1. finance
2. bank

Roundtable
March 2013
How to develop Thailand’s
wealth management industry
As more and more banks vie to enter and grab their share of Thailand’s
developing wealth management industry, they shouldn’t under-estimate the
size of the task ahead of them.
This starts with simply being able to
define what “wealth management”
means in the local context.
The lack of consensus from one organisation to the next, for example,
makes it difficult to create a clear
brand and be profitable.
It is a market which also requires patience, given that firms cannot really
justify scaling up if they assess the
potential revenue in the short-term
compared with the actual costs of doing business.
Further, many of Thailand’s emerging
wealthy population tend to leave money on deposit and only invest small
portions in investment products. And
restrictive regulation in terms of the
product offering is a further hurdle.
These were some of the collective
views of several senior management
and other leading practitioners in
Thailand’s private banking and wealth
management industry at a roundtable
organised by Hubbis in Bangkok.
Providing relevant products and services for each wealth segment, therefore, requires a trade-off depending
on an individual bank’s strategy. As
part of this, an important differentiator for institutions is to develop their
own relationship managers and investment advisers to provide a good long-
Andrew Crooke | Editor | T 852 2563 8683 | E andrew.crooke@hubbis.com
term service to attract clients – not
just continuing to target AUM alone.
The next step is educating customers
on the offering as well as about the
importance of asset allocation. For
the time being, for instance, many
customers first look for benefits and
privileges of opening a new account,
rather than seeking good advice.
In terms of regulatory hurdles, market participants said they would like to
see fewer restrictions on the product
range available for clients in Thailand,
to give them access to certain offshore
products onshore.
Other suggestions by participants included the regulators working towards
making Thailand more of a hub by
welcoming all players and create more
competition.
When it comes to true “private banking”, this is challenged in Thailand given that market participants estimate
there are only around 700 families in
Thailand which fall into this category.
Plus, they already have accounts with
large local banks and offshore.
Such a limited space to compete explains why many banks are trying to
tap the lower end of wealth management in terms of mass affluent
customers, even if they brand it as
“private banking”. But it’s still transaction-focused.
As in any market, therefore, the key
for wealth management firms in Thailand seems to be focusing on what
they’re good at, said practitioners.
1
How to develop Thailand’s wealth management industry
Chairperson
Andrew Crooke
Editor
Hubbis
Participants
Cholathee Pornrojnangkool
Senior Vice President, Head of Wealth
Management, Thailand
Standard Chartered Bank
Pote Harinasuta
Senior Executive Vice President
Private & Institutional Business
SCB Asset Management Co
Manaviga Piyapimook
Senior Vice President, Head of Retail
Deposit and Investment Products
Management Department
Retail Business Division
Kasikorn Bank
Ratanachon Thanyodom
Executive Director, Head of Wealth Products
United Overseas Bank (Thai)
Kris Chantanotoke
Executive Vice President, Wealth Management and Bancassurance Division
Bank of Ayudhya
Teera Phutrakul
Chairman, Thai Financial Planners
Association
Founder, JT Financial Planners
DEFINING &
SEGMENTING WEALTH
MANAGEMENT IN
THAILAND
Cholathee Pornrojnangkool: I observe more banks entering the private banking and wealth management
space in Thailand. However, when I
look at the potential revenue compared with the costs, it’s difficult to
justify such a decision; in general,
many private clients just leave money
on deposit and only invest small portions in investment products. At the
same time, it is costly to provide good
investment advice to customers.
Rinjai Chakornpipat
Senior Executive Vice President
Private Wealth Management
Maybank Kim Eng Securities (Thailand)
Kulnan Tsanthaiwo
Head of Private Client Group
Phatra Capital
Swee Meng Mok
Senior Vice President
Head of Wealth Management
AIRA Securities
Kulnan Tsanthaiwo: I also see some
of the bigger banks starting to look
more at the upper tier of the high net
worth (HNW) segment – roughly Bt50
million (US$1.7 million) and above –
and they are competing in their marketing.
