Wealth Management in China 2009

Published by: Datamonitor

Published: Sep. 18, 2009

Table of Contents

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

Abstract

• 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

• 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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