Plan for the next five years, not the next five headlines: HSBC’s Tommy Leung

[SINGAPORE] Investors and business owners should adopt a long-term mindset, especially in the face of ongoing geopolitical volatility and uncertainty, said Tommy Leung, head of global private banking, South Asia at HSBC.

“You cannot pre-empt some of these headlines that happen overnight,” said Leung.

Relying on day-to-day headlines to shape business operations or financial portfolios is a flawed approach, he stressed. “It’s difficult to stay ahead when you’re reacting to daily developments.”

Instead, planning with a longer-term perspective – such as where a business should be in five years – makes it easier to calculate targets and work backwards.

The same approach applies to financial portfolios, Leung said. If a client sets a goal of achieving annual returns of between 6 and 8 per cent, they can plan for a mix of high-quality fixed income instruments to meet those targets without taking “tremendous” risk.

“You can plan these things and build a portfolio accordingly, as opposed to trying to catch the bottom of every day’s daily movements,” he added.

Here are some excerpts from his conversation with The Business Times:

How did you end up in your role?

I didn’t plan out to be a banker – I took a very unusual path. I grew up in Hong Kong. I went to high school in Norway. I went to the US for university. I took a gap year to be a teacher in China.

I have been in the workforce for about 24 years now – half of that in Singapore, half of that in the US and the UK. The bulk of it was in investment banking, doing sales, trading and research; in the last few years, I was in private banking.

After university in the US, I started on the trading floor for my previous employer. My first week of work was Sep 11, 2001 – so I watched the collapse of the financial market up-close.

I spent a good nine years there on the trading floor as a research analyst – eventually as a trader – and then I moved to London as a research analyst, where I led the research team.

Eventually, we moved to Singapore because of family reasons.

What is a key trend that you see in your area?

Clients have become a lot more globally oriented.

If you look at the past, investors almost always have had a certain home bias – if they were based in Singapore, they tended to invest in Singapore; if they were based in China, they tended to invest locally in China.

But the lesson over the last decade is: over time, you really have to diversify your financial portfolio geographically, and also across different asset classes – equities, bonds, alternatives, and so on.

The second thing we’ve noticed is that clients have become a lot more savvy, sophisticated, and knowledgeable.

As bankers, we also have to evolve. That is why you probably have seen a trend where a lot of institutional financial professionals have moved to private wealth as well. These could be former investment bankers, salespeople, traders, and portfolio managers.

Our clients’ needs have also gone far beyond just wealth management.

For the entrepreneurs, they want to work with a bank that doesn’t just cover their personal and familial financial needs, but also work with their company, and – equally important – support them in their wealth transitions and family successions.

A lot of these topics are well beyond what a traditional private banker would do.

How do these affect your role?

We all have to learn new things and new skills. The analogy I always like to use: at HSBC, we are like a grand piano.

We have everything the client wants, and we have many things to offer them – from retail banking (credit cards, mortgages, and day-to-day banking) to private wealth (equities, bonds, alternative hedge funds, private equity, and insurance).

Traditionally, if you’re a private banker, you look at your whole platform – the grand piano – and you’d play the same two octaves in the middle.

But over time, we have to upskill ourselves. This means: learning how to play the entire piano; really understanding what insurance is about; really understanding what wealth planning is about, and so on.

Equally important is that we have to upskill ourselves to really understand our clients’ operating business. For example, if they’re in the real estate business, we need to understand the latest trend.

If I were to boil down to one word: upskilling. That constant learning and being able to play the full piano is absolutely critical.

Otherwise, aspects of our role risk being replaced by artificial intelligence, by robots and by automation, so we have to upskill accordingly.