We have got a relatively strong position in the HNW space (Bt30 million)
and up. However, we have no choice
but to target mass affluent customers,
to advise them to optimise their financial aspirations. To do so, we have to
invest so it’s costly.
Rinjai Chakornpipat: We do see
some interest from clients in diversifying their assets. These clients are still
looking for what they consider to be
Andrew Crooke | Editor | T 852 2563 8683 | E andrew.crooke@hubbis.com
safe and secure investments. Nevertheless, some of our clients started to
allocate part of their portfolio to offshore stocks / ETFs.
Kris Chantanotoke: The challenge
for wealth management in Thailand
is that there is no clear definition
of what it is; “wealth management”
means something different for every
organisation. This makes it even more
difficult to be profitable.
What individual firms can achieve in
this industry depends on their current
platform and service capabilities. For
example, it would be very difficult for
a securities company, or even foreign
bank, with a limited footprint to target
the mass affluent segment. That type
2
How to develop Thailand’s wealth management industry
tomer during our account-opening and
suitability processes, we can only get
a full picture if they tell us and if they
have been banking with us for many
years.
So, our job is to identify who needs
investment advice in order to serve
them better, not just looking at AUM
alone. And customers also need to be
educated to see the importance of asset allocation to risky assets.
Manaviga Piyapimook: At Kasikorn
Bank, we have multiple segments depending on the assets of each customer – ranging from a mass market
offering, to upper income customers
Kulnan Tsanthaiwo
Phatra Capital
of firm would be better to take a more
targeted approach to generate better
returns.
might be overlaps or differences in
how some banks define and market
their segments.
On the other hand, local banks have
the branch network and breadth of
platform to be able to penetrate the
mass affluent market and create product offerings in line with the needs of
these customers. However, the banks
need to offer the relevant service for
each segment, which will require a
trade-off depending on the individual
bank’s strategy.
Cholathee Pornrojnangkool: At
Standard Chartered Bank (Thai), although we don’t have a private banking segment, we have priority banking
(Bt3 million AUM, deposit + investment products). Internally we divide it
into sub-segments based on customers’ needs and risk appetite. For example, if a customer has Bt30 million
or more in AUM, they may need more
advice and be looking for investment
product that generate higher returns
as they might have the appetite to
take on more risk.
Kulnan Tsanthaiwo: The branding
for segmentation between mass affluent and private banking seems to be
getting blurred in Thailand, and a lot
of business with both groups of customers is transactional, not advisory.
It is important for institutions to address this by developing their own
RMs and investment advisers to provide a good long-term service to attract clients.
Kris Chantanotoke: The issue is
whether customers even understand
the different sub-segments that various banks cater to, especially as there
who participate more in investment
products, to HNW individuals.
We brand the status of each segment
accordingly, with various privileges associated with this also, and different
RMs servicing them.
For the mass affluent and HNW segments, we also use our data-mining
team to carve out potential customers.
Kris Chantanotoke: A big part of the
challenge is that the definition of true
For customers in the lower tier with
Bt3 million to Bt5 million in AUM, many
of them will put their wealth into deposits, with some of them might putting some money into the equity market through a stock broker.
Also, since some of them might have
another Bt50 million with other banks,
it limits what we can do for them because we do not know their overall
situation and what they want. Even
though we try to get to know the cus-
Andrew Crooke | Editor | T 852 2563 8683 | E andrew.crooke@hubbis.com
Kris Chantanotoke
Bank of Ayudhya
3
How to develop Thailand’s wealth management industry
private banking only covers around
700 families in Thailand, and often
they already have accounts with large
local banks.
Given this limited space to compete,
this explains why many banks are trying to tap the lower end of wealth
management in terms of mass affluent customers, even if they brand it as
private banking.
But it’s still transaction-focused.
Cholathee Pornrojnangkool: One
of the issues we have is that for customers who are loyal to their relationship manager (RM), when the RM
moves to another bank, there is a 30%
probability that the client will move
their account along with the RM.
