Interview with Tay Li Choo, Head of Investment Counselling, Southeast Asia at HSBC Private Bank
The 2021 Private Wealth Series
How do you invest $3 million to $300 million? How do you manage $20 million to $3 billion?
The 2021 Private Wealth Series is a 6 weeks special coverage on private wealth in Asia. Hear from leading private wealth experts, institutes, banks, private banks, fund managers, investment managers, insurers, tax, legal, risks, regional and international experts and many more.
Learn about private wealth in Asia, how to manage $3 million to $300 million of assets, where to find private wealth services, how key financial centres such as Hong Kong and Singapore play a role in managing assets, should assets be managed regionally or globally. Find out where the wealth is growing fastest, how the biggest wealth transfer is taking shape, how managing traditional wealth and new wealth is different and many more. If you are a financial professional, professional investor or institutional investor, how do you advise clients and how do you manage $20 million to $3 billion of assets?
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Interview with Tay Li Choo, Head of Investment Counselling, Southeast Asia at HSBC Private Bank
The 2021 Private Wealth Series: Tay Li Choo, Head of Investment Counselling, Southeast Asia at HSBC Private Bank
We speak to Tay Li Choo, Head of Investment Counselling, Southeast Asia and Interim Head of Investment Products and Services (IPG) at HSBC Private Bank, sharing her valuable insights on managing wealth & investments for billionaires, UHNWs and HNWs in The 2021 Private Wealth Series.
HSBC Private Banking is part of HSBC Group, one of the world’s largest banking and financial services organisations with $2.95 trillion assets as of 31st March 2021. HSBC Private Banking seeks to be the leading international private bank for business owners and their families.
Highlights from Interview
- Common Misconception: “Investors who feel they can manage their entire investment portfolios on their own by picking single line stocks, bonds or direct investments”
- Invest $5 million, $50 million or $500 million: “By and large the principles should be the same – invest for the long haul, diversify and manage your systemic as well as idiosyncratic risk”
- On Smaller Portfolios: “Harder to be well diversified across asset classes or single line holdings”
- On Larger portfolios: “Issue of finding enough of a single investment or security to make up a position that is worthwhile … to keep monitoring”
- On Social Media Feeds, Tips, Investment Scams: “Many of our clients depend on their bankers and Investment Counsellors to sift through the information“
- “Always invest for the long term, lever modestly if you must, and make sure you diversify your portfolio”
- “There is no need to look at your portfolio everyday unless you are inclined toward day trading”
- Institutional Investors, Family Offices: “We regularly get asked to provide bespoke discretionary mandates for large clients like family offices.”
- Investing Behaviour: “Strong home bias for many investors, including those from China and India”
- On Asset Class: Equities and fixed income usually remain the biggest allocations in most portfolios, given their relative liquidity
- “most of my investments are in discretionary portfolios and funds … I trust the professionals to do a good job”
- Likely first travel destination: I need to go to Hong Kong! Let’s hope the travel bubble comes back!
” There is no need to look at your portfolio everyday unless you are inclined toward day trading “
Who are you and what do you do?
Li Choo: I am Li Choo and I run the Investment Counselling team at HSBC Global Private Banking (GPB), Southeast Asia. My team of Investment Counsellors and Investment Counselling Analysts work together with Relationship Managers to help our clients construct diversified portfolios across asset classes and geographies that meets their wealth ambition goals.
- Head of Investment Counselling, Southeast Asia at HSBC Private Bank
- 18 Years in Fixed Income and Structured Products (Institutional) at Merrill Lynch, JP Morgan and MUFG Securities
Prior to my current role, I first joined HSBC Global Private Banking (GPB) in 2018 as Head of Fixed Income. Before that I spent 18 years in fixed income and structured products on the institutional sell-side.
Introduction
Direct investments into shares, funds, ETFs, options, futures through apps or online trading platforms are on the rise.
1. Are wealthy clients and HSBC Private Banking clients putting more of their investments into shares, funds and options via apps and online trading platforms?
Or do clients still prefer putting their wealth into a properly constructed portfolio, going through their Private Bankers or Wealth Managers?
Li Choo: Digital and online trading are growing areas of uptake as more of our clients, especially the younger generation, want to access investment products via our digital trading app or online account. While some clients appreciate independence in their investment management, others prefer having someone to discuss ideas with or to give them advice.
I don’t see digital as a competitor per se for private bankers but really a complement to enable clients to view their portfolio on the go and for those that are keen to make transactions seamlessly. A well thought-out digital platform for a private bank is complementary with the personalised bespoke services that our Private Bankers and Investment Counsellors provide in tandem with our Chief Investment Officer (CIO) for Southeast Asia on the latest market movements and high conviction themes.
