Malaysia Wealth Management – High Net Worth (HNW) Investors 2021

Most high net worth (HNW) individuals in Malaysia earned their wealth through entrepreneurship and are showing strong demand for planning and lending products. However, a multi-service proposition is a must as demand is expected to increase across all planning services and mandates, especially robo-advice services as HNW investors show greater demand for digitization of advisory services.

The Malaysia wealth management report sizes the opportunity within Malaysia’s wealth market and analyzes the investment preferences, service requirements, and portfolio allocations of Malaysian HNW investors. The report is based on GlobalData’s proprietary Global Wealth Managers Survey.

What are the market dynamics in Malaysia wealth management industry?

In 2020, despite the adverse economic consequences of the outbreak of the COVID-19 pandemic, the Malaysian entrepreneurial segment remained resilient. In the period of January-November 2021, new companies and new businesses were registered in Malaysia. This can be attributed to various government initiatives that support entrepreneurs and SMEs. In June 2020, the government launched Dana Penjana Nasional, for venture capital firms to invest in startups. To further nurture the development of a startup ecosystem, in February 2021, the Malaysian government launched the MyDIGITAL initiative as part of the Malaysian Digital Economy Blueprint plan (2021-2030). Clearly, supporting the young entrepreneur segment presents a significant opportunity in Malaysia. While not all will succeed, targeting entrepreneurs early on, even if they do not qualify as HNW yet, has the potential to create goodwill in the long-term.

The inheritor segment currently represents a small proportion of the Malaysian HNW wealth market. However, this is expected to grow over the years given the current aging HNW cohort. Keeping in mind the intergenerational wealth transfer, wealth managers should update their service offering to cater to the preferences of the second and third generations, many of whom are taking over or will take over the family wealth.

What are the various investment services for HNW investors in the Malaysia wealth management market?

Advisory asset management, automated investment services, discretionary asset management, execution-only asset management, and life insurance are the various investment services for HNW investors in Malaysia’s wealth management market.

While advisory mandates dominate in terms of managed HNW wealth in Malaysia, their forecast demand is among the lowest. In addition, contrary to other wealth markets, discretionary mandates rank low in forecast demand, highlighting the lack of absolute trust in wealth managers’ services as a factor affecting demand for advisory services. While automated investment services are not currently among the most popular forms of investment mandates in Malaysia, they are slowly growing traction. This may be driven by the growing availability of financial technology and information that allow investors to receive similar advisory services at reduced overall costs. The Malaysian government is actively promoting digitization, resulting in various wealth management firms embracing technological advancements by developing in-house digital platforms or entering the wealth management market as sole provider of robo-advisory services.

Malaysia wealth management market, by investment services

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What are the major asset classes of wealth allocation for HNW investors in the Malaysia wealth management market?

Equity, cash and near cash, bonds, property, alternatives and commodities are the major asset classes of wealth allocation for HNW investors in Malaysia’s wealth management market.

In line with the trend observed in the wider region, equities and bonds are the major asset classes to which the Malaysian HNW investors allocate their wealth. While Malaysians tend to be conservative, the high predominance of Muslims in the population and the popularity of Islamic finance contribute to the popularity of equity as an asset class.

Malaysia wealth management market, by wealth allocation

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What are the major asset classes of offshore investment for HNW investors in the Malaysia wealth management market?

Equity, cash and near cash, bonds, property, alternatives, and commodities are the major asset classes of offshore investment for HNW investors in Malaysia’s wealth management market. The Malaysian offshore investment portfolio is mainly exposed to asset classes, such as property and alternatives, that provide avenues to investors to diversify the overall risk on overseas investments. Investment in properties abroad has the potential for healthy long-term returns.

Malaysia wealth management market, by offshore investment

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Market report scope

Scope

• Expats constitute a mere 5.8% of the local HNW population. However, they represent an attractive target market thanks to their more complex service requirements.
• Robo-advice accounts for just 2.0% of the Malaysian HNW portfolio. But demand for robo-advisory services is expected to grow at the strongest rate compared to other investment mandates over the next year.
• Malaysian HNW individuals spread their investments almost in line with the Asian average, with equities, bonds, and property dominating.

Reasons to Buy

• Develop and enhance your client targeting strategies using our data on HNW profiles and sources of wealth.
• Enhance your marketing strategies and capture new clients using insights from our data on HNW investors’ asset management style preferences.
• Tailor your investment product portfolio to match the current and future demand for different asset classes among HNW individuals.
• Develop your service proposition to match the demand expressed by Malaysian HNW investors and react proactively to forecasted changes in demand.