We try to counter-balance this by attaching investment advisers to the
RMs, so that when an RM leaves, we
have someone internally who knows
the customer well and can provide advice to them, hopefully lowering the
chance the customer will leave – and
the results show it is.
Manaviga Piyapimook: We also face
a challenge in terms of how we can
Cholathee Pornrojnangkool
Standard Chartered Bank
make our service – both non-financial
and financial – more institutionalised
so that we don’t have to rely on individuals RMs to look after customers.
Teera Phutrakul: Not everyone can
be successful in private banking and
wealth management, so it is important
to focus on what you’re good at.
The real issue for many banks is that
clients’ needs have not always been
put first. Especially when it comes to
private banking, clients don’t want to
see banks promoting their offering so
publicly; that is against the intention
and spirit of private banking. HNW individuals should be selected to be a
private client, so the banks wouldn’t
need to put up signs promoting their
private bank segment.
There can at times be a lack of discretion in the Thai market when it comes
to this tier of segmentation.
As a result, some clients prefer to deal
with offshore bankers.
There can at times be a lack of discretion
in the Thai market when it comes to this
tier of segmentation. As a result, some
clients prefer to deal with offshore bankers.
Manaviga Piyapimook
Kasikorn Bank
Andrew Crooke | Editor | T 852 2563 8683 | E andrew.crooke@hubbis.com
4
How to develop Thailand’s wealth management industry
MEETING
CLIENT NEEDS &
EXPECTATIONS
Kulnan Tsanthaiwo: The benefits
and privileges available for clients
are overwhelming for them. It is vital, therefore, for wealth management
providers to balance the true advisory
offering withy the financial and nonfinancial benefits customers.
Cholathee Pornrojnangkool: Customers are looking for benefits and
privileges first, and I see more banks
looking to give customers these benefits; this worries me.
But if we as wealth managers position
ourselves as “trusted advisers” and
provide good advice, this is intangible
for customers, especially in the acquisition stage.
In particular, the challenge is that
when banks spoil customers with benefits and privileges, it becomes more
difficult to afford good people to offer
better advisory services.
Customers are looking for benefits and
privileges first, and I see banks looking
to give these benefits; this worries me.
Ratanachon Thanyodom: A lot of
customers don’t care about the marketing efforts or segmentation strategies of various banks. Most of the
wealthy people in Thailand are successful businessmen, so they have
taken enough risk already in their
business.
As wealth managers, the real challenge we face is competing with the
returns they generate through their
businesses. This is perhaps a reason
why wealthy individuals keep their
money in fixed deposits.
Pote Harinasuta: Customers with
Bt50 million or more tend to have
offshore accounts and are looking for
more sophisticated products and double-digit investment returns.
The local market seems to prefer to
target mass affluent customers like
executives and small business owners
– people with more than Bt3 million
and who aren’t looking just at fixed
deposits and term funds.
We also hire international investment
advisers to do tactical asset allocation
for our global wealth funds every three
months and monitor performances of
managers selected for each individual
chosen fund.
This approach needs to become more
widespread in the Thai market in order
for locals to reach the very best funds
in the international market.
Manaviga Piyapimook: Banks need
a wide variety of products in place so
that when we introduce certain asset
allocation models for customers, or
provide a platform to enable them to
do asset allocation themselves, then
they need to be able to pick whatever
they want from our product shelf.
Ratanachon Thanyodom
United Overseas Bank (Thai)
Andrew Crooke | Editor | T 852 2563 8683 | E andrew.crooke@hubbis.com
For HNW clients, while there isn’t a
large number of them, the amount of
5
How to develop Thailand’s wealth management industry
My view is that customers don’t fit into
the banks’ segmentation models and
approaches of just ticking a box based
on risk profile or suitability.
wealth they have justifies our efforts
to source more specific products that
meet their lifestyles and interests – for
example, art or wine funds.
Teera Phutrakul: My view is that
customers don’t fit into the banks’
segmentation models and approaches
of just ticking a box based on risk profile or suitability.
From my perspective, I know the overall wealth of my clients because we go
through the process with them of net
worth, liabilities, cash flow, etc. We do
this by listening to their goals and aspirations, as well as wider family situations and needs. After we map it out,
we then work out what mix is right for
them.
Pote Harinasuta: The challenge for
some local banks is training people
on the distribution side to understand
customers’ needs and not just be
transactional bankers.
Teera Phutrakul: What concerns me
is that there is a lot of concentration
risk with clients chasing equity funds
which have had good performance
over the past 12 months. But the client rarely asks what the manager did
to get such a high return. And 50% to
60% of managed funds actually underperform the benchmark. There is a lot
of work that advisers need to do for
their clients in these areas.
Pote Harinasuta: Education is the
most important thing in delivering new
products – not in the technical sense,
but in terms of planning for the future
based on individual needs.
REGULATORY GAPS
Swee Meng Mok: There is a very limited product range available for clients
in Thailand.
I would like to see some deregulation
to enable investors to get access to
more offshore products onshore. For
example, there are many capital protection funds offshore, but not accessible for investors in Thailand.
Rinjai Chakornpipat: There’s a lot
that could be done to support our in-
Rinjai Chakornpipat
Maybank Kim Eng Securities (Thailand)
Andrew Crooke | Editor | T 852 2563 8683 | E andrew.crooke@hubbis.com
6
How to develop Thailand’s wealth management industry
If Thailand wants to be serious about
developing its industry it needs to work
towards becoming a hub.
dustry. For example, at the moment,
in terms of wealth management, there
are a lot hurdles – for instance, as
part of foreign subsidiary company,
we can’t offer insurance directly to
clients. We also have other hurdle to
offer other product like equity linked
note to our clients.
So without being able to provide a
complete product set to customers,
how can we offer a full “wealth management service” to clients?
Teera Phutrakul: If Thailand wants
to be serious about developing its
wealth management industry it needs
to work towards becoming a hub, like
Singapore.
The regulator needs to welcome all
players and create more competition.
Kulnan Tsanthaiwo: The discrepancies in terms of regulatory and compliance conduct between local and international service providers make it hard
for international and offshore private
bankers to enter the market.
Those firms which are subsidiaries of
offshore banks, or those which follow
international standard, are in the short
run at a disadvantage as their KYC and
other procedures are more robust and
time consuming, making it relatively
inconvenient for clients.
Pote Harinasuta: The industry is going to be forced along that route with
more ASEAN economic cooperation
happening anyway.
So I think regulators will need to be
forward looking as well.
MARKET OUTLOOK
Pote Harinasuta
SCB Asset Management Co
Teera Phutrakul: This is the golden
age for Thailand, with a tremendous
Andrew Crooke | Editor | T 852 2563 8683 | E andrew.crooke@hubbis.com
Teera Phutrakul
Thai Financial Planners Association
amount of wealth to be created over
the next couple of years.
This wealth will also trickle down to a
wider population.
Kris Chantanotoke: When looking at
the broader wealth management opportunities in Thailand, I see a need
for a significant shift in three areas.
First, there are many touch points for a
customer before they invest – whether
this is buying insurance from an insurance company, trading securities via a
stock broker, or buying mutual funds.
However, there needs to be a single
wealth management touch-point so
customers can use one individual or
channel to buy investment products.
Secondly, the approach by wealth
management firms will need to shift
from being product centric to one of
customer centricity.
Having a single touch-point will facilitate this because it becomes more
about the customer not the product
being sold.
7
How to develop Thailand’s wealth management industry
Manaviga Piyapimook: In general,
the wealth management industry in
Thailand lacks a standardised approach and offering for customers.
We need to put the interests of our clients first by working together to come
up with basic infrastructure and standards in terms of how we do business.
Ratanachon Thanyodom: I think
that the regulators should play a more
high-profile role in educating the wider market.
