Wealth management emerges as new battleground for securities firms

Wealth management emerges as new battleground for securities firms

For years, retail businesses at securities firms have largely revolved around brokerage, margin lending and trading-related services.

A trader talks to a customer in a trading room. — VNA/VNS Photo

Wealth management is becoming a new area of competition among securities companies as investors increasingly shift from short-term stock trading towards asset accumulation, preservation and long-term wealth growth.

For many years, retail businesses at securities firms have largely revolved around brokerage, margin lending and trading-related services. These activities can generate substantial revenue when market liquidity and new account openings are high but are also sensitive to downturns in trading activity.

The need to diversify revenue streams has therefore increased interest in wealth management, while rising personal wealth is also making investors' financial needs more complex.

The transition from short-term self-directed trading towards professional asset management as a natural development as wealth accumulation among Vietnamese people increases, Ngô Thùy Linh, chairwoman of SmartInvest Securities (AAS), told tinnhanhchungkhoan.vn.

Citing industry estimates, Linh said Việt Nam's economy is worth around US$514 billion, with gross national income per capita at $4,970 and GDP per capita exceeding $5,000.

Knight Frank expects the number of US dollar millionaires in Việt Nam to rise by nearly 60 per cent by 2031, while BCG classifies the country as a high-growth, low-maturity wealth management market.

McKinsey estimates personal financial assets in Việt Nam are expanding at a compound annual rate of around 11 per cent and could reach $600 billion by 2027, with approximately $65–75 billion in personal wealth considered insufficiently managed.

As their assets grow, investors are increasingly considering asset allocation, risk management and longer-term objectives such as housing, children's education and retirement rather than focusing solely on short-term stock returns.

For securities firms, this shift could also change the nature of their relationships with clients. Traditional brokerage focuses heavily on transaction frequency and value, alongside revenue from margin loans.

Wealth management instead seeks to manage a larger proportion of clients' financial assets over longer periods, allowing firms to develop revenue from advisory services, asset allocation, investment products and portfolio management.

At Kafi Securities, retail activities remain an important growth driver. The company targets profit before tax of VNĐ1.05 trillion in 2026 and plans to expand brokerage and margin lending alongside derivatives, covered warrants and other financial products.

Over the longer term, however, Kafi CEO Trịnh Thanh Cần said the company is working towards a technology-driven investment and wealth management platform. Wealth management and savings solutions are expected to become one of its growth drivers over the next three to five years.

AAS is also expanding beyond traditional securities services into wealth management, combining digital platforms with advisers and adopting a multi-asset allocation approach rather than concentrating solely on equities.

Technology could accelerate that transition. Artificial intelligence, Big Data and digital platforms can reduce service costs and extend asset allocation, regular investment and portfolio advisory services beyond wealthy clients to a broader middle-income customer base.

Trần Việt Hưng, deputy CEO of Vietcombank Securities (VCBS), said one challenge is the shortage of high-quality financial products suited to Vietnamese investors.

He said the market needs more long-term savings products, such as voluntary pension funds and regular investment products, that provide clear benefits and are easy to understand and access.

The transition also requires different professional capabilities.

Wealth advisers need to understand clients' financial circumstances, risk appetite, investment horizons and objectives rather than simply recommending individual stocks or entry and exit points.

Trust remains another challenge. Investors may open trading accounts at several securities companies, but entrusting a substantial portion of their assets to one institution for years requires different considerations.

Investment performance, risk management, fee transparency and protection of client interests therefore become important factors.

Hưng said applications of AI, blockchain and big data could facilitate new products and service models, including robo-advisers and asset tokenisation. More diversified investment instruments and mechanisms encouraging long-term capital are also needed.

Tax incentives for long-term investment products, if introduced, could provide additional motivation for household savings to move towards professionally managed investment channels.

The shift towards wealth management is broadening competition among securities companies beyond brokerage market share and technology towards their ability to serve investors throughout the process of accumulating and managing wealth. 

Bizhub