A winner all the way

Updated: 2015-03-09 07:40

By Luo Weiteng(HK Edition)

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Hunger for success helped Alan Tsang, AMTD Asset Management boss, spot a market gap that turned out to be more than profitable. Luo Weiteng gets the story.

A"hungry man", that is how Alan Tsang Hing-lun, chairman of Hong Kong-based AMTD Asset Management Ltd, likes to describe himself.

And it was indeed his hunger for knowledge and success that motivated this top brass of the city's banking industry to leave the arena of retail banking - where he made his mark - and tap into the financial planning market, with the founding of AMTD more than a decade ago.

Many Hong Kong middle-class families may currently enjoy strong financial capabilities, but back then they knew little about managing money matters. Until the real estate crash of 1997 and the bursting of the tech and dotcom stocks bubble in the year 2000, most Hong Kong residents had yet to realize that financial planning is never simply equivalent to buying property or throwing money into the stock market. There was thus a huge market gap where people longed to handle their savings wisely yet had no idea about how to do so.

AMTD Group was set up in 2003 to satisfy precisely this appetite for financial planning and to pioneer investment education for locals, Tsang said.

Before he set up AMTD Asset Management that year, known at the time as AMTD Financial Planning Ltd, Tsang was country manager in Hong Kong for American Express Bank, well known for its credit card business.

But the lender's biggest revenue generator was its financial planning service, making AmEx the largest financial planner in the US with more than 30,000 advisors.

In those days, there was much talk about Hong Kong's potential to lead an emerging Asia as the next hub for the financial planning and wealth management industry.

In a city teeming with property speculators as it was at the time, Tsang found it hard to predict a promising future for financial planners in the near term.

Facing the hard facts

But the hard fact is that the local banking industry had been trapped in a rat race since the turn of the century, with small players often raising the white flag before even stepping onto the battlefield, Tsang noted.

Mortgage loan and credit card businesses, albeit profitable for a time, were far from money-making ventures then, with private loans left as the only lucrative business.

Tsang became increasingly enamored with the exciting possibility of introducing the philosophy and practice of financial planning into the city, a move that steered him away from retail banking, where his career had taken off and where he had made a name for himself.

In 1992, Tsang successfully helped Chase Manhattan Bank list its credit card business on the Hong Kong Stock Exchange, which led him to the realm of investment banking and saw him promoted to vice-president of the consumer loan business department a year later. He was just 29 at the time and the youngest vice-president in town.

That promotion marked the first turning point for Tsang's career. The second came in 1997, when he took up the position of regional managing director for retail banking at American Express Bank (AmEx), rising to country manager in 2000.

During the period, he rejuvenated the AmEx brand by pioneering mobile and Internet banking in Hong Kong and helping the bank develop asset securitization outside US borders for the first time.

Despite a host of "firsts", Tsang is willing to grant himself just 70 points out of 100 for his performance as the AmEx country manager.

"Being a country manager is entirely different from being a regional managing director," he said. "Looking back, there were some decisions I should have made the other way round and much work I could have done far better."

Amid the regrets and successes in his career journey, came the third turning point in 2003, when retail banks scrambled for petty profits and the inspiring possibility of financial planning stood out in the hard times of the post-SARS era.

Tsang rose to the challenge, and not for the first time in his career either.

In a vibrant and energetic local market where opportunities abound and things can always be made to happen so long as you put the brilliant concepts into practice, Tsang hopes his constant striving for self-improvement can infect those working with him.

Three steps to prosperity

"Having witnessed the mushrooming of dazzling financial innovations in the ever-changing mainland market, we can easily lag behind industry counterparts if we congratulate ourselves on minor successes," said Tsang.

The Wild West nature of the mainland's thriving economy offers good reasons for Hong Kong's financial planners to expect explosive business potential.

In fact, Tsang forecasts that the city's financial planning business could take a huge leap forward on the mainland within the next five to 10 years.

However, financial planning services are still on the cutting edge on the mainland, where clients can be very educated but not yet financially sophisticated, he added.

"Most clients are still wondering what financial planning services can bring to them and their investments," said Tsang. But he believes such a nascent stage for the financial planning market is a natural thing.

Tsang notes three interesting development stages for the financial planning business that most emerging markets in Asia would go through.

In the early stage, many families manage to land plum jobs but have yet to see savings parked in their accounts.

The financial service they need most is help to borrow money for a set of consumption items such as a house and car. Therefore, a loan relationship is how financial institutions deal with cash-strapped consumers at this stage.

When families are able to make both ends meet but are caught up in a slew of outstanding transactions and payments, the service they expect from financial institutions is assistance to settle bills like credit card debt and overseas expenditure.

Eventually, families become flush with money but know nothing about how to invest for a comfortable retirement and for their offspring to live well. This stage is where the financial planning business blossoms and is given full play.

However, financial planning is never a one-size-fits-all story. When you have so much money at hand, being a wealthy retiree and ensuring a decent life for future generations is dead easy. What keeps you awake at night are not fears that your assets will fail to produce generous returns but that your fortune will evaporate when transferred to your offspring due to a hefty inheritance tax bill or other factors.

Therefore, middle-class and high-net-worth individuals (HNWI) have different needs that must be catered to. The former ask for financial planning services with the purpose of generating handsome capital gains, while the latter want the estate transfer plan to beat inflation and prevent sky-high legacy taxes from eating up their wealth.

AMTD targets clients with investable assets of more than $2 million, and this benchmark figure sets clear goals for estate transfer planning (asset management) and financial planning, with the latter program should go beyond buying one or two financial products.

"By virtue of financial planning, clients without that amount of money could try to accumulate $2 million of investable assets in their account as their golden years approach, while asset management clients could be assured the wealth handed over to their offspring would be no less than $2 million," said Tsang.

In October last year, AMTD struck up a strategic partnership with Morgan Stanley Private Equity Asia to explore the huge market possibilities from the HNWIs on the mainland and in Hong Kong, Macao and Taiwan.

In its China Rich List released last September, Hurun predicted the number of mainland residents with personal wealth topping 10 million yuan ($1.59 million) would reach 1.2 million in the next three years.

Also, the coming on board of Morgan Stanley last year as a strategic shareholder symbolizes a switch in AMTD's business focus, from financial planning to asset management.

"Investor education, still in its infancy both on the mainland and in Hong Kong, really takes time. Yet, that is where the key to our business lies," said Tsang. "It has taken Hong Kong 15 years to get on the right track and travel so far. Certainly we have a long way to go on the mainland."

Contact the writer at sophia@chinadailyhk.com

A winner all the way

 A winner all the way

"Hungry" banking stalwart Alan Tsang Hing-lun, who has always had a keen eye for opportunities, saw a business opening for financial planning in the hard times of the post-SARS era and his AMTD Asset Management has since risen to become a leading provider of such services. Roy Liu / China Daily

 A winner all the way

The AMTD website says it is committed to providing comprehensive and high quality asset management and investment services to high-net-worth customers in key Asian markets. Provided to China daily

A winner all the way

 A winner all the way

The Capital Investment Entrant Scheme garnered HK$200 billion for Hong Kong. Provided to China daily

(HK Edition 03/09/2015 page8)