Wealth Management in Hong Kong 2011

This publication has been discontinued on August 23, 2011.

Below is the updated product.

Wealth Management in Hong Kong 2011

Published: August, 2011

Product code: 209139

Introduction

Abstract

Introduction

The global economic crisis has had a major effect on Hong Kong' s onshore wealthy population, potentially causing them to lose faith in their wealth managers. To keep clients, wealth managers need to know what this lucrative customer wants from them, in terms of products, services and interaction.

Scope of this research

• 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

Research and analysis highlights

For the wealthy population living in Hong Kong, 2008 was a particularly tough year to bear. However, global economic conditions appear to be heading towards recovery in 2009 and stock markets have bounced back, helping investors to feel more confident about the future.

Datamonitor believes that Hong Kong HNWs will return to risky assets over the short-term as economic conditions improve and investment assets increase in value.

Datamonitor believes that significant potential exists within a wealth manager' s ability to identify successful investment opportunities in the recovery. Markets have picked up from their lows in March 2009 and clients will be looking to recover their losses.

Key reasons to purchase this research

• 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

Table of Contents

OVERVIEW

• Catalyst
• Summary
• Methodology

EXECUTIVE SUMMARY

• The wealth of Hong Kong investors suffered at the hands of the global financial crisis
• HNWs become more defensive at the start of 2009, however as economic conditions continue to improve the expectation is that they will return to real estate investments and equities
• The global economic recovery presents an opportunity for wealth managers to show their skill in identifying attractive investment opportunities

HONG KONG' S WEALTH

• Hong Kong produced strong growth in the lead up to the financial crisis, however 2008 was a difficult time for investors
  • Labor market conditions weakened for Hong Kong workers in 2008
  • Entrepreneurs struggled to grow their wealth as business conditions deteriorated in Hong Kong
  • Events in the global economy sparked selling pressure in the local stock market
  • Hong Kong house prices declined in 2008
  • The wealth data in 2009

THE HONG KONG HNW INVESTOR

• Hong Kong HNWs became more conservative in 2009, reducing their property fund exposure and investing heavily in cash
  • Cash and near cash represent an important asset class for Hong Kong HNWs
  • Hong Kong HNWs are expected to remain fairly conservative over the next two years

• Hong Kong HNWs lack financial knowledge and are considering managing their own money, making it important for providers to emphasize their expertise
  • HNWs are risk seeking individuals however they exhibit slightly less-than-average knowledge of financial products
  • Hong Kong HNWs place high importance on personal relationships when doing business, however they are less demanding for face to face relationship management than the regional average

• The global downturn has shifted the demands of Hong Kong investors
  • Clients are demanding more hand holding and a variety of asset management services

THE HONG KONG WEALTH MANAGER' S VIEW

• Over the next two years, wealth managers are likely to focus resources on deposits in response to the expectation that HNWs will be demanding these products
  • The majority of HNW clients will be demanding advisory asset management services and private equity funds over the next two years
  • Wealth managers expect to focus their resources on deposit and savings products over the next two years

• HNWs are strongly influenced by investment performance and the economic recovery presents an opportunity for providers to show their skill in identifying investment opportunities
  • A provider' s ability to identify investment opportunities is very important to Hong Kong HNWs
  • Hong Kong wealth managers view their personal relationships, brand and reputation, and their ability to identify investment opportunities in the downturn as their biggest strengths

• