The Future of Financial Advice in Asia with Tokenised Portfolios
Introduction
What is the case for the Asian asset management industry to harness the power of tokenisation to provide high net-worth individuals (HNWIs) across the region with greater personalisation in their investments?
With over USD 11 trillion held by Asia's HNWIs today, Asia represents a vast wealth opportunity for many firms as they look to provide increasingly bespoke investment advice and administration.
But whilst the personalisation of portfolios has rapidly gathered momentum in North America, key challenges and considerations remain in Asia that are, today, holding back service providers from offering the benefits of investment alpha and operational beta to their customers.
Chief amongst these are the prohibitively high operating costs faced by asset managers across the region, which put true portfolio personalisation out of reach for many.
Executive summary
This white paper, led by Marketnode, Calastone, HSBC and Northern Trust, sets out the case for and path towards the personalisation of investments for over 6.6 million HNWIs across Asia.
With up to USD3.3 trillion in new assets available to those able to offer higher levels of customisation, this paper explains how asset and wealth managers can leverage the power of tokenisation to create an industry ecosystem that reshapes operating costs and accelerates the convergence of institutional and wealth management markets.
Whilst challenges to adoption exist (notably in the form of regional fragmentation across Asia), the introduction of this digital ecosystem has the potential to do more than just reduce costs – it can drive portfolio performance, increase fund managers' revenues by over 25% and it can form the basis for a safer and more liquid capital market across Asia.
Key points
Over 6.6 million HNWI investors in Asia today (with USD1-5 million in assets), growing by over 300,000 per year.
40% of Asian HNWI investors (representing USD1.1 trillion in AUM) are unhappy with the levels of personalisation that they receive today.
Most global banks face a minimum threshold for customised portfolios of USD 2-10 million, due to high operating costs of fund operations
USD 3.3 trillion in AUM (held by 30% of Asia's HNWIs) would change their wealth management provider if greater personalisation was available to them.
One-third of fund managers believe that tokenisation would help them to grow their revenues by over 25%.
Key challenges lie ahead in ensuring that the benefits of tokenisation can be realised on an Asian-scale—overcoming the fractionalisation of market liquidity that prevails across the region today.
This research has been conducted by the ValueExchange, in partnership with Marketnode, Calastone, HSBC, and Northern Trust. It is based on extensive survey data (from over 158 asset managers and HNWIs, gathered by the ValueExchange in June–August 2024) and on insights from 19 interviews with leading market experts globally.