Kenanga IB sees riches in wealth management

KUALA LUMPUR: Kenanga Investment Bank Bhd (Kenanga IB) expects its wealth management division to contribute 25% to its bottom line in five years, said director and head of wrap wealth management William Lee (pix).

He said the bank strongly believes that the wealth management industry will grow tremendously in the next five years, on the back of greater awareness among the general public. Wealth management is identified as one of the entry point projects under a National Key Economic Area of the Economic Transformation Plan.
"We're working closely with the Financial Planning Association of Malaysia, Malaysian Financial Planning Council and Association of Financial Advisers to promote this industry. We're also trying to work with the regulators and participate in their events to promote wealth management," he said in an interview recently.
Kenanga IB's wealth management division was established in April 2012 to tap the potential of the growing retail business in Malaysia's financial industry. Lee said recognising that a lot of financial products are offered on a silo basis Kenanga IB has embarked on an information technology-driven "wrap" platform, called the KenWrap, in an effort to offer holistic financial product and service platform, to meet rising demand from investors and servicing financial advisers.
Soft launched in December 2013, KenWrap is an online investment portal that uses a single platform to offer multiple products, such as unit trust, private retirement scheme (PRS), discretionary mandates, equity trading, share financing, treasury deposits, structured investments and bancassurance. It currently has 2,000 customers.
Lee said the wrap concept has been practised in the US and Australian markets. The portal targets the mass market, from the general public to high net worth individuals, as insurance premium can be as low as a few hundred ringgit.
KenWrap adopts an open architecture; hence it can offer clients a large variety of products. Wrap provides convenience and simplicity and allows one to source products from a single access point rather than multiple product providers.
"We not only promote our own funds, we also promote external, third party products," said Lee.
KenWrap currently carries some 300 funds in its platform, including from 11 unit trust fund houses, six insurance providers and three PRS providers.
"Currently we offer unit trust, equity booking (share trading) and treasury product. The next phase will be our PRS and insurance products. We expect everything to be integrated into one by the end of the third quarter," added Lee.
KenWrap is also a user-friendly portfolio management tool that enables advisers to perform financial planning for clients, and cross sell other products to clients. It also allows for customer relationship management.
Lee said Kenanga IB is the first to offer the wrap system in Southeast Asia and 150 or 60% of the licensed financial planners in the industry has joined the KenWrap platform. Compared with KenWrap that offers multiple products, he said other players merely offer one product.
Meanwhile, Lee said the wealth management industry in Malaysia is still in its infancy compared with advanced and neighbouring countries.
There is also the challenge in terms of certain restriction in regulations whereby financial planners here need to have multiple licenses to sell multiple products, compared with other countries where the process is simpler.
"The licences are costly… (and with compliance issues), it's a challenge to be a full-fledged financial planner," he said, adding that here, most tied agents have an average of two licences, comprising of the unit trust and either a PRS or insurance licence.
"In Malaysia, you have different regimes to give out different licences. If you look overseas, as long as you are a
financial planner, you can sell multiple financial products.
"We hope regulators are more flexible in their licensing and we suggest the industry and regulators put more effort into promoting this industry. We believe wealth management is the way forward," said Lee.