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THE DOW JONES BUSINESS AND FINANCIAL WEEKLY
PENTA ASIA
www.barrons.com
APRIL 19, 2017
BNY Mellon Plays the Long
Game in Asia
Wealth manager is growing rapidly in Asia with a holistic approach and expertise with globetrotting families.
By ABBY SCHULTZ
One of BNY Mellon Wealth Management’s clients in Asia is a family office
with three-generations of family members.
Although the family’s wealth was created
through businesses in Asia, and most
members are Hong Kong residents, family
members also live in the U.S. and Canada.
Three countries, three generations, a
variety of business interests in Asia — it’s
a situation that could confound the most
sophisticated families, especially if children
have competing needs. Yet multinational,
multi-generational families are increasingly common among Asia’s wealthy as
their children are educated from the U.K.,
to the U.S. to Australia.
BNY Mellon’s expertise in working with
families across jurisdictions has paid off in
Asia, where it opened an office in October 2014. The U.S.-based wealth manager,
ranked eighth on Penta’s annual list of top
40 wealth managers of U.S. private wealth
assets in investment accounts of $5 million
or more, has had clients in Asia going back
to the 1950s. From that base, its Asia assets have surged 270%, says Charles Long,
head of greater China, for BNY Mellon
Wealth Management. Still, in Asia’s consolidating private bank landscape, the firm
didn’t make the top 20 in the region as of
the end of 2016, Asian Private Banker’s annual ranking shows. BNY Mellon doesn’t
break out assets under management for
Asia.
Long, age 58, and based in Hong Kong,
Charles Long - Head of Greater China for
BNY Mellon Wealth Management
says making the top 20 list isn’t a priority,
adding the typical BNY Mellon client “just
isn’t focused on the rankings.” BNY Mellon
will continue to focus on growing organically, as more clients — largely by word of
mouth — learn of their approach to wealth
management, although the firm “will also
consider strategic acquisitions within the
Asian region,” he says.
While many private banks in Asia often
play the role of broker, buying and selling
securities, BNY Mellon takes a holistic approach, overseeing investing in the context
of how each client wants to use and preserve their wealth. It’s “objective-driven
investing,” Long says, meaning, “let’s look
at the different needs that you have and
let’s build portfolios that are going to best
serve those needs.”
The process starts by creating an investment policy statement based on a client’s risk profile, cash flow and cash needs.
BNY Mellon implements the policy, but
clients “know what they’re expecting us to
do and we know what they’re expecting us
to do,” Long says. “It’s not product driven,
it is strategy driven.” BNY Mellon also
has a fee-based vs. a commission-based
approach, with fees ranging from 0.75% a
year on the first $3 million in assets down
to 0.20% on assets above $50 million.
That all banks aren’t transparent about
fees can come as a surprise, even to experienced investors. One of BNY Mellon’s ultra-high-net-worth clients recently
bought $15 million in U.S. corporate bonds
and U.S. Treasuries from a broker, citing
a low commission. BNY Mellon’s advisors
pointed out the broker hadn’t revealed
the clients were paying a markup to the
bond’s original value. Analyzing just one
$5 million U.S. dollar-bond purchase, BNY
Mellon found the client paid a markup fee
of $125,000.
“A lot of people don’t know what to look
for to understand what they’re paying and
how they’re paying,” Long says.
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About half of BNY Mellon’s Asia clients
are local or American expats who have been
shut out of institutions that don’t want to
deal with the paperwork required to bank
American clients. The rest are multinational, like the Hong Kong family spread
across three countries.
In that case, BNY Mellon uses a team
approach to serve the needs of each family
where they live, but they also coordinate
and plan directly with the family office,
Long says. “Using the expert team approach when working with multi-jurisdic-
tional families like this one, we are able to
make sure that each branch of the family, in
each geography, is receiving BNY Mellon
Wealth Management’s best thinking tailored to their unique situation,” Long says.
“But we also coordinate the teams to integrate the family’s overall wealth, philanthropic and family governance objectives
defined by their family office.”
BNY Mellon’s approach works best with
a full picture of a client’s wealth, which
Asia’s rich tend to obscure by banking with
multiple institutions. Clients may resist re-
vealing everything, not understanding the
holistic approach. But, Long says, “as they
start working with us and see that we’re
not trying to sell them something, that we
are really trying to help the family…then
very quickly they do open up.”
There’s a market opportunity: Capgemini’s 2016 wealth report found Asia’s
wealthy have less than a third of assets
with a wealth manager. If word keeps
spreading about how BNY Mellon operates, cracking the ranks of the top 20 may
be in reach.