Asia's rich are getting richer – even faster
Published on: Thursday, December 25, 2014
KUALA LUMPUR: The wealthiest among us are getting richer quicker. The Asia-Pacific recorded a 17.3pc increase in the number of the very rich, the highest rate of increase in the world. Accumula–tively, these 4.32 million people have assets worth RM46.5 trillion.The Asia-Pacific Wealth Report 2014 by Capgemini and RBC Wealth Management released recently shows that the number of high net worth individuals (HNWIs) in Malaysia grew 6.6pc last year to 65,800 and their total wealth rose 9pc to RM1.4 trillion. (Capgemini is a provider of consulting, technology and outsourcing services, and RBC Wealth Management is a global wealth management company.)
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The report also reveals that our HNWIs invest 40pc of their money overseas. That amounts to RM560 billion which, for Ste–gan Mueller, managing director (head of investments and products) of RBC Wealth Management, is staggering. One reason, Mueller says, the rich are parking their money overseas is because there are "bigger opportunities" elsewhere. But are the rich merely looking overseas to preserve wealth or is this just a matter of putting their eggs in more than one basket?At 65,800 it is a long list. The notable ones in the (obviously) rich and super rich list are the likes of Robert Kuok and T. Ananda Krishnan, among others.
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But how much must one have to qualify for membership in this elite HNWI or Ul–tra-HNWI list?There are a few factors that will determine if a person belongs to the HNWI or Ultra-HNWI category.
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"Based on the Capgemini and Merrill Lynch World Wealth Report 2006, HNWIs are individuals with US$1 million to US$5 million (RM3.3 million to RM16.5 million) of investable assets while the Ultra-HNWIs have US$30 million (RM99.5 million) or more in investable assets," says Bernard Seah, a partner of IPP Wealth Planners Sdn Bhd.Those who have US$100,000 to US$1 million (RM331,000 to RM3.3 million) are only considered affluent.IPP uses the Monetary Authority of Singapore guidelines which states that a HNWI must have at least S$2 million (RM5.2 million) in investable assets.While many older HNWIs benefited from Malaysia's development, today's group found their wealth in the global economic expansion.HNWIs can be from different backgrounds,but are usually owners of public listed companies, professionals or those who made their money through their own business (be it in property or construction)."Based on my HNWIs clientele in Kuala Lumpur, they are from a few main sectors like oil, energy, plantation, construction or property and finance," says Seah.RHB OSK Asset Management Pte Ltd CEO Anthony Siau agrees that most HNWIs and Ultra-HNWIS are those who had inherited their wealth from the nation's pioneers."But among them also are new entrepreneurs in the age of the Internet and social media as well as those in the services sectors," says Siau.The number of rich has probably grown because Malaysians are now more focused on the "latest and most interesting product ideas"to make money. Fixed deposit accounts are no longer the only way to see your money grow.Today, there are many ways to do this. Many seek advice from wealth management companies on how best to invest their money. Many Malaysians also prefer to do business abroad because of greater transparency.HNWIs see more opportunities overseas, such as property in the United Kingdom or Australia. Many make thses decisions based on where their children will go for further studies.Most, if not all, rich have offshore bank, accounts because they do not want to put all their eggs in one basket, just in case something unforeseen happens in Malaysia.According to Siau, there are many private banks across the region to serve this need, a facility that is in short supply in Malaysia. "There are not enough products width and depth at home to meet this need, so this rich have to go elsewhere to get access to these products," he adds.Expectation has changed. The current crop of HNWIs wants wealth management strategies that requires a new way of thinking, different strategies to manage risk and greater diversification of their investments.The underlying objectives is to come up with a sound financial plan that will be able to withstand unusual and unexpected shocks and crises, say Siau."A defensive financial planning strategy should include a large rescue fund and enhanced short-term liquidity. There must be defensive startegies in equity and balanced funds, protection and insurance and counter-trend strategies. It must avoid additional debt on local and global property funds," he adds.Seah disagrees with Mueller's contention that HNWIS are more concerned with what their peers think of their investment strategies. He believes HNWIs opt for timeless financial planning principles to create and protect their wealth.Stay up-to-date by following Daily Express’s Telegram channel.
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