European investors place priority on structuring for tax purposes, while this is less of a concern in the region The typical Asian private banking client requires a different approach from that taken by bankers in Europe, according to Daniel Truchi, chief executive of SG Private Bank (Asia Pacific). Mr Truchi said the main difference arose from the blurred distinction between the interests of the enterprise and the individual client in Asia. In Europe, this boundary was clearly defined. A European client would place a high priority on structuring for taxation purposes, while this was far less of a concern for Asian clients. 'In Europe, you have a clearer distinction between the enterprise and the private client, while in Asia you have sometimes mixed interests. When private individuals in Europe want to invest, they are really seeking pure investment advice, mainly focused on tax issues, while in Asia it is performance-oriented. Asian clients are looking for absolute performance, mixed with corporate requirements.' Mr Truchi said the main differences between Asian and European clients related to the contrasting origins of private wealth. 'The main source of wealth creation in Asia is entrepreneurship. New money is the greatest component of the growth of wealth creation in Asia. It has developed through initial public offers, mergers and acquisitions, the sale of the enterprise, stock options and dividends. In Europe, the pace is maintained by old money.' The predominance of new, entrepreneurial wealth in Asia was one reason private wealth in the Asian region had been growing faster than in Europe or the United States, Mr Truchi said. He said to cater for the different client profiles in Asia and Europe, private bankers had to apply different techniques. 'You can see the difference when you compare the European and Asian business models. When you translate the European business model to Asia, it doesn't work as well as it should because the approach is different. When you are dealing with entrepreneurs, very often you have a mixed approach between the company and the private requirements. You have a zone where you have mixed requirements, both related to the structure of the enterprise and to the structure of the family of this private individual.' Mr Truchi said this blurring of requirements of individual and corporate interests required a special approach by the private banker. 'It requires an approach of mixed private banking and corporate advisory. That requires a number of adequate dedicated structured products. It also requires a structure which allows the entrepreneur to control his company through various trusts or British Virgin Islands companies. This is in order to enhance confidentiality, to protect him against an acquisition and allow him to transmit those assets to his heirs in total security.' In Asia, entrepreneurial clients typically have a lot of their wealth tied up in their companies, which needs to be dealt with and managed in conjunction with their privately held assets. The private banker has a role here in developing appropriate vehicles to accomplish the client's corporate goals. 'The approach is a global approach, divided between a private and a corporate advisory role. It is far more than giving investment advice to a private client. The parameter is much larger than that. That is the reason why we believe that the business model in Asia is totally different from the models that are prevailing today in Europe.' Mr Truchi said while both Asian and European clients were concerned about implementing an orderly wealth transmission for their heirs, tax considerations were a greater concern in this regard to Europeans. The main areas of concern for Asian clients in estate planning were related to confidentiality, security and the smooth transmission of assets. He said Asian clients were generally more sophisticated in financial matters than their European counterparts. 'They are more hands on and, as such, they are involved tremendously with the technology of finance. They are very keen to analyse new financial products and invest in new structures. We have seen very strong volumes, very sophisticated structured products and also alternative investments.' The overall trade in alternative investments in Asia grew 36 per cent in volume last year and Mr Truchi said this trend would continue.