Winland Wealth Management
Q. Can you tell us about your firm?
Winland started in 1970 as a single family office and remained so until I joined in 2015. As an Exchange Participant of the Stock Exchange of Hong Kong, we have the right to provide independent custodian service, which is very rare for family offices here, and I thought that there was room for expansion. We are now a multi-family office.
On investments, most of our old clients are in bespoke discretionary portfolio management and newer clients are in active advisory.
Q. Tell us more about the custodian licence
With our custodian capabilities, we differ from most external asset managers and independent financial advisers (IFAs) as they need to rely on external custodians like a licensed bank or other custodian service providers to custodise their client assets. In fact, some overseas banks or financial institutions that want to trade in Hong Kong stocks will need a channel like us to enter the market.
Essentially, we run our entire operation from front-end to back-end. We choose which products go onto our shelves, which markets to enter and we custodise the assets for our clients.
Q. Does that mean that you don’t work with any custodian banks?
No, we use local banks as sub-custodians for cash and licensed foreign institutions as sub-custodians for overseas securities. We find it more efficient and cost effective to work directly with respective head offices rather than representative offices out here in Asia. The cost savings are then passed back to our clients.
Q. How big is your investment team?
We have five relationship managers (RMs) and we all sit on the same investment team. We have bi-weekly discussions on markets.
Q. What products do you offer clients?
We have access to over 48 major stock markets around the world. On mutual funds, our scope is huge. We carry the majority of funds across product shelves of most private banks in Asia.
Depending on the client profile, we can offer both authorised and unauthorised products. We also have alternative products such as private credit, private equity and venture capital on our shelves.
To us, crypto coins are purely for speculation and not for investmentKeith Wong
Q. What’s the mix of your client base?
Hong Kong, Chinese and Indian clients form the bulk of our clientele. We also have some European clients, but just a handful as we’ve not opened that realm yet.
Q. How do you charge clients?
We charge transaction fees and custodian fees, which are based on a percentage of their assets under management. We also take retrocessions passed on by the banks, but transaction fees form the bulk of our revenue.
Q. What is your business model?
We are structured like a law firm in the sense that we have a profit-sharing practice among our RMs. As we offer bespoke portfolios, our RMs can decide what goes into the client portfolios, but of course we maintain oversight of it. RMs mainly advise clients on products that we custodise.
Q. How are you advising clients on cryptocurrencies and blockchain?
We have been advising clients on cryptocurrencies for more than a year now. From an investment perspective, I have been telling clients not to buy digital coins because in most cases the coins have limited usage and crypto exchanges are unregulated. We tried using bitcoin in Japan and it took us 20 minutes to pay for lunch.
To us, crypto coins are purely for speculation and not for investment. However, if clients remain interested, we will help them gain exposure through a regulated vehicle. For them, we will buy structured certificates traded under a regulated exchange in Switzerland. These certificates are mostly issued by licensed banks under FINMA (Swiss Financial Market Supervisory Authority) and traded as a derivative product.
Q. Are you offering any digital initiatives?
We are looking into fintech and working with a local IT firm to develop a system where clients can have a transparent view of their portfolios. The system will include information and analytics on every single transaction made and on the profits that they’ve gained.
Q. What about robo-advisers?
We have done our research and this is not an area that we will venture into now because of regulations.
To me, a real robo-advisory service is one without human intervention using algorithms and machine learning to execute trades. It is meant to be a convenient and cost-saving investment tool for retail clients. Clients should also have a say as to what should be included within their portfolio.
To create a diversified and risk adjusted robo-portfolio, we would need to include various asset classes where selected ETFs will be employed. However, as there is a seemingly lack of liquidity in local listed ETFs, it is not ideal to be included within a robo-portfolio. Given current regulations consider the more liquid overseas ETFs as unauthorised funds, we cannot employ it.
Unless regulation eases up, it will be very difficult to create a meaningful robo-adviser that is truly diversified and risk adjusted.
Q. How has the industry changed over the past five years?
More people are talking about it but I don’t think it has changed a lot. The knowledge in wealth management still predominantly sits with the large multinational institutions because the entrepreneurial spirit in the financial world in Hong Kong is very low in this generation.
One of the reasons could be that locals have personal commitments or burdens like having to pay off their mortgages, the other being they’re just not willing to back down from a luxurious high-salaried life to pursue their aspirations.
It takes time to adapt to being independent. For bankers who joined us in 2015 when we opened up, it took them a year to catch up. There is this time lag because everything has to be re-learned. The bankers need to understand that they are no longer a salesperson but a buy-side person representing their clients.
Q. So what are you advising your clients on at the moment?
I think the way to build wealth is to start from protection, and my advice of late is on medical insurance. Not that my clients don’t have any, but rather, they are lacking in medical insurance that suits their lifestyle. Part of multi-generational wealth transfer is how much you want to pass on to the next generation. If you don’t have sufficient insurance to pay off a hefty medical bill, it means you have to take out a chunk of money that you originally planned on passing to the next generation.
Q. What prompted you to go independent?
I left the bank because targets were increasing at an unsustainable rate of 25% a year with an insufficient level of support. I also did not like the sales trend it was heading towards. They were promoting funds of funds, leverage structures and premium financing to generate profits.
Having left the banking scene, I joined Christie’s, the auction house, on the corporate side, where I was exposed to fine arts and many beautiful things. It was a great place to work for but my passion still lies in finance. After two years, I decided to look for something where I could merge my knowledge of financial investments and alternative asset classes, such as exquisite gemstones or forestry.
Q. What is the most unusual request you’ve received from a client?
When a client asked me to find a mooring buoy for their private yacht. That was quite challenging, because it’s difficult to source.