More Filipinos turning into investors
Filipinos are better known as consumers than either savers or investors. But with rising consumer affluence and financial education making more inroads in this digital age, more and more are turning into investors as well. With the Philippines in the so-called sweet spot, opportunities abound on how to grow wealth.
Another welcome development is that more Filipinos are starting to invest at a younger age, diversifying into more aggressive instruments and embracing a longer term investment horizon, says Citi consumer business manager Bea Teh-Tan.
With $210 billion in assets under management across 12 markets in the region, Citi is the largest wealth manager in Asia outside Japan and claims to serve a third of the region’s billionaires. Tan reports that with increasing affluence in the country, more Filipinos are signing up for wealth management services as they recognize the need to grow their retirement income.
There’s an increasing trend of clients scouting for more investment and insurance products, particularly unit-linked variable insurance. With interest rates hitting rock-bottom, more and more investors are shifting from bonds to higher-yielding investments, Tan says.
In any given day, Tan says 700 to 1,000 new customers walk into Citi’s local branches to inquire about investment opportunities. Citi has over a million clients across various consumer segments in the Philippines.
“Quite a number are looking at options outside the country,” she says, adding there’s an increasing appetite for regional equities.
In terms of asset mix, she says quite a bit of them are still “balanced” in terms of exposure to fixed income instruments and equities.
Generation of young investors
At the same time, she says a new crop of young investors, including the “next-generation” tycoons and entrepreneurs, also boost demand for investment products. More Filipinos are now starting to invest as early as in their mid-20s whereas in the past, they wouldn’t start investing until they have reached their late 30s or 40s, she notes.
“In general, the market now is more informed. The younger generation understands how their money can multiply and are more open to looking (at other instruments),” she says.
Given meager local interest rates, there’s also some shift away from guaranteed savings instruments to alternative investments. Tan says this is because more clients are educating themselves on how they could benefit from the robust capital market environment.
As investors, Filipinos were previously known to prefer guaranteed instruments like savings and to have very low risk appetite. The lower the risk appetite, the more asset allocation goes to fixed income instruments but with record-low interest rates are making diversification more compelling.
But while risk appetite was now improving among Filipinos, Tan says people who own businesses still tend to be more conservative as they want more flexibility in handling their liquidity.
In terms of holding firm, more Filipinos now tend to hold on to their investments for three to five years whereas before, their time horizon was usually “very erratic,” she says.
Through Citigold, its wealth management service, Citi offers clients access to a team of financial experts, coupled with relevant research and analysis on global markets. Citigold caters to clients with liquid assets starting at $100,000 up to $1 million.
When it comes to wealth management, Citi adopts the “open architecture” model, which means that instead of itself structuring the financial product, it sells the investment products of other global institutions like Manulife, PruLife, Sun Life of Canada and Philam. This is to provide a more objective view of financial products suitable to each client’s financial capability and risk appetite.
Through Citigold, its wealth management service, the bank offers clients access to a team of financial experts, coupled with relevant research and analysis on global markets. From there, clients can make informed choices on a suite of products available onshore or take advantage of an offshore referral service exclusively available through Citi’s global affiliates.
“Citigold is one of the most successful brands of Citi in Asia-Pacific, where we are widely acknowledged as the financial partner of choice by the affluent market,” Tan says.
Global banking suite
In order to bring the world closer to its clients, Citi is also aggressively promoting its global banking suite, with specialized services to appeal to frequent travelers, expats or global citizens or global sophisticated investors.
For expats, the Citi wealth management team can arrange all the necessary requirements for funds to be transferred from one destination to another with just one’s existing Citigold account needed. As such, the expat will no longer need to open a new bank account. Credit card application in the new destination will also be processed even before the expat leaves—which means credit card history also crosses borders with the expat.
For frequent travelers, Citi allows higher daily fund transfers of up to $50,000 while waiving transfer fees. This makes instant fund transfers to other Citi accounts in close to 30 countries across the globe.
“Citi leverages its global presence to bring the world closer to our clients. We are more than ready to service the Filipinos’ increased appetite for investment opportunities and look to empowering clients with more financial options to address their ever changing needs,” Tan says.
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