The Tortoise and the Hare

Stable growth is often more important than fast money

SINGAPORE is on the rise as a wealth management hub with funds under management growing by 22% in 2012 compared with around 5% for Western Europe as a whole.

The disparity in growth rates is large, and the FT has attempted to narrate a story that fast growing Singapore will replace Switzerland as the world’s leading wealth management hub.

Swiss assets under management may be growing more slowly, but the Swiss continue to manage significantly more assets (US$2.8 trillion compared with US$1.29 trillion for Singapore).

As we know from Aesop’s fable about the Tortoise and the Hare, running faster does not always secure you first place, and there are three reasons to believe that Swiss wealth managers will remain in the lead:

    1. Firstly, shrewd wealth managers from Switzerland are setting up bricks-and-mortar operations in Singapore. They recognise that regional Asian investors want to deal with real people on the ground, and they’re accommodating the demand. This means that Swiss wealth managers can directly benefit from the rise of the Asian region rather than competing in a zero sum game (a race where the Swiss have to lose for the Singaporeans to win).
    2. Secondly, it is possible for both Singapore-based and Swiss-based wealth managers to thrive. For cultural and geographic reasons, Switzerland is a much better location for serving European clients (as well as many US clients); for the same reason, wealth managers based in Singapore are better placed to serve Asian clients. Both can thrive in their respective niche.
    3. Thirdly, the Swiss have a long tradition of wealth management (dating as far back as the 18th century). Swiss neutrality and national sovereignty, long recognised internationally, have ensured the stability necessary for the banking sector to survive and thrive. Can we expect the same stability from Singapore, an island state located in fast growing yet newly prosperous Asia? If the ongoing financial crisis which commenced in 2008 has taught us anything, surely the lesson was that stable growth is often more important than fast money.