Swee Meng Mok
Swee Meng Mok: In addition, people
shouldn’t forget that wealth management is a very costly business, so we
AIRA Securities
must put clients’ interests first.
Thirdly, there needs to be more online
offerings for customers, so they can
execute transactions at home or via
mobile phones.
From a product perspective, three
years from now I expect to see greater
penetration by mutual funds and insurance products then we have today.
In contrast, more complex products
will still only have a small share of the
local market.
Pote Harinasuta: I want to see
wealth management firms stop targeting AUM or volume as the main KPI
weighting. So I agree that we need to
be more customer-driven.
Cholathee Pornrojnangkool: For
the scorecard of front-line staff, we
don’t use product or new sales targets. Instead, it depends on the product suitability for each customer.
Rinjai Chakornpipat: For me, education plays a big role both for customers as well as advisers.
We definitely need more of an education effort for customers and advisers.
There are currently limited resources
to enhance the knowledge on financial
planning, and this needs to improve.
So while I expect to see the wealth
management industry grow over the
next few years, I think it has to become more professional.
People shouldn’t forget that wealth
management is a very costly business,
so we must put clients’ interests first.
So while I expect to see the wealth
management industry grow over the
next few years, I think it has to become
more professional.
Andrew Crooke | Editor | T 852 2563 8683 | E andrew.crooke@hubbis.com
8
Contact details and profiles of participants
Cholathee Pornrojnangkool
Senior Vice President, Head of Wealth
Management, Thailand
Standard Chartered Bank
Pote Harinasuta
Senior Executive Vice President
Private & Institutional Business
SCB Asset Management Co
Ratanachon Thanyodom
Executive Director
Head of Wealth Products
UOB (Thai)
Cholathee
Pornrojnangkool
joined
Standard Chartered Bank (Thai) in
January 2005. His responsibilities cover investment products, investment
advisory across asset classes, bancassurance and foreign exchange for
HNW individuals and SMEs. As head of
wealth management, his supervision
includes product development, upskilling the frontline on advisory capability, leading the investment advisory team, overseeing bancassurance
solutions, and infrastructure of wealth
management products. Prior to that,
Cholathee had 10 years’ experience as
a fund manager, managing both unit
trusts and private funds at Siam Commercial Bank’s subsidiaries – SCB Asset Management and SCB Securities.
During this time, he also developed
and launched the first index fund in
Thailand – SET Index Fund. Cholathee
holds a BA Accounting from Assumption University Thailand and MBA Finance from West Coast University, California. He is also a Certified Financial
Planner (CFP).
Pote Harinasuta joined Siam Commercial Bank Group in June 2008 having
had his first stint back in 1998 also
within the treasury group. After setting up and running the global investment division at the bank, he joined
SCB Asset Management to spearhead
the private & institutional business
where he currently runs a group of
30 people. With more than 15 years
of experience in fixed income, currencies and commodities business, Pote
was previously a director in South-east
Asia global markets at Merrill Lynch
and pioneered its effort into Thailand
by successfully acquiring a securities
company in Thailand to form Merrill Lynch Securities (Thailand). Pote
obtained a Master of Science in International Management from King’s
College London in 1997 as well as
completing a two-year Executive Management course at The Sasin Graduate
Institute of Business Administration,
in affiliation with Kellogg and Wharton
Schools of Management. He graduated
from the University of London with an
Upper Second Class Honours Degree
in Mathematical Sciences in 1996.
Ratanachon joined UOB (Thai) in May
2011 as executive director, head of
wealth products, and is responsible
for managing wealth products, covering deposit & investment services,
bancassurance and other fee-based
products. With over 17 years in the
banking industry in product management and business strategy, Ratanachon has contributed to the significant growth of bancassurance, mutual
funds, deposits, fee-based and the
privilege banking segment. Prior to
that, Ratanachon spent nine years in
HSBC’s Bangkok branch, where she
was in charge of overall business
strategies for the entire Personal Financial Services (PFS) products & services portfolio including credit card,
assets, liabilities, investment, insurance, wealth management and other
banking services. Ratanachon holds
an MBA in Finance and Marketing from
SASIN Graduate Institute of Business
Administration.
