Revolutionizing Asia’s Wealth Market: Securitisation as a Flexible Tool

The private wealth management industry in Asia is witnessing a groundbreaking shift, as professionals in the sector strive to provide more tailored solutions that cater to the evolving demands of clients. Steve Knabl, Managing Partner at Wealth Management Alliance, recently shared intriguing insights at a Hubbis event in Thailand, highlighting how securitisation can bring about a new era of flexibility and efficiency for wealth managers and external asset managers (EAMs).

The Untapped Potential of Securitisation

Securitisation has traditionally been perceived with skepticism due to its association with complicated and high-fee structures. However, Knabl challenges this view by highlighting that, when designed appropriately, securitisation offers transparency and liquidity with significant cost advantages. Such a strategic tool can redefine the approach to building customized portfolios, providing a flexible alternative to conventional funds.

Innovative Approaches to Portfolio Customization

Knabl underscores the inefficiencies of current fund models, describing them as “clunky” and “slow to launch.” Instead, he proposes the use of securitised notes which facilitate faster market entry, precise fee control, and the agility to tune strategies to client-specific needs. For instance, a Thai investor aiming for a bespoke fixed income portfolio can benefit from a strategy denominated in Thai baht, thereby simplifying cross-border investing.

Securitisation vs. Traditional Fund Models

While traditional funds are viable, Knabl argues that they are not always the optimal solution for rapid deployment or flexible execution. Securitised structures allow wealth managers to mimic the essential functions of funds while bypassing the high costs associated with fund administration. The aim is to enable non-bankable and illiquid asset inclusion, unlocking more diverse investment opportunities.

Strategic Alignment and Revenue Enhancement

Securitised solutions provide avenues for firms to enhance revenue by integrating strategic, client-aligned products, especially in areas like estate planning and insurance. Knabl emphasizes that these solutions should complement, rather than replace, core advisory services, empowering advisers with a broader array of tools to meet client expectations.

A Shift Towards Empowered Wealth Management

Knabl concludes with a powerful message: securitisation can be straightforward, client-aligned, and efficient when instituted with a strategic mindset. As Asian wealth management firms adapt to meet sophisticated client demands, those who master strategy-driven structuring will likely lead the market transition, shaping wealth strategies rather than being confined by them.

According to Hubbis, the wealth management landscape is set to be transformed as firms increasingly adopt innovative securitisation practices, promising a future of enhanced flexibility and strategic alignment in Asia’s burgeoning market.