” Some clients appreciate independence … others prefer having someone to discuss ideas with or to give them advice “
This crisis (COVID-19) is quite unusual, with some economy still running well and financial markets functioning properly – perhaps supported by government stimulus, and increase in investors participation from younger generation, next-gen wealth, students, wealthy professionals, fast-growing middle-income and more investment managers. There are also many new policies and investment shifts during this crisis, such as the post-pandemic work-place, work-from-home flexibility, ESG & Sustainable investments.
2. For HSBC Private banking clients, billionaires, UHNWs & HNWs, what are the hot topics in investments and investment products today?
And what are some of the key changes in investment trends since the pandemic (Jan 2020)?
Li Choo: If there is one discernable theme that has really taken root among clients since the pandemic, it is that of Sustainability and ESG (Environment Social Governance). The pandemic has brought attention to investors on the enormity of risks that such low probability but high impact events can bring, and a greater awareness around sustainable investing especially with regard to climate change has definitely resulted.
” the enormity of risks that such low probability but high impact events can bring “
3. You have many years of experience in investments. Can you share any interesting stories, horror stories or common misconceptions on managing investments?
Li Choo: Sometimes I come across investors investors who feel they can manage their entire investment portfolios on their own by picking single line stocks, bonds or direct investments, however many times these portfolios end up being unbalanced, undiversified, or skewed towards certain biases.
Building a resilient portfolio is important, especially during times of volatility. There are benefits of diversifying across asset classes and markets, and if one is trying to do this by investing in unfamiliar areas, the best way is usually via mutual funds, ETFs or discretionary portfolios.
“ Investors who feel they can manage their entire investment portfolios on thier own by picking single line stocks, bonds or direct investments ”
On Private Wealth & Investments, HSBC Private Banking
Today, there are many more billionaires, UHNWs & HNWs. But there are also more investment opportunities and investment products and instruments.
1. For new investors, next-generational wealth or wealthy clients that just doesn’t have time, what kind of investments would be most suitable for them?
Li Choo: Unless you have retired or you’re running your own investment portfolio full time, it is unlikely you will have the time and energy to be day-trading your portfolio and have your eye on every position all the time.
Even for seasoned investors, I would advocate leaving a portion of your core portfolio in discretionary portfolios and other managed products like mutual funds, hedge funds and private equity funds.
” it is unlikely you will have the time and energy to be day-trading your portfolio and have your eye on every position all the time “
2. Is there any difference in investing for clients with $5 million, $50 million or $500 million? Do and should clients invest differently?
Li Choo: By and large the principles should be the same – invest for the long haul, diversify and manage your systemic as well as idiosyncratic risk. Having said that, there are challenges for portfolios of different sizes. For example, smaller portfolios are sometimes harder to be well diversified across asset classes or single line holdings, especially if there are minimum trade sizes for certain investment products.
When portfolios are very large, there can be the issue of finding enough of a single investment or security to make up a position that is worthwhile for the portfolio to keep monitoring.
“invest for the long haul, diversify and manage your systemic as well as idiosyncratic risk”
There is a lot of talk about Wealth Transfer, next-generation wealth. But some of the younger adults and even students have also become wealthier at a younger age (entrepreneurs, freelance, professionals in tech sectors, stock options en-route to IPO).
3. How are the younger generation of today investing?
Li Choo: For the younger generation especially the entrepreneurs and tech professionals, they tend to be technologically savvy, and appreciate having both online as well as offline contact.
” Younger generation – appreciate having both online as well as offline contact “
How about clients who are more sophisticated, and professional or experienced investors such as private investment funds or family offices? Or institutional investors such as Foundation, Endowment, Charities, Corporate Investment Funds and the larger and more sophisticated family offices?
4. Do they get into more sophisticated investments such as leveraged structured products, private equity?
Li Choo: Private equity, direct investments, pre-IPO deals and leveraged structured products are just some examples of investment ideas they would consider.
” Private equity, direct investments, pre-IPO deals and leveraged structured products “
5. Do they allocate $50 million or $100 million and ask you to construct a portfolio with regular payouts?
Li Choo: Short answer would be yes. We regularly get asked to provide bespoke discretionary mandates for large clients like family offices.
These mandates might seek to provide regular income, or they may be growth oriented – it really depends on the objectives of the client.
” We regularly get asked to provide bespoke discretionary mandates for large clients like family offices “
Singapore is an international financial centre, attracting assets from all over the world, institutional investment managers, family offices, and the fast growing wealth in Asia, especially from China and India.
6. Do clients from different countries / regions invest differently?
Li Choo: While the investment theories and basics tend to be similar, what tends to be inevitable is a strong home bias for many investors, including those from China and India. This is probably because investors feel that they know certain names and sectors from their country of origin better than others.
” strong home bias for many investors, including those from China and India “
On Portfolio / Investment Management
1. What kind of expected returns are investors expecting in this 10 years (2021 to 2030)? Is the mean (average) expected returns higher than the last decade?
Li Choo: This will depend largely on the portfolio mix that the investor holds.
