Major banks have encouraged their wealthy customers to invest in certain assets and advised them to shift such portfolios to foreign markets to take advantage of economic recovery in developed economies and avoid volatility at home.
Lalitphat Toranavikrai, head of private banking at Siam Commercial Bank, said it was important to help review asset allocations, especially in equities, for high-net-worth clients, adding that local equities might not be a safe investment choice in the current political situation.
Several fund managers have offered foreign equities as the choice for wealthy investors, and SCB takes the same view.
However, the risk of investment in foreign equities is finding the right timing, she said.
The competition in private banking is intense, as clients are ready to switch banks if they cannot meet their returns target.
“We are facing unknown factors, so the challenge of private banking amid the market volatility is how to make the customer satisfied with the return target range.”
The normal return range that SCB offers to high-net-worth clients is 5-6 per cent.
SCB is restructuring its services for these rich customers. The restructuring will be completed in the next few months, and should influence assets under management.
SCB oversees about 7,000-8,000 private banking customers with combined AUM of more than Bt500 billion.
“We want to strengthen this service because the competition in this category is serious, and we plan to be active in private banking by integrating it with SCB securities and SCB asset management,” Lalitphat said.
She said asset allocation depended on the risk appetite of each customer, and conservative clients who accept returns of 2-3 per cent should increase the weight of their investment in fixed-income and long-term plays.
Jirawat Supornpaibul, head of private banking at Kasikornbank, said it had advised high-net-worth customers to allocate investment under an all-seasons strategy to protect their wealth and lock in a certain return.
“We have to understand the economic cycle, that there will be recovery, then growth, then slowdown and recession. In the US and the EU, which are set to recover, we suggested that our clients increase weight on equities and bonds there to gain profit. The US and EU recoveries will benefit [economies] in North Asia such as [South] Korea, [mainland] China and Taiwan, so our clients are advised to increase investment in those equities as well,” he explained.
However, what clients should be aware of is that prices in those markets may go up, because when several investors pour in, the cost of investment might not reasonable.
Jirawat said accurately predicting return on investment was the challenge for private bankers because the clients expected their advisers to help them enjoy high returns.
KBank aims to expand AUM this year by 15 per cent from Bt580 billion.
Patinya Vachiratamma, first vice president for wealth management at Krungthai Bank, said customers who are building wealth and understand the stock market would have their own brokers, but for those who don’t, private bankers will advise them to invest in long-term equity funds.
For clients who have enough money and are considering wealth-inheritance planning, KTB suggests dividend stocks.
Overseas equities are attractive in terms of return but investors should consider the risks that could have impacts on overseas investment, such as US monetary policy and the Ukraine crisis.
She said private bankers should offer new products that enter the market to wealthy customers in order to maintain the wealth and increase AUM.
“Interest rates in the Thai market are not expected to be on an upward trend, so we suggest our customers hold long-term products such as the 60-month deposits or debentures with ratings of ‘A’ or ‘A-’ and long-term funds to gain tax privileges,” she said.
KTB defines high-net-worth individuals as those with at least Bt10 million, for which its AUM this year is projected to move to Bt300 billion from Bt200 billion. The bank has actively taken care of customers who have assets below Bt10 million in order to help build their wealth and secure them as long-term clients.
Picha Ratanatam, head of Tisco Wealth Management, which focuses on offering overseas equities, noted that more than 50 per cent of its 120,000 wealthy customers invested overseas because the bank last year saw signs of recovery in developed markets.
Tisco Wealth Management aims to expand its base of wealthy customers by 30 per cent to 160,000 and AUM by 15 per cent to Bt350 billion.