Too many bank accounts? Veco has the solution
It used to be easy for the super-rich. Find a private bank, settle on an investment plan over a cognac or two, and leave the bank to do the rest. Profits streamed in, the portfolio grew, and bonuses jumped. Everybody was happy.
Cut to the age of bumbling banks. Where a private bank once determined the portfolio, now it is itself a part of the portfolio - one of the several places where a high-net-worth individual would park his or her wealth - since trusting a single bank with one's money has become a thing of the past.
But who helps in creating this portfolio? Enter the so-called external asset manager, like Veco Invest Asia, which is now scouring the region for cautious millionaires.
A subsidiary of Veco Group, established in 1973 in Lugano, Switzerland, Veco Invest Asia last year became the first Swiss external asset manager to establish a presence in Hong Kong. It is looking to increase its assets under management to US$250 million this year.
Peter Lee, managing director of Veco Invest Asia, said about a third of the assets under management targeted this year would come from existing customers in Switzerland who wish to invest in Asia. With a footprint in 10 cities around the world, including in Latin America and the Middle East, Veco Group has more than Euro1 billion (HK$9.46 billion) of assets under management globally.
One of the main services Veco offered was helping wealthy people manage and consolidate their numerous accounts with different private banks, making sure bankers were doing a good job and the portfolio was balanced, Lee said. The demand for such managers has risen as high-net-worth individuals are increasingly becoming less loyal to one bank.
Between 2007 and last year, Asian clients' average number of banking relationships grew 22 per cent to 3.3 banks, a McKinsey & Co study found.
'We have a love-hate relationship with private banks,' Lee said. He said Veco mostly relied on other private banks for products but also advised clients on picking or switching banks. This, understandably, doesn't always make it terribly popular with private banks.
For its advisory services, Veco usually receives a return of up to 1 per cent of the total size of assets it oversees. When banks that created products offered it rebates to sell them, Veco let the client know to minimise conflicts of interest, Lee said.
Compared with Switzerland, where there are around 4,000 external asset managers, who control 15-20 per cent of the overall assets under management, Lee said Asia-Pacific's external asset managers accounted for 3-5 per cent of assets under management, and only a handful of such managers existed in Hong Kong. 'With this limited market penetration in the region and especially now that overall wealth is growing here, we see huge opportunities,' said Lee.
Veco Invest Asia aims to have this much, in US dollars, of assets under management this year