Asia has been the Klondike of the wealth management industry in the 21st century. Reports of a mother lode of unbanked assets sparked frenzied immigration from Europe and North America, as prospector banks descended on Singapore, Hong Kong and Shanghai in pursuit of high net worth individuals (HNWIs) and their assets.

Not only was the territory seen as paved with gold, these deposits were perceived as easy to extract and serviceable with only the minimum of effort, investment and finesse. Asian clients were less sophisticated, newly rich and wanting to get richer. They had an appetite for risk far in excess of their more defensive Western counterparts and a strong desire to trade on their own account.

Even better, with the inexorable march of the forces of increased regulation and transparency across traditional offshore lairs in Europe and the Caribbean, there was an expectation that existing clients might wish to ship their assets out east as well. As a result, wealth managers from Wall Street, Lombard Street and the Paradeplatz jostled for banking licences, joint venture partners or acquisitions in Asia’s entrepôts and tussled to secure the best available talent.

Then, in 2008, the music stopped. Bank clients found that the packages they were left holding were not as replete or robust as they had been promised and wealth managers found themselves powerless to intervene. Markets tumbled, complex financial instruments imploded and fortunes headed south.

On average, assets held by the wealthy across the globe dropped by as much as 40%. But if the falls in the Asian markets were especially painful and dramatic, they were also the most short-lived. While Western markets lost traction and slipped backwards, many of the Asian economies picked themselves up, dusted themselves down and got back on track. And it now seems clear that they will use the opportunity to make up considerable ground on the old world.

Far from being a busted flush, Asia not only represents the best global growth opportunity for wealth managers, but for the moment it is pretty much the only game in town. It is also causing wealth managers to reassess their previous perceptions about Asian clients and adjust their service offerings accordingly.

“The stereotype of Asian clients was that they were money-focused and risk-taking to the point of distraction,” says Sebastian Dovey, managing partner at wealth management consultants, the Scorpio Partnership. “What we are seeing is far from that description. Our research has shown us a generation of customers that are very similar in nature to the traditional clients in more mature markets: risk-adverse and advice-seeking, with a strong desire to protect and grow their assets. There is a big opportunity in the high levels of consumer spending power and the growing middle class all the way from China through to India.”

Scorpio has been undertaking research to determine, from the client perspective, what wealth-holders across the world actually want from their wealth managers. Of the first feedback sample of almost 1,500 wealthy people under its Futurewealth project, 35% were based in Asia, the Indian sub-continent, the Middle East and Africa.

“There is a significant difference among this community of future wealth customers which should be understood, particularly in Asia. Their ambition does not immediately imply a high propensity to risk. Indeed, this is not just another wave of clients willing to trust the industry’s promises of a sure bet,” says Dovey. “This is a community broadly rooted in the professions – which is often, incidentally, the core of the private banking customer base – with a solid grip on their career direction and capabilities.

“In many ways, in Asia we are seeing this community possess strong similarities to the community of the 1950s and 1960s in the US who were pursuing the American dream. These individuals are the engine room of the next wave of industrial growth in the region; they are the Asian dream.”

There are more than 2.4 million dollar millionaires in Asia Pacific, with a combined wealth of $7,400bn (€5,500bn), according to the latest data from Merrill Lynch and Capgemini. It forecasts that the region will grow 12.8% a year and overtake North America as the world’s largest pool of wealth by 2013. This means expansion opportunities for private banks and competition is hotting up again.

In January, HSBC chief executive Michael Geoghegan relocated back to Hong Kong from London after a 17-year absence. HSBC stated that the centre of gravity was shifting and Asia was where the growth would be. Late last year, HSBC said that it was planning to add another 20 branches to a Chinese network that already stands at 100 and is understood to have appointed advisers to prepare the bank for a listing in Shanghai this year.

