Wealth Management in China 2009
Datamonitor
September 18, 2009 SKU: DFMN2445067
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Countries covered: China
Introduction
The global economic crisis has had a major effect on Australia's onshore wealthy population, potentially causing them to lose faith in their wealth managers. To keep clients, wealth managers need to know what this lucrative customer wants from them, in terms of products, services and interaction.
Scope
- HNW demographic and attitudinal attributes based on our Wealth Management Market Leaders Survey 2009
- Extensive primary research from 17 wealth management companies highlights their strategies for revenue growth, acquiring and keeping clients
Highlights
Chinese HNWs are displaying defensive behavior in the face of the economic instability, and have lifted their proportion of assets held in cash and near cash from 13% in 2008 to 25% in 2009. Despite this, HNW individuals are expected to increase their exposure to stocks over the next two years.
Clients in China have less financial product knowledge compared to their Asia Pacific counterparts, which presents an opportunity for wealth managers to add some real value to their offering by providing educational services for clients.
Clients in China have less financial product knowledge compared to their Asia Pacific counterparts, which presents an opportunity for wealth managers to add some real value to their offering by providing educational services for clients.
Reasons to Purchase
- Understand the HNW population's investments by sector and geography, appetite for risk, and reasons for choosing/leaving their wealth service
- Assess the threats and opportunities for wealth managers by understanding how peers are planning to grow revenues, acquire and keep clients
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- Overview
- Catalyst
- Summary
- Methodology
- Executive Summary
- The wealth of Chinese investors suffered at the hands of the economic slowdown
- HNWs have become more defensive, however equities still represent an important asset for the future
- Wealth managers that can identify investment opportunities and produce returns will attract the business of HNW individuals
- Table of Contents
- Table of figures
- Table of tables
- China's wealth
- After years of impressive growth, the wealth of Chinese investors was impacted by the global financial crisis
- The economic slowdown undermined the Chinese labor market in 2008
- Business conditions deteriorated in 2008, making it harder for entrepreneurs to build wealth
- Chinese stock values crashed in 2008 as economic growth cooled off
- In 2008, the growth in property prices cooled off after the recent boom
- The Wealth Data in 2009
- The Chinese HNW investor
- Chinese HNWs have become much more defensive in 2009, however equities are expected to grow in importance in the near future
- Cash and fixed income have become important asset classes for Chinese HNWs
- Wealth management service implication: Proactively advise HNW clients where to invest as the markets change
- Innovative example from the US: Pyxis mobile is providing a complete mobile communications interface to allow wealth managers to contact their clients while on the move
- Over the next two years, equities are expected to become an increasingly important asset class for HNWs
- Wealth management service implication: help investors position for the equities recovery while limiting risk
- Innovative example from Australia: Macquarie has a capital protected Geared Equity Investment product
- Chinese HNWs have less knowledge of products and are more demanding towards their wealth managers
- HNWs have less knowledge of products and market conditions compared to other Asia Pacific clients
- Wealth management service implication: Providers should focus on improving the education levels of their clients
- Innovative example from China: Standard Chartered aims to educate second generation wealth holders
- Chinese HNWs are more demanding when it comes to their wealth management service
- Wealth management service implication: Wealth managers need to increase contact with their clients in their time of need
- Innovative global example: Standard Chartered Private Bank plans to hire 100 new relationship managers
- Despite the global downturn Chinese investors are looking for opportunities to make money in the current environment
- Tax advice has emerged as a strong demand for HNWs in 2009
- Wealth management service implication: each client is unique therefore wealth managers need to fully understand the client's needs
- Innovative example from the US: ClientFirst Wealth Management is for the client
- The Chinese wealth manager's view
- Over the next 2 years, most wealth managers are planning to focus resources on property, deposits and equities
- As the economy recovers, wealth managers will focus on developing their property funds, deposit products and direct equity investments
