External Asset Managers (EAMs) are also known as Independent Asset Managers (IAMs) or Financial Intermediaries (FIMs). Just as many asset management concepts and innovations were originated in Switzerland and Luxembourg, EAM first appeared in Europe in the 1990s. Many bankers left private banks to make changes and work as individuals or in teams in order to better serve top-tier clients. Over time, EAMs have been greatly outranged the traditional private bankers thanks to its expertise and experience.

eam

With the progress of information and services, EAM services spread to Europe, the Americas, and Asia. According to a report in 2015 1 , there are approximately 3,600 EAMs in Switzerland alone and approximately 12,800 in the United States. Hong Kong and Singapore are undeniably the most vibrant financial regions In the Asian financial market, and the booming growth of EAMs are predictable. Compared to Switzerland and the United Kingdom’s EAM accounting for about 15% to 16% of the overall asset management industry, Hong Kong and Singapore are currently only about 3% and 6%, respectively. It can be seen that the potentials and growth of the EAM market in the two regions are far greater than those in mature countries. Hong Kong is benefiting from the rapid increase in high-net-worth populations in the Mainland (the HNWI population grew by 11.2% in 2017) 2, while Singapore is benefiting from high-net-worth people in Southeast Asia such as Thailand and Indonesia (HNWI in 2017 grew by 13.6%). In 2018, the number of EAMs in Hong Kong and Singapore was 70 and 90 respectively, and the total assets under management (AUM) was estimated at USD 91.5 billion. The market expects that AUM managed by EAMs in the two regions to exceed 10% market share in overall asset management in the next five years 3 .

  • Assets Held Under The Safety Of Global Custodian Banks
  • Dedicated Holistic/Portfolio Approach To Investment management:
    • Portfolio Modeling
    • Discretionary Model Portfolios
    • Discretionary Trading Mandates
  • Access To Various Global Private Banks
  • Aligned Interests With Clients
  • Independence To Seek Out Best Investments.
  • Not Pushing For Own Labeled Investments – No Conflict

Compared with traditional private banks, the major differences of EAMs is that it is outside the large financial institutions, and its interests are aligned with the interests of the clients. Experienced relationship managers know client’s financial needs and appetite, providing the most optimal investment advice and solutions. The basic structure of EAM is a tripartite partnership. The client has full authority to entrust EAM to manage the “managed assets” kept in private banks (or brokerage houses). Private banks are the custodian and transaction recorder of the assets. EAMs then focus on managing the assets and on servicing the clients. Investment decisions are made only for client’s financial benefits (not because of sales commission), EAM, as an asset manager, aims to build a long-term, independent, and complete partnerships with clients.
Since the financial crisis in 2009, investors expect investment vehicles to be straight forward and less risky. They demand the investment structure more transparent and ask to participate more in the decision-making process of their investment. The closely-coordinated EAMs structure fully meets the client's expectations to protect and cumulate his or her family assets at the same time.

1 http://www.pilotage.ch/sites/default/files/files/pilotage_wp_series_1.pdf
2 https://asiapacificwealthreport.com/
3 https://cdn.asianprivatebanker.com/wp-content/uploads/2018/06/Asian-Private-Banker-2018-IAM-Report.pdf

ABOUT TRENDS ASSET MANAGEMENT LIMITED:

Trends Asset Management is an independent asset management and investment advisory company incorporated and headquartered in Hong Kong that provides alternative and bespoke investment management and solutions for High Net Worth Individuals and Family Offices.
Trends Asset Management is a holder of the Type 4 (Advising on Securities) & 9 (Asset Management) licenses issued by the Securities and Futures Commission Hong Kong (SFCHK).
By leveraging Trends Asset Management’s in-house investment management team and through numerous partnerships with the world’s top-tier private banks, international securities firms, and hedge fund houses, we aim to deliver clients with best-in-class optimized model portfolios based on institutional-grade quantitative and qualitative investment management processes and portfolio construction methodologies.
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Further, this document is not an offer to buy or sell any security, commodity or financial products. This article does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The appropriateness of a particular investment or currency will depend on an investor's individual circumstances and objectives. Opinions expressed are our current opinions as of the date appearing on this article only and may change without notice.

Published on 10 August 2019