Managing partner and founder
HP Wealth Management
Q. Tell us about your firm
The co-founder, Michael Foo and I started HP Wealth Management in Singapore as a typical Swiss-model independent asset manager (IAM) in 2009, managing segregated accounts for private clients and using different custodian banks. In 2012, Stephane Schmid joined as a partner and he started to develop the family office offering. Today, we are almost like two businesses: an IAM and a multi-family office.
Q. Do you have any roots in Europe?
We had a Geneva-based shareholder when we started out, but we bought them out completely last year, so HPWM is all owned by people living in Singapore now.
Q. What’s your client mix?
About 90% of our clients are from Asia including Singapore, Malaysia, Indonesia, Thailand, Hong Kong and the Philippines. The rest of our clients are from Dubai, Germany and Switzerland.
Q. What’s your team size?
We have a team of 17 of whom four are relationship managers (RMs) and five are investment experts.
Q. What’s your fee structure?
From day one we took a conscious decision not to work with retrocessions. We will always only be paid by the clients.
That also makes it more difficult for us to attract RMs because many say that their clients don’t pay. I think it is only because they don’t ask them or they don’t dare to ask.
We usually charge management fees and are not big fans of performance fees, hence we are being paid performance fees by one client only today.
Our clients also have to pay the custody fee, transaction fee, FX spread etc at the bank level but we negotiate lower fees on the client’s behalf, so that offsets most of the fees they have to pay us.
Q. Do you have any in-house funds?
We used to have an Asian equity fund but we closed it in 2016. Now, the only in-house product we have is an actively managed certificate. We do it for operational efficiency, not because we want to sell it to third parties and make money. It allows clients to conduct transactions by buying units in the certificate rather than us going to each custodian bank whenever we have to buy or sell shares.
We would like to hire senior bankers, but it is exceptionally difficult because things have not changed and banks tend to pay too much money for mediocre performanceUrs Brutsch
Q. How are you advising clients who are keen in investing in cryptocurrencies and blockchain?
We follow what is happening, obviously, but we haven’t invested a single cent into any cryptocurrency. There were one or two clients who wanted to put some money into an exchange traded fund (ETF), but we haven’t done anything proactive where we say we should buy Ripple or anything. I think it is far too early for that.
Q. Have you ventured into any new services?
We started private equity last year by making a hire and we want to expand that this year. That is mostly for our family office clients. We have also hired a wealth structuring expert.
Q. What is your growth strategy?
So far, most of our new business has been through referrals from existing clients. There are two things we would like to do going forward.
If there is an opportunity to buy a firm that doesn’t have critical mass, we are very happy to look at that.
Secondly, we would like to hire senior bankers, but it is exceptionally difficult because things have not changed and banks tend to pay too much money for mediocre performance. You still get away with being an average RM, but getting a base salary of $200,000 with a bonus of close to $100,000. It has also become difficult to move clients.
Q. Have you found smaller IAMs looking to sell their business?
Not yet, but I think it will come. I think many of the IAMs today are still very young – about four to six years old. Of course, they won’t give up yet. I think they will start thinking about it in two to three years.
Q. What measures are you taking to ensure the security of client data?
We did an exercise two years ago. We asked a so-called ‘ethical hacker’ to try to get into our system. That was very good. We came out quite well at the end, I must say. We made some adjustments to our infrastructure and tested it again, and I think we are in pretty good shape.
Q. How has the industry changed in the past five years?
When we started the Association of Independent Asset Managers in 2011, the IAM industry was pretty much an expat segment. Of the 10 founding members, nine had Swiss links. In the last three to five years, it has become a lot more local in terms of the IAMs, clients and bookings.
It is very good for the eco-system and for the sake of the industry. I don’t think we will be seeing many new foreigners coming in. We will probably see more disgruntled senior bankers who are local bankers in local banks. I think in the next 10 years, the IAM industry will double its market share from the current 5%.
Q. Have you digitalised any of your services?
We already do account consolidation for our clients. As we speak, we are thinking of new ways of to optimise the way in which we operate. One service would clearly be a customer relationship management system, we don’t have one today. We also want to make the way we pass research to the client more efficient.
Q. Which new regulations are you watching?
At the moment, everybody is getting ready for the accredited investor regime, which will kick in on 1 January 2019. I don’t think that it should affect us too much because our clients are accredited investors. However, clients have to opt in, rather than opt out, which requires us to obtain this declaration every year, unfortunately.