Income's financial advisory arm wants to capture demand for alternative investments
[SINGAPORE] Amid growing demand for private market and alternative investment products in Singapore, financial advisers are increasing efforts to offer products in addition to the traditional insurance and investment products. Income Insurance's independent financial advisory arm, Income Advisory Financial Advisers (Iafa), is one such example.
Studies show that the demand for alternative investments is projected to reach US$25.8 trillion by 2032, growing at a compound annual growth rate of 7.9 per cent from 2024 to 2032. This growth is expected to outpace the 7 per cent to 14 per cent increase seen in mainstream products, driven by global economic shifts and market disruptions.
With a network of 255 advisers, Iafa is transitioning to a partnership-based business model that expands the range of products available to clients. Beyond traditional insurance and investment options, advisers will be able to access private markets, alternative investments and structured products.
This strategic shift follows the appointment of Grace Yong as CEO in February. She told The Business Times that many products commonly available in the broader wealth space were not being made available to financial advisers or their clients.
'The shift in our business model stems from a need to better serve our customers with the increasing demand for value-driven advisory services, and differentiate ourselves in this competitive advisory landscape,' she added.
Yong assumed the role of chief executive in February, having previously held senior roles at Tiger Brokers Singapore and iFast Corporation overseeing growth, customer operations and strategic partnerships.
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Iafa CEO Grace Yong says: 'The shift in our business model stems from a need to better serve our customers with the increasing demand for value-driven advisory services, and differentiate ourselves in this competitive advisory landscape.' PHOTO: IAFA
As part of its new model, Iafa has started working with three key partners – digital wealth platform Arta Finance, brokerage firm Tiger Brokers, and ride-hailing company Ryde – in the past quarter.
These additions complement Iafa's existing network of more than 80 partners, spanning life and general insurance, investment, asset management, and non-traditional sectors including Singlife, Manulife, HSBC, and Etiqa.
Under the Financial Advisers Act introduced in 2002, financial advisers were only allowed to offer insurance products from providers with whom they had distribution agreements, as well as investment products available through a few servicing platforms.
Over the years, Yong noted that the product suite expanded to include equities, bonds, and unit trusts, with structured products introduced more recently.
But with demand growing for alternative investments, by partnering with like-minded firms, Iafa aims to help its advisers expand their range of product offerings.
Looking ahead, Iafa is targeting 12 per cent growth in its number of partners by 2025, with a particular focus on strengthening its collaborations with Arta, Tiger Brokers, and Ryde.
With these three new partners, Iafa has seen a 35 per cent increase in case count and a 75 per cent rise in total sales from February to March.
Yong noted that each partner brings unique strengths. For example, Arta Finance offers fractional access to private market investments, with Iafa being its first and anchor distribution partner.
She explained: 'We want to enable access to investment opportunities in both private and public markets, which is what Arta has because their platform is unique in providing private credit, private equities and venture capital.'
Growing appeal
Yong observed that private markets and alternative products are usually reserved for the ultra-wealthy, leaving most retail clients unaware of such opportunities.
The growing appeal of private markets, Yong noted, is driven by investors' increasing desire for returns that are not correlated with public markets – particularly in the current economic climate, which is marked by volatility and inflation.
Private markets, she added, provide unique long-term diversification opportunities. They offer access to growth sectors and assets that are not typically available through public exchanges, making them an attractive option for investors seeking to enhance their portfolios.
Yong also pointed to research showing that the traditional 60/40 portfolio, once designed to balance risk and return, is no longer optimal in today's market environment.
Instead, she believes a 40/30/30 allocation – comprising stocks, bonds, and alternatives – has outperformed traditional portfolios, especially during periods of high inflation, such as the current market conditions. With the 40/30/30 portfolio allocation approach, where up to 30 per cent of a client's portfolio can be dedicated to alternative and private market products, Iafa aims to balance clients' risk exposure.
Given the unique risks of private markets, the firm also uses a layered approach to align investments with each client's risk profile. 'We embed risk-profiling tools and conduct suitability checks within our advisory workflow, ensuring that clients are only introduced to products that align with their risk tolerance and investment horizon,' Yong said.
When asked if Iafa expects advisers to be well-versed in private markets, Yong acknowledged that the space is new for many of them. Since such products were traditionally unavailable to them, Iafa offers comprehensive training to those unfamiliar with private markets. This training is both in-house and developed in collaboration with Iafa's partners, leveraging their expertise.
For more experienced advisers, particularly those with backgrounds in private banking or high-net-worth clients, Yong said that Iafa focuses on advanced training in portfolio allocation, and market positioning.
She further clarified that Iafa's advisers are certified through the CMFAS Examinations, which are the licensing requirements for capital markets and financial advisory services in Singapore. 'We want to make sure that our advisers are always kept up to speed with what's happening in the market, and we also try to provide ongoing updates through webinars and market outlooks.'
For instance, clients engaged in alternative investments are expected to be accredited investors, which exempts their advisers from certain examinations. Nevertheless, Iafa ensures that all advisers are fully certified before they can provide alternative investment advisory services.
Yong said that Iafa conducts product-specific training, with a particular focus on positioning alternative products within client portfolios. This training helps advisers guide clients on how to integrate alternative allocations.
'We want to arm our advisers with the knowledge, and support them with structured training and content, especially in such times of uncertainty where clients need confidence and clarity,' she added.
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