While investors value professional advice, they are reluctant to relinquish control and tend to prefer advisory mandates. The average portfolio is heavily invested into cash and near cash-products and property, and this is not expected to change. Chinese HNW clients also show moderate to strong demand for auxiliary services, suggesting that a multi-service proposition is critical in China.
- HNW entrepreneurs will prove to be lucrative, accounting for 33.6% of the local HNW population.
- Expats also represent a noteworthy proportion of the Chinese resident HNW population, accounting for 14.1%.
- HNW investors allocate an above average and growing proportion of their wealth into cash and near-cash products.
- HNW demand is particularly pronounced for advisory asset management, but technological advancements and investors’ desire to manage simple investments themselves is driving demand for execution-only asset management.
- Already high demand for margin lending is forecast to increase even further, and wealth managers should ensure clients understand the risks associated with a leveraged investment strategy.
“Wealth in China: HNW Investors” analyzes the investing preferences and portfolio allocation of Chinese HNW investors. The report is based on our proprietary Global Wealth Managers Survey.
Specifically the report:
- Profiles the average Chinese HNW investor in terms of their demographics and analyzes the expat opportunity in China.
- Analyzes which wealth management mandates are preferred among Chinese HNW investors and how demand will develop going forward.
- Examines the allocation of Chinese HNW investors’ portfolios into different asset classes and how the allocation is expected to develop in the future.
- Analyzes product and service demand among Chinese HNW investors.
Reasons To Buy
- Develop and enhance your client targeting strategies using our data on HNW profiles and sources of wealth.
- Give your marketing strategies the edge required and capture new clients using insights from our data on HNW investors’ drivers for seeking investment advice vs. self-directing.
- Tailor your investment product portfolio to match current and future demand for different asset classes among HNW individuals.
- Develop your service proposition to match the product and service demand expressed by Chinese HNW investors and react proactively to the forecasted change in demand.
- Understanding the servicing needs of local HNW clients is critical to success in China
- Key findings
- Critical success factors
2. Profiling Chinese HNW Investors
- A significant proportion of Chinese HNW investors have sourced their wealth from real estate and manufacturing
- Wealth managers in China have to understand the specific needs of HNW entrepreneurs
- A significant proportion of HNW individuals have built their fortunes through real estate and manufacturing
- Expats are an attractive segment in China
- Expats account for 14.1% of the Chinese HNW population
- A significant proportion of HNW expats in China come from the US, Australia, and Hong Kong
- Uncertainty if they will return and fear of having insufficient control motivate HNW expats to invest in China
3. Chinese HNW Investment Style Preferences
- Chinese HNW investors value professional advice, but are reluctant to relinquish control
- The largest proportion of HNW wealth is kept in advisory mandates
- Building up trust is critical to increase the share of HNW wealth kept in discretionary mandates
- Chinese HNW individuals prefer to manage simple investments themselves
- Looking forward, demand for investment management will increase
- Execution-only mandates pose a real threat to traditional wealth managers
4. Understanding Asset Allocation Trends Among HNW Individuals In China
- Chinese HNW investors allocate a quarter of their assets into cash or near-cash products
- Equities constitute a below average proportion of HNW investors' managed wealth
- Bond investments have decreased in popularity over the past year
- Cash and near-cash investments constitute an above average proportion
- Property constitutes less than 18% of the typical HNW portfolio
- Chinese HNW investors have strong exposure to commodities
- Alternatives constitute 7% of the typical HNW portfolio
5. Product and Service Demand Among HNW Individuals in China
- Planning services are in high demand in Australia
- Financial planning needs to be a core element of a Chinese wealth manager's proposition
- Demand for all auxiliary services is forecast to increase as Chinese HNW individuals are becoming more demanding
- Property advice is in high demand in China
- Positive lending conditions are driving demand for credit in China
- HNW demand for margin lending will continue to rise
- Abbreviations and acronyms
- Liquid assets
- Mass affluent
- 2015 Global Wealth Managers Survey
- 2014 Global Wealth Managers Survey
List of Figures
Figure 1: Wealth managers should be prepared to cater to a broad range of demographics
Figure 2: Manufacturing and property are important drivers of wealth in China
Figure 3: Expats represent an attractive target market in China
Figure 4: A significant proportion of HNW expats in China come from the US and Australia
Figure 5: HNW expats invest locally as they are unsure if they will return to their country of origin
Figure 6: Access to more sophisticated investments through advisors is driving uptake of financial advice
Figure 7: Almost 50% of HNW wealth is kept in advisory mandates
Figure 8: Chinese HNW individuals show strong demand for advisory mandates
Figure 9: Demand for all asset management types is forecast to increase significantly
Figure 10: Chinese HNW investors prefer to manage simple investments themselves
Figure 11: HNW investors are heavily exposed to cash products
Figure 12: HNW investors prefer fund holdings as opposed to direct equity investments
Figure 13: Diversification benefits are the number one driver of equity investments
Figure 14: HNW investors allocate 16% of managed wealth to fixed income products
Figure 15: The current returns available are driving demand for fixed income products
Figure 16: A noteworthy 36% of managed HNW wealth is held in cash products
Figure 17: HNW demand for cash products will continue to rise
Figure 18: 18% of HNW wealth is allocated to property
Figure 19: Demand for real estate is set to stagnate
Figure 20: Commodities are in higher demand among China's rich than the wider region
Figure 21: Already strong demand for commodities is set to rise
Figure 22: 7% of managed wealth is kept in alternatives
Figure 23: Expected returns are driving HNW demand for alternatives
Figure 24: Chinese HNW individuals show strong demand for financial planning
Figure 25: Already strong HNW demand for planning services is forecast to increase
Figure 26: Chinese HNW investors show strong demand for margin lending
Figure 27: Already high demand for margin loans is forecast to increase