management (Assetfund).

Win is an enthusiastic and avid thinker about the evolution of the financial sector and its role in society and is a regular guest speaker at Stock Exchange of Thailand (SET), the Association of Investment Management Companies (AIMC), the Thai Bond Market Association (ThaiBMA), Thai Professional Finance Academy (Thai PFA), as well as offering some academic lectures at Chulalongkorn University and the National Institute of Development Administration (NIDA).

Win earned his bachelor’s degree in engineering from Chulalongkorn University, then his Master’s degree in Engineering from Old Dominion University in the US state of Virginia.

Realising then that his future would be in finance, not engineering, he went on to gain his doctorate degree in Financial Economics & Banking from the University of Missouri, Columbia, graduating near the top of his class.

“The key transition for me was to realise that I never really had the passion for engineering,” he reports, “whereas I became very interested in economics and finance, which has remained a passion to this day.”

His confidence to take up the position at the head of KTBST from its current inception came about after his stints as CIO at Assetfund and later CEO from 2012 to 2016 at ONEAM.

“At ONEAM, we had a lot of success,” he recalls, “growing the AUM rapidly and winning plenty of awards locally and from international media. That is how the KTB Group became interested in me as their local partner for their expansion plans in Thailand, and that is how we gave birth to KTBST in its current form and ownership in 2016.”

Win graduated in 1998 as an engineer and was out of job only in a few months due to financial crisis, so decided to go abroad and study engineering, before turning to economics and finance.

When not working, lecturing or speaking at events, Win is a committed family man. He and his wife have two lovely daughters of just four and two years old.

Outdoor pursuits include golf, often at his favourite Amata Spring course outside Bangkok. And quiet time after the children settle at night might be spent enjoying fine wine or single-malt whiskies from both Scotland and Japan. “I am an investor in both of these,” he reports, “so I combine my interest with an active personal investment programme, storing the collection in both Ireland and Hong Kong.”

Win is also a talented pianist, having been considered highly gifted as a child when he often went around Thailand competing in music festivals and giving recitals. “I play regularly at home nowadays,” he explains. “It is both a great love of mine and a great way to relax.”