The world of investment and money management is rapidly changing. Gross revenues are declining due to smaller margins from reductions in fees and commissions. Relationships are gaining importance and successful investment advisors are working with a smaller roster of clients and forging stronger relationship bonds. Reviews show the general trend is moving towards fee-based accounts although transaction-based accounts still dominate, with 65% transaction-based, 13% fee-based and the balance a hybrid. Another major issue is demographic. Baby boomers dominate the investment business clientele, and growth will come from the harder to penetrate Generation X and Millennial sectors, along with a massive wealth transfer from the aging Traditionals generation. Wellington Capital Group embodies the ideal model of the future of wealth management. They are an independently owned, Tokyo-based money manager with a reputation for high levels of service to a global client base, all of which are factors of increasing importance.
INDEPENDENTLY OWNED – WHY THIS MATTERS
In days gone by, all investment companies were independently owned and operated. Over the past several decades, many have been taken over by banks, insurance companies and have developed significant institutional divisions. These behemoths often treat their retail clients as outlets for their principal positions, with clients often subject to conflicts of interest. By working with an independently owned investment company like Wellington Capital Group, clients can be assured of guidance that is always in their best interests. Analysts aren’t repackaging institutional blocks the company was pressured to take a principal position in by large client, or a dud stock offering. Traders prioritize transactions for retail clients and have more agility in the market. Investment Advisors are free to choose from a full range of stocks, bonds, funds and alternative investments. Clients will find their interests aligned with the company, since they are the raison d’être for the business. In the future there will be large investment firms selling mutual funds and other managed money products and there will be smaller, independently owned and service oriented firms. Mid-tier companies that want to survive will need to choose a direction to prosper over the long term.
LOCATION: TOKYO, JAPAN
Wellington Capital Group is ahead of the curve being based in central Tokyo, which is quickly catching up to Hong Kong as the dominant regional financial center. It’s already a major international center, with the 2nd largest stock exchange in the world. Japan is a democratic country known for its stable economy, especially with its currency – the Yen – being one of the four traditional safe harbours (the others being gold, the USD and the Swiss Franc). It is home to the 2nd largest developed economy, which is 3rd largest by GDP and 4th largest by purchasing power. It’s steady and it’s stable. At the same time, Japanese investors are knowledgeable and forward thinking, with recent reviews indicating that they are behind 30-50% of bitcoin trading. While traditionally conservative with slow growth rates, has recently reported 7th quarter increases in a row. It’s a safe and comfortable place for foreigners and expatriates, and the local work force is educated, focused and disciplined. Additionally, the culture places a very high value on honour and integrity. Japan is known for its highly regulated banking and investment environment, which provides additional security for clients.
Traditionally, offshore investing had a reputation for being risky and glamourous, complete opposite to today’s reality. We operate today in a truly global environment and more and more people are taking advantage of the benefits of offshore investing. Holding assets in a different country from where one lives help people to minimize risk during times when markets are volatile and provides bona fide tax advantages. Wellington Capital Group investors have opportunities for higher returns and access to various asset classes and specialized investments that their local brokers may not. Finally, it always bears repeating that diversification is the most important aspect of risk management for all investors, which is easiest to maintain when investing globally. More and more people are reaping the benefits off offshore investing, from fiscal privacy and tax effectiveness, to higher returns and greater diversification and risk management.
HOW TO AVOID A SCAM
The definition of irony is that with all the advances in technology, smart bankers and financial advisors are making it a habit to confirm client instructions with a phone call. According to the compliance department at Wellington Capital Group, a scam can be perpetrated very easily and steps must be taken on both sides. This is where a higher level of service becomes more important – regular and direct communication is the best protection. Humans have an underrated ability to detect changes in patterns of behavior so regular contact between clients and advisors, even if brief, is of greater importance. Fortunately, the modern infrastructure in Japan is conducive to enhanced cyber-security and with the upcoming 2020 Summer Olympics, Tokyo is actively beefing up its infrastructure and cyber security protocols. Clients must take personal responsibility as well. It’s important to review one’s internet security both at home and at work. Avoid doing financial and investment related transactions and correspondence in areas with public Wi-Fi, and most importantly, use common sense. It’s free.
PERSONAL RELATIONSHIPS AND SERVICE
As it gets harder to differentiate by returns with AI and computer modelling, firms will compete by giving their clients superior service. The largest portion of assets under management belong to Baby Boomers. These assets will eventually be inherited by Generation X and Y, who are underrepresented as clients. Gen-X’ers are independent and skeptical by nature and require more time to build trust. They are willing to pay for advice once trust has been established. Gen-Y’s are tech-savvy and less detail oriented. Wellington Capital Group has made great strides penetrating these markets. They have accomplished this by eliminating their minimum investment threshold, providing flexibility in their fee structure and emphasizing transparency and simple, direct communication.
Global markets are overwhelming and investors need professional guidance to achieve financial success. Strong personal connections give clients confidence, knowing that someone is looking after them. In our hyper-connected yet disconnected world, the future of the investment business will be built on direct human contact and strong personal relationships.