Contact details:
E Cholathee.Pornrojnangkool@sc.com
Contact details:
E ratanachon.tha@uob.co.th
Contact details:
E poteh.scbam@scb.co.th
Andrew Crooke | Editor | T 852 2563 8683 | E andrew.crooke@hubbis.com
9
Contact details and profiles of participants
Swee Meng Mok
Senior Vice President
Head of Wealth Management
AIRA Securities
Teera Phutrakul
Chairman, Thai Financial Planners
Association
Founder, JT Financial Planners
Swee Meng Mok is a private fund manager at AIRA Securities, after heading the research department for more
than a year. Prior to joining AIRA,
he worked as a financial adviser at
Dharmniti Capital specialising in M&A,
fund raising, distressed debts and financial risk evaluation. He used to be
a derivative dealer in Singapore. He
received his Masters degree in Applied
Finance from Macquarie University. He
earned the right to use the designations of Financial Risk Management
(FRM), Professional Risk Management
(PRM), Chartered Financial Analyst
(CFA) and Chartered Alternative Investment Analyst (CAIA).
Teera Phutrakul, the founder of JT Financial Planners, has been the leading
force in the investment management
industry in Thailand for over 25 years.
He was executive chairman of Finansa
Asset Management from 2005 to 2010
and prior to that president & chief executive officer of SCB Asset Management and managing director of Thai
Capital Management. He also served as
chairman of the Association of Investment Management Companies (AIMC)
and is currently the chairman of the
Thai Financial Planners Association
(TFPA) as well as the co-chairman of
the Business & Economic Committee,
The American Chamber of Commerce,
in Thailand. Khun Teera, a Certified Financial Planner (CFP,) holds a Master
of Arts Degree in Economics in Finance
and Investment from Exeter University, England, and a fellow member of
the Thai Institute of Directors (IOD)
Director Certification Programme (DCP
145/2011), and has attended Class
4/2012 of the IOD Financial Institutions Governance Programme.
Contact details:
E mok_sw@aira.co.th
Kulnan Tsanthaiwo
Head of Private Client Group
Phatra Capital
Khun Kulnan Tsanthaiwo is the managing director of private client group,
Phatra Securities Public Company
Limited (Thailand), Kiatnakin Phatra
Financial Group. Khun Kulnan’s expertise in finance and securities involves
heading Phatra Securities in the areas of wealth management, asset and
provident fund management, syndication (equity capital markets), investment banking and stock brokerage.
Khun Kulnan was one of the management team implementing a management buyout (MBO) from Merrill Lynch
in 2003 and successfully driving Phatra Securities to become the pioneer in
wealth management in Thailand, with
assets under management of Bt225
billion, by far the largest. Khun Kulnan is an alumni of Sasin Graduate
Institute of Business Administration of
Chulalongkorn University.
Contact details:
E kulnan@phatracapital.com
Contact details:
E teerap@truemail.co.th
Andrew Crooke | Editor | T 852 2563 8683 | E andrew.crooke@hubbis.com
10
Contact details and profiles of participants
Manaviga Piyapimook
Senior Vice President, Head of Retail
Deposit and Investment Products
Management Department
Retail Business Division
Kasikorn Bank
Contact details:
E manaviga.p@kasikornbank.com
Rinjai Chakornpipat
Senior Executive Vice President
Private Wealth Management
Maybank Kim Eng Securities
(Thailand)
Contact details:
E Rinjai.C@maybank-ke.co.th
Andrew Crooke | Editor | T 852 2563 8683 | E andrew.crooke@hubbis.com
Kris Chantanotoke
Executive Vice President, Wealth Management and Bancassurance Division
Bank of Ayudhya
Contact details:
E kris.chantanotoke@krungsri.com
11