A typical 60/40 stocks to bonds portfolio has historically returned in the mid to high single digits per annum, and it is not inconceivable to expect similar going forward.
2. Are Equities and Fixed income still the biggest allocation in portfolio? Or are Alternatives, Private Equity, Private Markets and Hedge Funds playing a bigger role in the portfolio and accepted by clients?
While equities and fixed income usually remain the biggest allocations in most portfolios, given their relative liquidity, other products in the alternatives space including private equity and hedge funds have been gaining in popularity among clients. These products can provide uncorrelated returns to traditional risk assets, hence enable clients to improve their risk-return profile.
” Equities and fixed income usually remain the biggest allocations in most portfolios, given their relative liquidity “
The financial industry is highly regulated and risk-profiling and KYC are important. Given the massive change in this decade, some investments that are low-risk, are becoming high-risk. Some high-risks are becoming low-risk. Some investment sectors may face a write-down on their asset value as banks shift their financing to green investments (Race to Zero – Carbon Emission) Risk-profiling is important both from the regulatory standpoint and in establishing basic understanding of risk with clients.
3. Is risk-profiling still working?
Especially in trying to create an investment portfolio for the future in a transiting economy with new global initiatives, policies and opportunities.
Li Choo: Risk profiling is still important, if only for us to understand our clients’ ability and willingness to take risk, which is one of the key places we start before we even start introducing any products to our clients.
What is important to remember is that a risk profile is not stagnant and needs to be refreshed periodically especially given the changing environment and a clients’ evolving needs.
” risk profile is not stagnant and needs to be refreshed periodically “
4. For wealthy clients, the new billionaires, UHNWs and HNWs, and even private bankers, how do they deal with the constant social media feeds on investment opportunities and advice, exaggerated investment headlines, stock market manipulation and investment scams?
Li Choo: By and large, many of our clients depend on their Bankers and Investment Counsellors to sift through the information, and some of the bigger clients may also have their own advisors and family offices to help them do that.
Within HSBC Global Private Banking, we have our CIO (Chief Investment Officer) as well as product specialist colleagues to help us filter though the data and curate appropriate advisory insights for our clients.
” many of our clients depend on their bankers and Investment Counsellors to sift through the information “
Final Words
1. You have a very successful career, spending many years in institutional investments and in private banking. How is your journey so far? Any advice for billionaires, UHNWs, HNWs and private bankers?
Li Choo: I would say always invest for the long term, lever modestly if you must, and make sure you diversify your portfolio.
If you have a well-diversified core portfolio which includes various discretionary and fund solutions, there is no need to look at your portfolio everyday unless you are inclined toward day trading. However do schedule in regular portfolio reviews to rebalance holdings from time to time.
” Always invest for the long term, lever modestly if you must, and make sure you diversify your portfolio “
2. You are the Head of Investment Counselling, Southeast Asia at HSBC Private Bank and need to track global investments 24/7, and advise and manage investments for the wealthiest clients. Do you have time to manage your wealth and investments?
Li Choo: I wish I had more time to trade tactically but given my time constraints, most of my investments are in discretionary portfolios and funds. That’s actually fine because I trust the professionals to do a good job!
” most of my investments are in discretionary portfolios and funds … I trust the professionals to do a good job “
3. What is your first likely destination once travel opens up again? (For Work, Holiday)
Li Choo: I need to go to Hong Kong! Let’s hope the travel bubble comes back!
“I need to go to Hong Kong! Let’s hope the travel bubble comes back!”
Thank you Li Choo for sharing your valuable insights on managing wealth & investments for billionaires, UHNWs and HNWs in The 2021 Private Wealth Series.
Tay Li Choo, Head of Investment Counselling, Southeast Asia at HSBC Private Bank
Tay Li Choo is the Head of Investment Counselling of Southeast Asia at HSBC Private Bank. She joined HSBC Private Bank in 2018 as the Head of Fixed Income, Southeast Asia.
Before joining HSBC Private Bank, Li Choo spent more than 18 years at Merrill Lynch, JP Morgan and MUFG Securities in the institutional business in Fixed Income and Structured Products.
About HSBC Private Banking
As part of the HSBC Group, one of the world’s largest banking and financial services organisations, HSBC Private Banking seeks to be the leading international private bank for business owners and their families. It provides clients with wealth, business and family succession solutions in the largest and fastest growing markets around the world. HSBC Private Banking is the marketing name for the private banking business conducted by the principal private banking subsidiaries of the HSBC Group.
The Hongkong and Shanghai Banking Corporation Limited is the founding member of the HSBC Group. HSBC serves customers worldwide from offices in 64 countries and territories in its geographical regions: Europe, Asia, North America, Latin America, and Middle East and North Africa. North Africa. With assets of $2.95 trillion at 30th September 2020, HSBC is one of the world’s largest banking and financial services organisations.
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