Wednesday 30 November 2022

Singapore asset management increases 16% year on year | How it affects us as Singaporeans

In the earlier article that I wrote, I mentioned about the greatest wealth transfer incoming where baby boomers are set to pass to their children more than $68 trillion in assets. It might sound funny to the ordinary folks like me as I don’t think there is a huge amount of inheritance for me but for the high net worth individuals (HNWI), this is a huge thing and lots of planning has to be done prior.

Singapore has definitely seen a wave of HNWI and we can see that from the properties being bought, family offices being set up as well as just news that talk about how Singapore is a hub for the HNW to come to.

From this article ,”According to the 2021 Singapore Asset Management survey published by the Monetary Authority of Singapore (MAS), total assets managed by Singapore-based asset managers grew 16% y-o-y to reach $5.4 trillion, up from $4.6 trillion in 2021.” This is a substantial increase especially so in times like these as it shows that the HNW individuals find Singapore an attractive place to place their wealth here.

Asset Management and the role of an asset manager

Asset management is the practice of increasing an individuals wealth over time by helping to invest and trade assets that appreciate over time. It can involve different instruments and products depending on the individual’s risk appetite and main goals for the funds provided. Asset managers help in the providing their services and some might be affiliated to certain financial institutions or work independently.

Singapore has also been very welcoming to HNWI, for example, Monetary Authority of Singapore (MAS) and the Economic Development Board (EDB) have set up a Family Office Development Team to lead and coordinate initiatives that will enhance Singapore’s position as Asia’s premier base for family offices.

With more HNWI making Singapore their base, we should also be paying attention to wealth disparity

It might seem a good thing that more HNWI are making Singapore their base with funds coming in showing that people are confident in Singapore’s future and we are Southeast Asia regional hub as more companies look to set up their HQ here. However, wealth disparity or inequality comes up as more HNWI enters Singapore, we can see that the HNWI purchases property units here, also as more of these HNWI come in, they would also want to bring in their networks or family which can be a plus point as there might be investments or job opportunities opening in Singapore.

Overall, from Blackbox Research, they have found that amongst Singaporeans, 4 in 5 (81%) are worried about the widening income gap. Youths (90%) and young working adults (86%) are more likely to feel anxious about the unequal distribution of income and 7 in 10 Singaporeans (69%) feel that income inequality in Singapore has worsened over the past 5 years, with more than 1 in 4 (27%) believing the income gap has gotten “much worse”.

It really is difficult to manage this situation as we see the government wanting to attract overseas talent and companies are very willing to offer them high compensation. Of course, we need the companies and talents to come to Singapore to bring jobs and also learn from them on the skillsets however inevitably, things will get more expensive as they can afford to pay more and things that are based on demand and supply, will increase if they are very much willing to pay.

What I can do?

I would say opportunities to grow your career are there but definitely it depends on which industry you are in and how willing are you to pivot or learn new skills depending on your age. Having HNWI coming over to Singapore might bring opportunities to the country but at the same time, widen the wealth gap. We have to work on improving our skills and capitalising on our jobs to increase our income.

Certain roles tend to earn more as they are the profit centers and the job role demands much more than others. Communication is very important and I believe your network can be a huge advantage in your career. Of course, we all have our own goals whether it is to earn more or have work life balance. No one knows how the world will be like 10, 20, 30 years from now. The skills needed might be different so living in the present is also important rather than thinking too much to the future. The world of the HNWI is unreachable in my lifetime at least as of now that I am planning based on my income so I will just live a happy life and hope the wealth inequality doesn’t widen too much.

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