Wealth Management in China 2009

Content

• 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
• List 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