Thailand’s wealth management industry has been developing dynamically against a backdrop of steadily growing wealth in the country. According to the World Bank, the country became an upper-middle income economy in 2011. Over the past four decades, Thailand has made remarkable progress in social and economic development, moving from a low-income country to its current status in less than a generation.
Steadily Increasing Wealth
Household wealth trends in Thailand have largely mirrored the country’s economic growth. According to the Credit Suisse Research Institute’s Global Wealth Report 2017, Thailand’s household wealth increased by 6.9% from 2016 to USD 434 billion in 2017, if measured in local currency terms. Over the longer term, i.e. since 2000, Thailand’s household wealth has risen rather rapidly at an annual rate of 8.9%. As it is globally, growth is fastest at the top wealth segments, which is likely to continue to drive private asset flows and investment trends. The number of high net worth (HNW) individuals in Thailand with more than USD 1 million in investable assets grew by 11% in 2016–2017, while the number of ultra HNW individuals with more than USD 50 million and the number of billionaires grew even faster at 21% and 33%, respectively.
A Growing Wealth Management Industry
The wealth management industry in Thailand has developed rapidly and vibrantly against this backdrop of steadily growing household wealth and an expanding pool of potential HNW and ultra HNW investors. The evolving regulatory environment and central bank policy, especially in managing a strong baht, have provided further impetus for the industry’s growth. Since 2007, the central bank has continued to relax exchange control regulations to add more balance to the country’s capital flows and allow Thai residents to invest abroad, which provides more alternatives for Thai investors in diversifying their investments.
While Thailand’s wealth management industry is still at a relatively early nascent stage compared to more mature markets in Asia, we have seen an increasing number of local and international banks, securities companies, and asset management firms offering an expanding range of investment instruments and wealth management products across asset classes, from equities to mutual funds, derivatives, fixed income products, structured products, real estate funds, and private funds. For instance, according to the latest statistics from Thailand’s Association of Investment Migration Companies, the number of asset management companies operating in Thailand has doubled in the past 20 years to over 20, while the number of funds managed has increased more than eightfold to almost 1,500 this year.
In Thailand, private banking services first emerged among local financial institutions two decades ago. The term is now loosely used in the financial industry in reference to a very broad range of services and clientele, ranging from mass affluent to HNW individuals with varying levels of net worth or investable assets, from less than USD 100,000 to a very small number that cater to those with over USD 1 million. However, in reality, the needs and sophistication of investors across such diverging wealth segments vary significantly, and the services and solutions required to meet the needs of clients with, for instance, USD 10 million in investable assets are vastly different from those for clients with USD 250,000 in investable assets.
Across Asia, global banks with long-established traditions in private banking remain the largest operators, with the top three, including Credit Suisse, managing a total of more than USD 800 billion in assets for their regional clients. Credit Suisse launched its wealth management services in Thailand in 2016, setting up a client relationship coverage team through its local securities entity and targeting two key client segments: HNW individuals with more than USD 5 million in assets under management (AUM) and ultra HNW individuals with USD 50 million in AUM or USD 250 million in net wealth, who happen to be mostly first- or second- generation entrepreneurs with family-owned businesses. As a firm, we see a service gap in the market where such investors are increasingly demanding a more sophisticated approach in terms of structured asset allocation and access to a truly global platform with a comprehensive range of financial and investment solutions across geographies and asset classes.
In our view, the wealth management industry in Thailand and the sophistication of investors therein are still in the early evolving stages, which calls on us to work closely with our clients and partners in the industry to educate and support clients gradually in moving away from a product-focused investment approach to a deeper appreciation of a more balanced approach to investin — based on an advisory approach that takes a holistic view of client needs, objectives, and investment profiles — and help them better navigate increasingly volatile That means building a diversified portfolio with exposure to different asset classes that can generate lower overall portfolio volatility and help smooth out overall returns.
Wealth Outlook Bodes Well for the Industry
Looking ahead, the Credit Suisse Research Institute forecasts that global wealth will continue to grow at a similar pace to the last half a decade, at 3.9%. However, emerging economies will outpace the developed world in terms of wealth growth, and Thailand will be one of them. With this sizeable and growing pool of HNW individuals and ultra HNW entrepreneurs in Thailand, the continued expansion of the domestic and regional financial markets will open up further opportunities for business growth and investor flows for entrepreneurs and corporates.