Are high net worth people in Singapore more aggressive in their investment strategies than their peers in Hong Kong? This question arises after a new study revealed that 55% of high net worth (HNW) investors in Singapore are more concerned with wealth creation while 69% of their counterparts in Hong Kong tend to focus on wealth preservation.
Discussing the results of the study, Ian Kloss, Singapore CEO of wealth management solutions provider Quilter International, explains that the city state has more policies and infrastructure to encourage entrepreneurship, noting that there are three times as many Singapore HNW individuals who run their own business (29% against 10% in Hong Kong).
Also, the average age of HNW investors in Singapore is younger than in Hong Kong, and as such “they are more likely to take aggressive investment strategies with the goal of creating wealth for years to come”.
“Finally, Singapore enjoys an environment which also helps support wealth creation strategies,” he adds.
Research conducted by Aon Client Insight on behalf of Quilter International in January also shows that HNW investors in Singapore favour traditional asset classes such as stocks. Besides cash, they hold stocks (95%), fixed income assets (86%), and real estate (77%). Hong Kong HNWs have very similar investment portfolios when it comes to traditional asset classes.
However, the study finds some significant differences between the two groups. Singapore HNW investors are more likely to invest in private equity (70%) compared to just under half (49%) of their Hong Kong counterparts. Singapore HNW investors are twice as likely to hold commodities such as gold and precious metal with 63% including these investments in their portfolio compared to just 31% in Hong Kong.
Singapore HNWs also show a degree of regional bias in their investments with around half of all asset classes invested in Asia. Outside Asia, the top three regions for investment are North America, Europe (including UK) and Australasia.
When it comes to succession planning, the majority (70%) of HNW investors expect to pass on wealth in the form of liquid assets (e.g., cash and investment portfolios). Over half (55%) expect to pass on illiquid assets (e.g., property and jewellery). Other methods the HNWs also intend to use to facilitate the passing on of wealth include using life assurance products (60%) and trust structures (51%), according to research
“However, regardless of wealth strategy, any HNW investor’s portfolio should still reflect their long-term succession planning goals,” says Kloss. “As these types of investors are typically internationally mobile with assets potentially spread across multiple jurisdictions, financial advice is key to make sure that their portfolios cater to their needs and wants while still mitigating against potential tax liabilities.
“Financial planning structures such as life assurance can help mitigate against the potential tax implications of moving abroad and also help make sure that wealth is passed on to the next generations in the desired way while retaining a level of control when alive. Ultimately, though, every investor has a unique set of circumstances and professional financial advice can help tailor a portfolio to an individual’s needs.”