Thursday 28 Mar 2024
By
main news image

In the final part of this series, Lee Lung Nien, CEO of Citibank Bhd talks about the wealth management landscape in Malaysia. The following is an excerpt from the interview. 

 

Personal Wealth: In the wealth management space, there is a lot of controversy because many relationship managers sell products without really understanding them. What does the man in the street know about the risks?
Lee Lung Nien: When it comes to mis-selling, the issue of controls comes in. What motivates the relationship manager, or RM, to sell products? A lot has to do with their incentive scheme. In the past, it was always about revenue. But if you look at the incentives of the RMs now, the portion of controls, [such as] customer complaints, is some of the things that make sure there is no mis-selling. They will have to face the consequences of violations or non-adherence. This can include losing their jobs. We have learnt a lot since the global financial crisis.

I don’t think it is as prevalent here in Malaysia as in other countries, so my view is that our RMs have been very responsible. One, because they are well trained. The products are explained clearly. There is no such thing as signing a blank form. 

The other is products. The product suite we have is one where we always try to be ahead of the game. We brought in Franklin Templeton Malaysia on a wholesale distribution platform. We were the first to bring them in because of our global network. 

In terms of wealth management, it is a whole process right from the beginning. Education plays a big part. Citi’s resources and ability to field global expert speakers and practitioners in specific industry sectors, such as oil and gas, equities, bonds, fixed income and foreign exchange, all add up to a compelling wealth management proposition for clients.

We look after our customers. We make sure there are proper regulations and secure the necessary local approvals for our products. We don’t just roll out products. We have a rigorous approval process internally. We check the suitability of clients and weigh their risk profiles before making any recommendations. These updates are done together with the clients on a regular basis or when the need arises.

We as an institution have been doing this for a long time. The key to wealth management is also how well you listen to your clients to understand their needs. It is not just about finding the solution to plug a problem. It’s about sitting down and understanding the client’s risk profile. The consultative dialogue is key, not the product sale.

There have been cases where banks come up with products for clients and then trade against those in other departments. Where is the firewall within the institution? 
We do not front-run positions. Remember, these things can come back to haunt or bite you. 

Do you think there are enough regulations in Malaysia to protect clients?
I think Bank Negara Malaysia has done an excellent job regulating the industry. A lot of onus is on the banks themselves to self-regulate. We have a very vigilant regulator, and you can imagine the consequences if a bank does something wrong. 

Is your target clientele still the high net worth or the mass affluent?
For wealth management, we work with high net worth individuals who are more sophisticated and have very different levels of risk appetite and investment objectives. 

What are the new trends in wealth management?
We still see healthy growth in the local wealth management segment moving forward as we believe there is still tremendous potential to be harnessed in this area. There are opportunities from the liberalisation of the local asset management industry, Asean passporting as well as the growing demand for sophisticated and tailored wealth management solutions among Malaysian consumers, especially the affluent. 

Singapore and Hong Kong are wealth management hubs, but is Malaysia considered a fledgling one? 
Malaysia is quite sophisticated. I would never put Malaysia behind Singapore or Hong Kong. These are familiar markets to me. The opportunities and offerings are similar. I don’t see much difference other than the risk appetite of clients. 

In terms of clients’ level of sophistication, is Malaysia on a par with them? 
I would say we are on a par with the other major centres. From Citi’s standpoint, the clients that we have are sophisticated. It doesn’t matter which country, it comes down to the individual. It’s about experience and education.

But you structure your products according to your clients to a certain extent, don’t you?
Yes, there are a few approaches. There are the high net worth individuals for whom you can customise the products. There are also over-the-counter products, unit trust, FX and fixed income. 

In wealth management, we look at your portfolio in totality and provide the suitable solutions for our clients. For example, a client has a 30% fixed-income portfolio. But now with volatility coming, maybe he needs to load up more and be overweight on fixed income. Maybe some blue chip equity funds can be considered.

Most people fear volatility and uncertainty. I say look on the bright side, this may be a good opportunity to invest. That is why diversification and asset allocation are important to your portfolio. You have a portfolio of FX, time deposits, fixed income, equities … look at the ratios to get a balanced diversified portfolio. Look at your portfolio in totality. In wealth management, the emphasis should be on management, not wealth. We like clients to have a diversified and balanced portfolio.

 

This article first appeared in personalwealth, a section of The Edge Malaysia, on January 26 - February 1, 2015.

 

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.

      Print
      Text Size
      Share