Wealth in China: HNW Investors 2017
"Wealth in China: HNW Investors 2017", analyzes the investing preferences and portfolio allocation of Chinese HNW investors. The report is based on our proprietary Global Wealth Managers Survey.
The Chinese private banking industry is difficult to penetrate, but wealth managers that are aware of the local makeup of the HNW market will find it to be highly profitable. Chinese HNW investors have mainly sourced their wealth through a mixture of first-generation entrepreneurship and business ownership. While the largest chunk of HNW wealth is held via discretionary mandates, a noteworthy proportion remains up for grabs. The average portfolio is heavily invested into cash and near-cash products and property, and this is not expected to change in the near future. Chinese HNW clients also show moderate to strong demand for auxiliary services; in particular, financial and pension planning are popular, and demand for all planning services is forecast to rise. As a result, a multi-service proposition is critical in China.
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 looking forward.
- Examines the allocation of Chinese HNW investors portfolios into different asset classes and how this will change in the future.
- Analyzes product and service demand among Chinese HNW investors.
- Business owners are a lucrative segment, accounting for over 61% of the local HNW population.
- Expats also represent a noteworthy proportion of the Chinese resident HNW population, with the largest number stemming from the US.
- HNW investors allocate an above-average and growing proportion of their wealth into cash and near-cash products and real estate.
- 41% of HNW wealth is kept in discretionary mandates, but demand for automated investment services is on the rise.
- Financial and pension planning are particularly sought after, and should be part of every wealth managers offering.
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 forecasted changes in demand.
1. EXECUTIVE SUMMARY 3
1.1. A comprehensive service proposition is critical to success in China 3
1.2. Key findings 3
1.3. Critical success factors 3
2. PROFILING CHINESE HNW INVESTORS 7
2.1. A significant proportion of HNW investors have sourced their wealth through financial services and real estate 7
2.1.1. Female business owners represent a growing target market 7
2.1.2. Wealth managers in China must understand the specific needs of HNW business owners 8
2.1.3. A significant proportion of HNW individuals have built their fortunes through real estate and manufacturing 10
2.1.4. Chinese HNW investors are less likely to hold director roles than their peers in the wider region 12
2.2. Expats are an attractive segment in China 12
2.2.1. Expats account for over 25% of the Chinese HNW population 12
2.2.2. The majority of HNW expats in China come from the US, Australia, and Hong Kong 13
3. CHINESE HNW INVESTMENT STYLE PREFERENCES 16
3.1. Wealth managers will have to up their game to capture the large pot of Chinese HNW wealth that remains unmanaged 16
3.1.1. Chinese HNW clients place a below-average proportion of their wealth with their main wealth manager 16
3.1.2. Fostering loyalty is critical to minimize the risk of increased churn 17
3.1.3. The largest share of HNW wealth is kept in discretionary mandates, but a significant proportion remains up for grabs 18
3.2. Wealth managers cannot afford to ignore the opportunity automated investment services provide 20
3.2.1. Demand for advisory mandates will experience the strongest increase in demand 20
3.2.2. Demand for automated investment management will increase significantly 21
3.2.3. Wealth managers looking to push discretionary mandates should focus on the convenience factor 22
3.2.4. Self-directed services pose a real threat to traditional wealth managers 23
4. UNDERSTANDING ASSET ALLOCATION TRENDS AMONG HNW INDIVIDUALS IN CHINA 24
4.1. Chinese HNW investors allocate almost a third of their assets into cash or near-cash products 24
4.1.1. Equities constitute a below-average proportion of HNW investors managed wealth 25
4.1.2. Bond investments have decreased in popularity over the past year 27
4.1.3. Cash and near-cash investments constitute an above-average proportion of the typical HNW portfolio 29
4.1.4. Offering a wide range of REITs is a must to lure investors away from direct property holdings 31
4.1.5. Offering a wide range of alternatives is a must in China 33
4.1.6. Chinese HNW investors have strong exposure to commodities 35
5. HNW PRODUCT AND SERVICE DEMAND 38
5.1. Demand for planning services is forecast to rise rapidly 38
5.1.1. Financial planning needs to be a core element of Chinese wealth managers propositions 38
5.1.2. Demand for all auxiliary services is forecast to increase 39
6. APPENDIX 41
6.1. Abbreviations and acronyms 41
6.2. Definitions 41
6.2.1. Affluent 41
6.2.2. HNW 41
6.2.3. Liquid assets 41
6.2.4. Mass affluent 41
6.3. Methodology 42
6.3.1. GlobalDatas 2016 Global Wealth Managers Survey 42
6.3.2. GlobalDatas 2015 Global Wealth Managers Survey 42
6.3.3. GlobalDatas WealthInsight 42
6.4. Bibliography 42
6.5. Further reading 43
List of Figures
Figure 1: The average Chinese HNW investor is younger than in the wider region 8
Figure 2: Business owners dominate Chinas wealth market 9
Figure 3: Entrepreneurs are a priority for Credit Suisse 10
Figure 4: Over a quarter of HNW investors have sourced their wealth from the financial services sector 11
Figure 5: Chairman is the most common title held by Chinese HNW individuals 12
Figure 6: Expats represent an above-average proportion of the Chinese HNW population 13
Figure 7: Almost half of HNW expats in China are from the US and Australia 14
Figure 8: Almost a third of Chinese HNW investors work with four or more wealth management firms 17
Figure 9: The expectation of better returns is driving uptake of financial advice 18
Figure 10: Discretionary mandates account for the largest proportion of Chinese HNW wealth 19
Figure 11: HNW demand is strongest for advisory and discretionary mandates 20
Figure 12: Demand for automated investment services is set to significantly increase 21
Figure 13: Many HNW investors are reluctant to relinquish control over their investments 22
Figure 14: Non-financial investment represent a key constraint on wealth manager growth 23
Figure 15: Cash and near-cash products dominate the typical Chinese HNW portfolio 25
Figure 16: Chinas HNW equity investments are well below the regional average 26
Figure 17: Equity investments are driven by a varied range of factors 27
Figure 18: Chinas HNW investors allocate just 10.4% of managed wealth to fixed-income products 28
Figure 19: Demand for fixed-income products is set to decrease 29
Figure 20: Almost a third of managed HNW wealth is held in cash products 30
Figure 21: Demand for cash and near-cash products is expected to increase further 31
Figure 22: Offering quasi-REITS is a must in China 32
Figure 23: Demand for real estate is forecast to rise 33
Figure 24: Alternatives currently constitute a minor proportion of the typical HNW portfolio 34
Figure 25: The expectation of future capital appreciation is driving demand for alternatives 35
Figure 26: Commodity funds and physical gold are particularly popular among Chinas HNW individuals 36
Figure 27: Demand for commodity holdings will continue to grow 37
Figure 28: Demand is most pronounced for financial and pension planning 39
Figure 29: Already strong HNW demand for financial and pension planning services is forecast to increase even further 40
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