Recent studies on High Net Worth Individuals (HNWIs) in the APAC region highlight a disparity between Filipino investors' intentions and actions in realizing personal goals, sustainable investing, acquiring private assets, and aligning family objectives.
“Even as APAC HNWIs have a deep understanding of their aspirations, there is a gulf between their intent and their actions. We also see the divide in perspectives between generations, and a continued emphasis on sustainable investing and emergence of private assets in managing risks when it comes to allocations,” said Vincent Magnenat, Limited Partner, Asia Regional Head and Global Head of Strategic Alliances at Lombard Odier.
Lombard Odier conducts annual studies to understand HNWIs' wealth aspirations and priorities, guiding their efforts to preserve legacies across generations.
Arlene Joan Tanjuaquio-Agustin, Head of UnionBank's Private Banking, underscores the significance of offering investment opportunities both domestically and internationally, capitalizing on their collaboration with Lombard Odier.
“This study shows trends and gives us insights into the changing landscape of the industry. This allows us to listen to our customers, refine our offerings, and provide solutions to meet their financial needs.
Our goal is to provide investment options to our customers not just locally but also globally so we brought the expertise of a Swiss-based private bank to the Philippines,” said Atty. Arlene Joan Tanjuaquio-Agustin. Since 2016, UnionBank has partnered with global wealth and asset manager Lombard Odier.
Family discussions on wealth management are lacking, presenting an opportunity for education and dialogue to bridge the communication gap and develop solutions for wealth succession.
According to the study, when examining both their aspirational and essential goals, the top goals of Filipino investors are to enjoy and maintain their current lifestyle, remain wealthy for their remaining lives, protect family members, and ensure they are well taken care of. However, only a small fraction believe that they have achieved their goals.
This presents an opportunity for Filipino investors to rethink their investment approach by understanding their goals, and how these could translate into financial objectives and be tailored into an investment strategy.
“We have an emerging middle class and they do have specific goals as investors. We also need to consider that the younger generation’s goals are different from that of the older generation. They don’t perceive work as their life, they are veering away from that and would rather pursue what drives their passion. With this learning, the challenge now lies in enabling them to reach their goals and align their financial investments,” said Atty. Tanjuaquio-Agustin.
In communicating their goals, the study shows that Filipino investors recognize the need to structure wealth within the family and the importance of sharing investment goals to build a long-term common vision. Ironically, only half of the respondents have conducted discussions with relatives and fewer have a trust or foundation already in place.
Atty. Tanjuaquio-Agustin stated, “We have to understand what’s keeping families from having structures in their wealth management goals. There’s a generation gap in terms of who should be involved in wealth management discussions.
At UnionBank, we started the Next Generation Academy, where we provide a venue for the younger generation to dialogue with their parents in matters concerning their financial goals and concerns within a learning and development environment. These engagements are made available to our customers to address this gap in communication and hopefully come up with solutions, specifically in wealth succession.”
The study shows that Filipino investors are aware of sustainability investing and recognize its importance, however, most have remained cautious from an investment standpoint.
“In the Philippines, there are more and more discussions on sustainability; it’s no longer a complex idea. From questions and doubts, there’s the conviction that there is a need for sustainable investing. This interest in sustainability is particularly strong among the younger generation, reflecting a shift towards bridging generational differences in investment strategies. Investors are still looking for returns on the performances of their investments, however, the study showed that Filipino investors are concerned with the environment. What I think needs to be done is to communicate how sustainability and performance are connected. There would be good returns on sustainable investments and that to me is the challenge to the Philippine wealth management practitioners -- to educate investors in the space of sustainable investments,” added Atty. Tanjuaquio-Agustin.
”Investing in sustainability is not just investing in solutions, it is investing in the transition. We need the transition in our economy. In the case of the Philippines, the transition is more apparent than in other markets in Asia, which is very positive. The reality is that companies that do not have a road map in the sustainability of their business will disappear because the economy is changing toward direction,” said Magnenat.
Although Filipino investors are exploring private assets for growth and diversification but they have yet to take action toward this goal.
“We see this as an opportunity for the Filipino investors to be educated on how private assets work and learn the benefits. In the Asia Pacific region, more than 70 percent already invested in private assets but in the Philippines is quite a low number,” added Magnenat.
Investors understand they need clear goals in investing but they lack information to make sound investment decisions. Having access to these investments may be the biggest mistake if you are not guided professionally. Having ‘a product’ is not enough.
We take a bespoke approach and guide our clients at every step. This starts with understanding their needs, their goals, their family context, and only then, do we discuss the solution that will work best for them.”
For Magnenat, he sees the importance of a global offering to be delivered locally. He envisions investors going to any private bank and gaining access to global banking with the right advice and knowledge from their home markets.
“With this alliance with UnionBank, what we want to achieve is a holistic approach, it’s the key. We need to engage, educate, and share information to close the gap,” concluded Magnenat.