Supermarket approach keeps customers on board

In Hong Kong, most banks, including private banks, do not manage clients’ assets on a discretionary basis, but like a supermarket, make sure to keep their shelves stocked with a wide range of products to meet clients’ needs, explains Nicholas Leung, senior vice president, investment products and advisory department at Bank of East (BOE) Asia. “In Hong Kong, banks fully believe in open architecture,” says Mr Leung. “We help the customers to pick the right product, providing them with the right information so they can make an informed decision,” he explains. “But it is investor who makes the decision.” Questioned about the risk that relationship managers, who get paid on a transaction basis, may be driven to push products to clients, he says that “it is the relationship with the customer we care about the most. We help our customers otherwise they will just go away from us.” Mr Leung says his bank “could not emphasise more” about the importance of asset allocation and diversification, but if investors come to them and want to do certain transactions, they certainly cannot reject that trade. “We cannot just educate them ourselves; the whole of society should be working on it.” Bank of East (BOE) Asia, which is the largest independent local bank in Hong Kong, has 20 distribution agreements with fund providers, including Schroders, Invesco, AllianceBernstein and also in-house BOE AM, which is considered just as one of the many business partners, says Mr Leung. Around 1000 fund units are available on the BOE platform. “If I see the demand for a new product, and I find a good product, I will add it to the platform,” he says. “If I think we need more relationship managers, then we will hire more people,” he says. On the other hand, number of funds may also decrease, if they do not raise interest. “I have become more cautious about putting new funds on the platform, in order to minimise product replication.” Because of the crisis, investors’ interest has shifted from investing in equities, China, emerging markets, Latin America and Russia, which have suffered the most at the end of last year, to bonds. “I see a lot of investors are turning their focus into bonds or bond funds. People now are more cautious about their investments and about market volatility,” explains Mr Leung.