60 connected strategy for asian wealth management ^Top negotiating power63. In China, the Securities Regulatory Commission launched a pilot scheme to test the investment advisory business in public mutual funds, in a move to shift from a transaction-based model to a fee-based model of selling funds. Financial regulators in Taiwan, India and Korea are also pursuing regulatory measures to address the incidence of high fees. A Connected Strategy enables new data and value driven revenue models to be deployed. In wealth management in Asia, such pricing models are not currently used. We expect newer revenue models from other geographies to make their way to Asia over time. New, potential revenue models include: • Subscription-based models: Subscription pricing models are increasingly a part of the advisory landscape in North America but are not prevalent in Asia yet. This allows wealth managers to offer “digital first” services with select access to human advisors. This accelerates the connected relationship a firm can build with clients, while recognizing that in key journey steps an advisor’s role and human connection is valued by clients. In 2019, pricing for Schwab Intelligent Portfolios Premium was changed from a traditional AuM-based advisory fee to a one-time $300 fee for planning and a $30 monthly subscription (advisory) fee. In addition, clients pay the operating expenses on the ETFs in the portfolios. • Usage-based models: One could envision a new model where firms will charge investors for on-demand consultation based on the timing, length and complexity of the advice desired and the degree of digital versus human connectivity a client prefers. As such, simple, hourly fixed fee-models have been introduced and continue to gain in popularity in North America64 but are less prevalent in Asia. • Longevity-based models: Firms could reward investors over time for their loyalty. • Individualized performance-based models: Firms could explore performance fee- based not on the financial return of a particular product but on the success of the client in achieving their goals. • Advertisement-based models: Like firms in other industries, the portion of the revenue stream could be based on advertising linked to the user’s engagement with the platform. 63 Morningstar 64 “State of Financial Planning and Fees: The Bigger Picture”, Envestnet, 2020