Ever-growing compliance requirements in Singapore have added to the cost of doing business for financial advisory (FA) firms, says Alfred Chia of SingCapital.
The decision by the Monetary Authority of Singapore (MAS) to scrap the licences of BSI and Falcon Private Bank – linked to the 1MDB investigation has clearly been an eye-opener for all industry players.
This has come in the shape of the Financial Advisory Industry Review (FAIR), introducing concepts to the local market such as the Balanced Scorecard. Plans are now underway to change the commission structure for life insurance from 2017 onwards.
A likely outcome will be fewer firms over time. This is due to the pressure being put on market players by the regulations.
For the individual advisers, therefore, this means more opportunity, explains Alfred Chia, chief executive officer of SingCapital.
“From the FA representatives’ point of view, there are fewer people joining this business, so competition is less. But the FA firms will have a problem as the cost is rising,” he explains.
This presents a dilemma for the industry in Singapore.
On the one hand, the evolution of the market relies on there being more advisers, both in government and the private sector. Yet there is a need for greater government supports by providing training and offering subsidies if firms can take their businesses to the next level.
An answer in technology?
One of the approaches that SingCapital is taking, explains Chia, is to uplift the level of professionalism, via various means.
For example, he says, the firm has already embraced digital by developing a portal for car insurance and travel insurance comparison and online purchase – CompareKaki.com. (While ‘Kaki’ is a Malay word, it means ‘buddy’ in “Singlish”, he adds with a smile.
Providing such transparency over pricing for such services has typically been unusual in markets like Singapore. “We have been doing this off line, so we are now bringing this online and customers are buying car insurance from us,” adds Chia.
SingCapital also offers personalised advice when required and, most importantly, claims-related services when customers need it most.
More time and attention on clients
A key focus for the 40-plus advisers at SingCapital is supporting clients by spending more time with them and offering a wider set of products and services.
These range from property investments to their ability to understand insurances policies, tax, estate planning and other components of their wealth.
A key element that sets the firm apart, believes Chia, is the commitment to transparency. For example, the firm shares as much information as it can with its clients, to help them to contextualise their needs.
This is reflected in Chia’s own philosophy, which comes across in the books he has written – which are dedicated to holistic financial planning to drive financial well-being.
Consolidation beckons
With a shrinking industry in general, Chia believes there is a need for consolidation of FA firms in Singapore.
By adding scale, firms will be more likely to be able to weather the impact of regulation and associated costs.
Singapore as a whole should also leverage its branding as a wealth management hub, building on the ASEAN Economic Community (AEC), which was established in 2015 – a USD2.6 trillion market with over 622 million people, making it full of opportunities.
“AEC will be a magnet where the ASEAN communities would like to use Singapore as a base to manage their wealth, succession planning and estate planning,” explains Chia.
Chief Executive Officer at SingCapital
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