Oreana Financial Services
Q. How did Oreana Private Wealth come about?
The company was established in 2002 and had undergone several iterations over its lifetime. Under the structure most recently prior to forming Orean, we were part of National Australia Bank (NAB). NAB was looking to grow its wealth management capabilities across Asia and acquired Calibre Asset Management for its advisory licences in 2009.
I came up to Hong Kong in 2013 to help build up the NAB private wealth advisory business. However, there was a change in strategy midway, and the focus was shifted back to Australia.
The Asian business became off-strategy so I made a recommendation to sell the group to Oreana Financial Services (OFS), an Australia-based investment firm that has an appetite to grow its Asian wealth management capability along with their Australia business. So we moved and became OFS in April 2016.
Q. What is your business model?
We manage client assets and advise them on investments. We also provide clients access to private deals in areas such as real estate, private equity (PE) opportunities or even land and forestry. That said, most of our investments are still in public markets at the moment. We also assist clients with wealth planning and account consolidation.
Q. How is your business structured?
In Hong Kong, we have two teams:
1) A local team of advisers who provide strategic investment and risk advice to Hong Kong and Chinese clients;
2) An expatriate team comprising Australian advisers based in Hong Kong. Upon the acquisition, we obtained both the Australian Financial Services license and a Hong Kong Securities and Futures Commission licence so that we can advise on wealth and finance in both Hong Kong and Australia for our Australian expat clients.
A core part of our model is supporting the flow of people and wealth across Australia and Asia, so we also deal with Chinese clients who are investing in or migrating to Australia.
Q. How big is the team here and what’s the split?
We are a team of 25 with 12 advisers and two investment experts. Within the advisory team, we have four advisers on the expatriate team, six local advisers and two UK advisers who advise UK clients on their wealth in Hong Kong.
Q. What is the minimum account size?
The sweet spot in our core offering is $1 million-5 million, but the entry point to our discretionary services is $100,000.
We have been increasing our allocation to alternatives over the past 12 to 18 months in anticipation of a correction and a recession in US in the next two or three years
Q. How do you charge clients?
We charge clients an upfront implementation or strategic advice fee, and an ongoing management fee typically charged as a percentage of assets. We are not remunerated on transacting or churning portfolios and we do not take retrocessions.
Q. On investments, where are you allocating your clients’ portfolios?
We have been increasing our allocation to alternatives over the past 12 to 18 months in anticipation of a correction and a recession in US in the next two or three years.
Q. Are you advising clients on cryptocurrencies and blockchain?
We’re not advising on cryptocurrencies. We are relatively conservative investors and we don’t invest in things we don’t understand.
Blockchain, however, is where we potentially see some value. Within our current technology allocation, there may be some underlying blockchain investments but they form a small proportion of our clients’ investment portfolios.
Q. What functions are you outsourcing?
We outsource functions that enable us to deliver advice more efficiently. Typically, we engage with clients by documenting the advice that we provide and sign off on the mandate. We’re working with a few technology providers in Australia who can streamline the documentation and administration of the delivery of advice.
As we continue to grow, we’re looking to maintain efficiency by outsourcing parts of our portfolio administration, finance and operational processing. It’s essentially a hybrid insource/outsource strategy that is designed to promote growth without the need to significantly add to the headcount.
Besides outsourcing technology to third-party providers, we also outsource a lot of our back-office functions to our Australia office.
Q. What is your growth strategy?
We are looking at both organic and inorganic growth.
Since leaving NAB, we have been focused on ensuring that existing clients are comfortable with the new systems and technology we have rolled out. Now that we have passed that stage, we are looking into promoting our service offerings in Hong Kong.
Aside from that, we are seeing opportunities for inorganic growth by acquisition, but more so in Australia than Hong Kong. The Australia market has been challenging, as the regulatory environment has been tightened by the Royal Commission looking into banking misconduct. We have seen many advisory firms or good-quality advisers shifting away from banks or bank ownerships and we are well positioned to benefit from that.
We rolled out the Oreana Advice Partnership at the start of the year to provide operations and infrastructure support to advisory businesses to join our firm. Strategic Wealth was the first firm that joined us in April. We have since onboarded a number of other firms.
Q. How does the Oreana Advice Partnership work?
Businesses that join us will continue to operate in their own structure and brand and we will provide all necessary resources for them in exchange for a fee. This includes technology, delivery of advice, investment portfolio management as well as revenue and fee collection.
This gives us the opportunity to understand these firms at a granular level and the discussions may then evolve into acquiring parts of those businesses to provide them with capital to acquire other advice firms.
Q. Have you introduced any digital initiatives for your clients?
We are in the final stage of rolling out an analytical tool that provides detailed reporting for client portfolios. We are working with a technology provider who used to be a start-up but is now profitable and we are about to sign a contract with them after 18 months of due diligence.
Q. What upcoming challenges does the industry face?
Reputational issues will be the biggest challenges. The newer clients with us tend to have a bad story around a relationship they’ve had or a product they’ve bought in the past. Promoting the IAM business as a professional industry that focuses on delivering strategic advice as opposed to product churning would be the biggest challenge.
Q. What regulations are you currently watching?
Our focus is very much on Australia at the moment. Not that we are not focusing on Hong Kong, but the Royal Commission that is taking place in Australia will bring about a raft of regulatory changes.
We operate in a conservative manner and sit well within the regulatory boundaries so I don’t expect any significant impact on our business.
Q. NAB was one of the banks that was burnt by the Royal Commission investigation. After leaving NAB, were there any operational changes you’ve made to be more compliant?
The issue that came out of NAB and a lot of firms in Australia is what I call ‘growth at all costs’ strategy.
However, there is a huge segment within the banking advisory network who are made of high-quality advisers who have clients’ best interests at heart. We are one of the better operators out there who have not had any compliance issues or client complaints. So apart from introducing new technology to enhance efficiency, we didn’t change anything operationally within the business.