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B. EMPOWERING THE MASS AFFLUENT SEGMENT
The mass affluent investor segment is set to grow, yet it remains largely untapped by wealth managers19. Across Southeast Asia, the mass affluent segment is expected to account for 21% of the population by 203020. They consist primarily of younger working professionals in the middle class segment and are typically more digitally savvy. While most have sizeable assets stored in cash or savings account, they remain generally hindered from accessing customised wealth services and products. Similarly, majority of the Malaysian mass affluent segment would also have sufficient capacity to invest. As they grow in sophistication and income, these investors are looking to be empowered with more investment options outside the scope of traditional products.
Within the current framework of investor classification, the mass affluent segment is categorised as retail investors. As retail investors, they may not be able to access investments with greater exposure to non-traditional asset classes and products with riskier profiles, despite having the means and risk appetite to do so. Moving forward, to further empower the mass affluent segment, more effort is needed to improve their access to products that are aligned to their risk appetite but are only available to high-net- worth individuals21 (HNWIs) today.
Given the different levels of investor sophistication, there is a need to evaluate the current classification of accredited investors, taking into consideration the knowledge and experience of investing as well as their appreciation of associated risk that enables informed decision-making. Aside from assessing net worth, the level of investor knowledge and sophistication are also important considerations to enable greater investor participation. This can also cater to investors who are professionals in relevant industries within the financial services sector.
C. EMPOWERING WITH MORE OPTIONS ON INVESTMENT FUNDS ONSHORE
Within the current unit trust industry in Malaysia, investors can access foreign funds that are recognised under the SC’s Guidelines for the Offering, Marketing and Distribution of Foreign Funds (OMD Guidelines). This includes funds recognised through the ASEAN collective investment scheme regime and MRAs. In addition, foreign funds such as Undertakings for Collective Investment in Transferable Securities (UCITS), which are available through feeder structures, allow onshore access to foreign funds for Malaysian investors, but are often limited in product range. In this regard, efforts will be undertaken to increase the offering of investment funds to enable greater access to foreign funds and strategies, while ensuring a level playing field for domestic and foreign fund managers. This calls for an approach to enable the phased liberalisation of the unit trust industry, starting with a framework to allow the offering of foreign funds that are from within the group of companies of domestically licensed fund management entities to high-net- worth entities (HNWEs), such as institutional investors and listed companies. Over the medium to long term, this offering may be extended to HNWIs, and potentially, retail investors. Such liberalisation efforts may allow for more types of alternative assets and strategies to grow domestically through wholesale funds and other types of potential regimes. This will also enable new domestic asset classes, such as private credit, digital assets and renewable energy infrastructure investments.
Global Digital Wealth Management Report 2019-2020, Boston Consulting Group (BCG) in collaboration with Lufax, March 2020.
Beyond the “Crazy Rich”: The Mass Affluent in Southeast Asia, BCG, 2018.
HNWIs are investors with annual income of at least RM300,000 or a joint annual income with spouse of at least RM400,000.
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