- Informing clients of investment opportunities and the actual performance of investments are important qualities that HNW clients look for in a wealth manager
- Chinese wealth managers need to ensure they are informing clients of investment opportunities
- Chinese wealth managers see brand reputation, personal relationships and investment performance as their biggest strengths
- Increasing face to face contact and focusing on the lending business are viewed as positive steps to increasing share of wallet
- Incentivizing relationship managers to sell more products has emerged as an important provider attribute this year
- Chinese wealth managers are contacting their clients at around the same frequency as their Asia Pacific counterparts
- Chinese wealth managers contact their clients at around the same frequency as the Asia Pacific average
- Chinese wealth managers are on par with their Asia Pacific counterparts at getting in front of their clients
- Chinese HNW investors want to speak with their provider, they most want to know where the opportunities to invest are now
- Appendix
- The drivers of growth in the wealthy population
- Income growth (combined with inflation, changes in GDP by sector, household savings rates and debt levels)
- Investment returns (market capitalization, interest rates and bond yields)
- The following measures are not, in themselves, drivers of wealthy population growth
- Market capitalization
- GDP
- The following measures are not drivers of wealthy population growth except under very restricted circumstances
- Primary residence value growth
- Inheritance
- Methodology
- Wealth Management Market Leaders Survey 2009
- Global Wealth Model
- The UK sub-model
- Global sub model (for all other countries)
- Forecasting methodology
- Continuous refinement to the understanding of liquid wealth distribution
- Datamonitor's wealth numbers compared with other wealth numbers
- Bibliography
- Definitions
- Asia Pacific
- Onshore
- Liquid Assets
- Further reading
- Ask the analyst
- Datamonitor consulting
- Disclaimer
- List of Tables
- Table 1: What proportion of your HNWs' portfolios is allocated to the following five asset classes?
- Table 2: HNWs' portfolio allocation now versus in 2 years' time
- Table 3: HNW attributes on a scale of 1 to 4 (1 = very low, 2 = somewhat low, 3 = somewhat high, 4 = very high)
- Table 4: HNW attributes on a scale of 1 to 4 (1 = very low, 2 = somewhat low, 3 = somewhat high, 4 = very high)
- Table 5: What are HNWs demanding today?
- Table 6: What product areas will your wealth management service focus most resources on over the next 2 years?
- Table 7: What will determine HNWs' choice of wealth management service over the next two years?
- Table 8: What are your company's biggest strengths and weaknesses today?
- Table 9: What is the most effective means of increasing share of wallet today?
- Table 10: On average, how often do your relationship managers speak by phone to each HNW client?
- Table 11: On average, how often do your relationship managers speak in person to each HNW client?
- Table 12: When speaking with clients, what do they most want to talk about today?
- List of Figures
- Figure 1: Conditions in the Chinese labor market showed first signs of weakness in 2008
- Figure 2: The global financial crisis had a negative effect on business conditions and confidence in 2008
- Figure 3: Chinese stocks tumbled in 2008, underperforming most other Asia Pacific markets
- Figure 4: After a strong year in 2007 the Shanghai property market cooled off in 2008
- Figure 5: The largest share of Chinese HNW wealth is invested in cash with this accounting for 25% of all investments
- Figure 6: Over the next two years, Chinese HNW investors are expected to hold a higher share of the portfolio in equities
- Figure 7: HNW investors in China have less knowledge of financial products compared to the average Asia Pacific HNW investor
- Figure 8: Chinese HNWs want to develop personal relationships and have face to face contact with their wealth manager
- Figure 9: In China, HNW investors' greatest demand is for tax advice
- Figure 10: Wealth managers in China will be focusing most of their resources on property and deposit products over the next two years
- Figure 11: HNW investors in China are most influenced by ability to identify investment opportunities in the downturn in their choice of wealth manager
- Figure 12: The strongest performing wealth managers have a real advantage over the competition as the global financial crisis made investment returns harder to achieve
- Figure 13: The best way for wealth managers in China to increase share of wallet is to increase face to face contact with clients
- Figure 14: In China most wealth management relationship managers speak to clients by phone approximately once a week
- Figure 15: Typically, wealth management relationship managers see most of their clients either once a month or once a quarter
- Figure 16: The majority of clients in China want to speak to their wealth manager about where the investment opportunities are now
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