With the on-going COVID-19 pandemic bringing a significant shift to everyone’s lives, the world has transformed and the impact on every aspect of daily living will go on for the years to come.
Even the Ultra-High Net Worth Individuals (UHNWIs) are somewhat affected by the pandemic. They started to shift in the way they do things, as they are able to shape and influence the direction of the economy. It is imperative to gain a deeper understanding of how this pandemic will shape their approach to how they work, live, play or invest in the future.
Lombard Odier Asia, in conjunction with four other Lombard Odier Strategic Alliances, and Union Bank of the Philippines Private Banking conducted a study focused on UHNWIs here in the country and around Asia. The study makes us understand better how Filipino and Asian UHNWIs perceive the impact the current environment has had on their lives, families, and businesses, and what they think the post-COVID-19 pandemic future will look like.
More than 150 UHNWIs domiciled in the Philippines, Hong Kong, Indonesia, Japan, Singapore, Taiwan, and Thailand participated in the study. The findings are presented in four broad categories — technology, investment, sustainability, and family services — themes that have gained the most importance for UHNWIs since the COVID-19 crisis began.
“Our clients have turned to us more than ever for guidance while the world has faced unprecedented challenges from the COVID-19 pandemic. This shared trust for UBP Private Bank and Lombard Odier enables us to actively engage and serve our clients, to not only weather the crisis but to thrive in an environment that requires a risk-based and technology-driven approach to preserving and managing wealth,” according to Atty. Arlene Joan T. Agustin, Senior Vice-President, Private Banking Group Head, UnionBank of the Philippines.
Based on the Asian UHNWIs study:
- 78% of Asian UHNWI participants in the study believe that lasting low-interest rates will be part of the new norm after the pandemic and could stay low for the next decade. With interest rates at such low levels, traditional asset allocation between bonds and equities might be challenged.
- The need for advice from UHNWIs has increased with the world becoming more complex. In this context, discretionary mandates are favored by UHNWIs: 58% of respondents said that going forward, they will most likely choose discretionary mandates, of which 44% a mix of discretionary and advisory mandates.
- 89% of respondents believe that the sustainability trend is here to stay, with UHNWIs conveying a desire to better understand the options available to them when it comes to sustainable investing. In that matter, sustainability is a core driver for Next Generation UHNWIs, and they are looking to incorporate their convictions to create lasting impact through their actions.
- 55% of UHNWIs said they are expecting an acceleration of measures to combat climate change. The main concern among UHNWIs interviewed is whether countries globally will be able to coordinate themselves in their effort to fight climate change. The (mis)management of a country’s natural resources and its consequences are also a concern.
- 61% of participants take ESG / sustainability into account when making investment decisions. Despite this, 56% of the participants who responded that they had not yet actively increased the proportion of sustainability factors in their portfolios are still unsure or do not plan to do so, amid some skepticism and belief that sustainability will not generate superior returns.
- 81% of participants think that there will be more digital, less physical human interactions following the pandemic. However, many participants highlighted the importance of in-person meetings to them, with the human experience arguably valued more now than it has ever been. There may also be a tradeoff between limiting office presence and reducing related costs and losing the intangible asset created through the physical interaction of employees.
- 87% of participants noted that a bank’s degree of digitalization will matter going forward, which speaks to UHNWIs’ desire for banks to offer IT-related banking services and new ways of communicating as the next steps in the evolution of banking.
- 83% of participants acknowledged that increasing inequalities will likely continue in the post-COVID-19 world. While the relationship between technology and equality is complex and multi-faceted, many participants responded with the hope that developments in technology could help to close the gap, with IT infrastructure upgrades leading to wider access to education.
- 46% of UHNWIs surveyed think that the future will see a “more local and less global” world, while 42% do not. The actual consensus among participants is that globalization will persist but probably under a different structure, with UHNWIs reflecting a strong desire for a trusted local advisor that helps them navigate and access markets they can no longer travel easily to.
- Families are still considering putting governance structures in place, and many do not see the value of doing so. 50% of respondents have not structured their family governance, of which only 36% indicated that the pandemic prompted them to consider putting a structure in place.
Vincent Magnenat, Limited Partner and Chief Executive Officer, Asia at Lombard Odier commented, “The disruptions and impact of the pandemic have forced leading families and entrepreneurs in the region to rethink everything — not only on the way they are driving their businesses but also on which values they are willing to drive their life. One thing is clear – UHNWIs have reflected a strong desire for a trusted local adviser that helps them navigate and access markets they can no longer travel easily, and for banking relationships with banks that are aligned with their principles and convictions. Banks that have values that they feel connected with. At Lombard Odier, our privately-owned structure and DNA of innovation and sustainability puts us in good stead to help clients navigate uncertainty in this ‘new normal,’ as they seek to protect, grow and transmit their assets and legacies across generations.”
Lombard Odier forged a strategic alliance with UnionBank of the Philippines, one of the largest banks in the Philippines, in August 2016 to grant onshore clients from UnionBank of the Philippines access to Lombard Odier’s globally diversified, risk-based investment solutions. Independent family business Lombard Odier also provides counsel to UnionBank of the Philippines and its high net worth and UHNW clients on family service needs, including governance and succession planning. Tailored investment solutions are also designed based on the holistic family needs of clients.
Download the full study here.