As a private banker meeting various clients, I have recently noticed an interesting shift in the questions high-net-worth individuals are asking. In the past, clients often inquired, "What is the best-performing investment product right now?" Nowadays, the questions have changed to, "What should my dollar allocation be?" "How should I prepare for living expenses after retirement?" and "When should I start transferring assets to my children?" While these questions may seem different, they share a common theme: clients are shifting their focus from 'what to buy' to 'how to manage my entire portfolio.'
As wealth increases, protecting assets becomes as important as achieving high returns. In consultations, I frequently hear concerns such as, "Am I too heavily invested in one area?" alongside questions about potential gains. Clients are contemplating how to allocate their assets across various categories, including stocks and bonds, domestic and foreign currencies, and financial assets versus real estate.
Recently, this interest has expanded to include tangible assets like gold. With ongoing volatility in financial markets and geopolitical uncertainties, many clients are asking how to incorporate assets with different characteristics into their portfolios.
Investment methods have also diversified. For instance, Hana Bank offers a 'Gold Accumulation Trust' that allows clients to trade physical gold in the KRX gold market. Gains from trading in this market are exempt from comprehensive taxation on financial income, and value-added tax is waived upon sale.
However, gold is also an investment asset that can incur losses due to price fluctuations. It is essential to consider what role gold will play in an overall asset strategy rather than viewing it solely as a safe haven. The required allocation and utilization of gold can vary based on investment duration, risk tolerance, and existing asset composition.
Ultimately, the definition of a good asset differs for each client, whether it be stocks, bonds, or gold. The key is to assign roles to each asset rather than concentrating funds in a specific asset or at a specific time. Clients should regularly reassess their asset structure as market conditions and financial goals evolve. Investing is not a one-time decision but a continuous management process.
When meeting with clients approaching retirement, this shift becomes even more apparent. In the past, the primary question was, "How much should I save by the time I retire?" Now, clients are more focused on, "How much can I expect to receive each month after retirement?" Having substantial assets does not guarantee a stable post-retirement life.
If a client has a high proportion of real estate or long-term investment assets, they may have a large overall asset size but lack sufficient cash flow for living expenses.
Therefore, it is crucial to examine how to connect different cash flows from deposits, bond interest, maturity funds, pensions, and dividends that occur at various times. From a private banker’s perspective, understanding the asset status held by clients at other financial institutions is also essential.
As clients accumulate a certain level of wealth, their focus naturally shifts to the next generation. Consequently, the questions during consultations change. They move beyond simply asking, "What will my inheritance tax be?" to inquiries about when and which assets to transfer to their children, and how much wealth should remain after gifting.
Inheritance and gifting are not solely tax issues. Transferring too many assets too early can jeopardize one’s retirement funds, while delaying preparations may not allow enough time to transfer assets as desired. Thus, managing assets above a certain threshold ultimately extends beyond individual investment issues to encompass the long-term financial planning of the entire family.
Today, we do not live in an era where a lack of financial information makes investing difficult. Anyone can check stock prices and exchange rates in real-time and easily compare the returns and features of financial products. Yet, why do high-net-worth individuals still seek private banking services?
Ultimately, what they need is not just information but sound judgment tailored to their circumstances. They require someone to help them navigate the vast array of information to determine what is essential for them, which risks to take, which to avoid, and which options align best with their goals.
Sometimes, the best advice may be to refrain from investing rather than recommending a new product. There are instances when it is more important to rebalance existing assets rather than adding new ones.
As a result, the role of private bankers is evolving. They must go beyond merely introducing good products quickly and become financial partners who consider clients' investments, retirement, taxes, and asset transfers over the long term. The investment targets that are currently in the spotlight may change over time. However, the essence of asset management remains largely unchanged: understanding the goals clients wish to achieve and aligning their assets accordingly. Perhaps this is why the role of private bankers is becoming increasingly important in an age overflowing with information.
* This article has been translated by AI.
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