HSBC is also in advanced discussions to move Chris Meares, global head of its private bank, from London to Hong Kong. Its private bank has more than $400bn (€300bn) under management. In February, the head of JPMorgan’s international private banking unit, Douglas Wurth, relocated from New York to Hong Kong. The US bank manages about $450bn (€335bn) in private banking assets, half outside the US, and targets individuals with at least $25m (€18m) to plonk down.

Wealth management in Asia is also a disproportionate growth driver for some global investment banks. Credit Suisse reported that 25% of last year’s CHF44bn (€30bn) net inflows to its private bank came from Asia – a region that accounted for only 10% of its group net revenues.

Even more significantly, the biggest deal in the private banking sector since the financial crisis began took place in Asia and the buyer was a local bank. Netherlands-based ING completed the sale of its Asian private banking unit to Singapore’s Oversea-Chinese Banking Corp (OCBC), in January for $1.5bn (€1.1bn). OCBC’s assets under management will rise more than threefold to $23bn (€17bn), making it Singapore’s second-ranked bank by assets and catapulting it into the 10 largest private banks in Asia. HSBC was the underbidder.

“We are not letting the [financial] crisis go to waste .... We are doing a transformational acquisition for OCBC,” says OCBC chief executive, David Conner, who added that the deal was needed to stay competitive. The new unit will be called Bank of Singapore.

And the battle to manage Asia’s wealth is no longer restricted to its offshore centres. Banks are increasingly now targeting the onshore interior in search of market share, and not just in mainland China and India, but in the growing regional financial centres of Jakarta, Taipei, Seoul, Bangkok, Manila and Ho Chi Minh City.

These wealth management markets may be highly disparate, but one factor that is common to all is a client demand for transparency. Stephen Richards Evans, regional head of Standard Chartered Private Bank for north-east Asia, says: “Clients have grown more guarded and skeptical in the private banking space. People don’t have trust. They want transparency in risk and pricing, and security is now more important than performance.”

Most of all they want good advice. “In Europe, relationships are important but often there is a ‘lock up and leave it’ mentality,” says Richards Evans. “In Asia, customers want much more regular contact and a close understanding of their family and business circumstances. Sixty per cent of Asian HNWIs have more than half their wealth deployed in their business, so having good access to wholesale and commercial banking is very significant and favours the ‘one bank’ approach. Asian clients also value loyalty and longevity, so the ability to retain staff can be a critical factor. Our premium bankers often migrate into private banking with their clients.”

The X-factor is how to penetrate this market most effectively and where to concentrate resources. And with the market becoming more contested, especially in the HNW and mass-affluent segment, wealth managers will need to reassess their presence.

“The simple question to ask is what is the account size?” says Dovey. “Currently, 60% of the total HNW assets are held in the sub-$10m [€7.5m] segment and these individuals are by no means confined to a few key cities. The real challenge will be capturing the fast-rising, middle-class affluent who will grow into the private banking clients of the future.

“In other words, it is the premier banking segment with access to foreign currency accounts, mutual funds, mortgages, insurance and credit cards. The main battleground will be in the mainstream market and clients will shop around. Banks that are prepared to invest in aggressive brand promotion will capture audience and there will be a distillation of mega brands.”

He sees a parallel in the strategies pursued by the luxury goods brands in China. Initially they adopted a strategy of focusing on top three cities only. This was followed by an expansion by some luxury houses to top three and tier-one cities and finally to tier-two and lower cities. “Rapid penetration can be achieved by those brands willing to sacrifice geographical exclusivity for wider reach,” says Dovey. “However, by applying geographical exclusivity institutions can safeguard their image of being open for business only for the very wealthy.

“Clearly the first strategy holds the greatest potential for accessing the coveted sub-$10m market, while the latter is more akin to the rarefied private banking days of old and family offices. Each serves a purpose, but in a market where volume will decide who reaps the biggest benefits, and customer loyalty is historically low, those wealth managers with the most recognisable brand among a brand-conscious growing wealth class will emerge as the market leaders.”