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Right now, there is a huge opportunity for Financial Advisors and wealth management companies to capture a large market share of the up and coming high net worth clients in China.

Background:

According to a survey ⁽¹⁾ by HSBC Holdings released on Tuesday, July 13, 2010, they found that the wealthiest 10% of investors in China had an average age of 36. These young, up-and-coming high net worth clients from Mainland China lead Asia’s wealth surge with 69 per cent increasing their total net worth in the last six months.

Opportunity:

Besides the fact that mainland’s China economy is growing at a 9%+ rate, well outpacing the growth of the United States economy, as the generation of up-and-coming high net worth clients, they will cause the demand to increase for advisory services the likes of which have been typically provided by FAs and wealth management firms. Offering the right sort of services, products and value-add service offerings will un-tap this huge opportunity:

• Deliver Asset Allocation and Volatility Management Services:

The HSBC survey found that China investors had a strong current preference for local securities to capitalize on any equity bull runs. The Taiwanese have been the biggest equity traders recently, spending US$547,739 on stocks in the last 12 months, followed by the mainland China with US$371,885 and Hong Kong in fourth place with US$220,795. As high net worth clients become overallocated to equities, this will make them particularly vulnerable to market volatility.

• Deliver Capital Protection Products:

FAs and wealth management firms that focus on product offerings for capital protection are likely to find a receptive target audience. Helping the high net worth clients achieve stable wealth growth built around a core suite of investment holdings will be important.

• Deliver Value-Add Service Offerings:

Taking what has been learned from years of experience in developed markets like the United States and United Kingdom, specific “value add” services tend to resonate well with the high net worth population.

For example, networking and financial education for dependents are desirable services. Establishing exclusive social networks/events in addition to providing educational opportunities such as workshops and online events where clients can be exposed to investment themes and skills can also be utilized when marketing to this up-and-coming generation in China.

Check out my related article on China: “Building a China mutual fund company – next great frontier?“

Do you think any Financial Advisors from developed economies will relocate to China?

Any major wealth management firms who have staked a large portion of future growth on China?

⁽¹⁾ “HSBC Affluent Asian Tracker survey” – The study was conducted by Nielsen and surveyed 2,072 affluent individuals aged 18–65 from February to April. The survey covers seven markets, Hong Kong, India, Indonesia, mainland China, Malaysia, Singapore and Taiwan, and gauges the views of people in the top 10% of the population by liquid assets or mortgage value.