Lenses on External Asset Managers (EAMs) – An Exclusive Interview with Mr Albert Liu of Sino Suisse Capital Pte Ltd

Turning the Tide - The Journey of Rebuilding for Success

Disclaimer: This article is purely for educational purposes and should not be misconstrued as promoting EAM.

Mr Albert Liu is the principal founder of Sino Suisse Capital Pte Ltd, an External Asset Manager in Singapore.  Albert has more than 25 years of experience in Wealth Management. Prior to founding Sino Suisse, he was Managing Director, Country Team Head for Global Ultra High Net Worth China with UBS AG, Singapore Branch. Albert has co-authored many academic papers on areas of family office and multi-generational succession planning in Asia. He holds an MBA degree from the Rochester-Bern Executive MBA Program and is currently pursuing his Global Finance PhD at Tsinghua University School of Finance.

Q. Why did you decide to start Sino Suisse in 2017?

 A. Honestly, I did not know what an EAM was when I first started Sino Suisse with 3 other partners. My initial motivation to venture out is driven by my disagreement with the appraisal methodology for a senior private banker. I felt that the performance appraisal on senior private bankers should be more holistic. A senior private banker brings deep experiences in risk management, client KYC, and sensing of market movements. His/her contributions should not be restricted to the AUM brought in”.

Q. Sino Suisse failed in the first year.  What are key learning points from this failure?

 A.  I was a private banker all my life.  My partners were private bankers. We did not realize that running a business is radically different from working for a business. We had no idea about cashflows management.  We had to quickly learn about the challenges in running an EAM business.  It was about fine-tuning our revenue model and figuring out how we could generate stable cash-flows.  

Q. What drove you to persevere after the failure when the other partners exited?

 A.  I am convinced that the EAM model has a “triple wins” positioning. The first win is for the private banker. As a private banker, I am in an awkward position, often sandwiched between the client and the bank, and not having the trust of either. The client knows that I must generate revenues for the bank and my interests are not fully aligned with the client’s interests. This awkward position of the private banker disappears in an EAM, because there are no short-term revenue targets to meet.  The second win is for the clients.  The EAM model protects the interest of the clients by removing the short term revenue targets and aligning the client advisor’s interest with the client’s interest.  The third win is for custodian banks.  As an EAM, all we have is our reputational capital which we cannot afford to throw away. Hence we regard risk management seriously. We will invest continuously in our infrastructure to fulfil regulatory compliance and to manage our operational risks.  In this sense, we are strategic partners with custodian banks in regulatory compliance.  We know the client KYC requirements on private banks and incorporate these in our own regulatory compliance checklist. 

Q. How did you turn over the business?

 A. Without reputational capital to leverage upon, we must be more diligent in client acquisition and explaining the “triple-wins” value proposition of an EAM to prospective clients.  During my banking days, I might have to reach out to 10 prospects in order to convert one to a client. As a new EAM, I had to reach out to 100 prospects to have any chance at converting one into a client.  We worked hard and prayed hard too.  Luck plays a key role in our success besides hard work.   

By the end of Phase One, we figured out our business philosophy which is to place client’ interests first and be free of conflict of interest with any financial institutions. We adopt a culture of transparency that fosters mutual trust and nurture long-term relationship with clients. For example, we show our clients their account statements from the custodian banks and the total fees incurred including our retrocessions. We are transparent to our clients.

In Phase Two, we adopted an open architecture and can deliver the best pricing, lowest cost, and hence, value-added solutions to clients.  At this stage, our cash-flows has also stabilised.

We are now in Phase Three. Heavy investments were made to implement an IT system that integrates trading, risk management, legal compliance, and client relationship management.  The IT system directly interfaces with the custodian banks for pricing feeds and consolidates the client’s trades and positions across his accounts with different custodian banks.  I estimated that the advent of this IT system reduces the costs of client by about 60-70%. 

 Q. Can you foresee any roadblock to impede the growth of Sino Suisse in the next 3-5 years?

 A. No. I do not foresee any firm-specific roadblock to our growth. However, there could be industry-wide challenges. For example, there is huge diversity in the EAM landscape in Singapore.  The smaller EAMs may resort to risky business strategies in order to survive, and they may not have the necessary capabilities to properly manage risks which include increasingly more complex regulatory and technology risks. In the event of a scandal, the reputation of the nascent EAM industry might be destroyed. 

Q. How do you contribute back to the EAM industry?

 A. Sino Suisse has set up a community network called the “Happy Alliance” to share industry-specific knowledge with other EAMs, and vice-versa. We hope to be able to help the smaller EAMs.  For example, we share regularly on regulatory compliance matters. We also open our IT system to other EAMs so that collectively, we have a larger combined AUMs and can obtain better pricings and deals from prime brokers through our enhanced bargaining power.

Q. Where do you see Sino Suisse in the next 3-5 years?

 A. I expect Sino Suisse to reach an AUM of USD 7 billion in 3 years and more than USD 10 billion in 5 years.

Background

This interview was conducted by the research team comprising Dr. T Mandy Tham, Assistant Professor of Finance (Education), Academic Director, Master of Science in Wealth Management, Sino Suisse Fellow, Lee Kong Chian School of Business; Ms Esther Kong, Senior Deputy Director and Ms Juliana Koh, Research Associate, Business Families Institute, Singapore Management University with Mr Albert Liu, CEO of Sino Suisse Capital Pte Ltd.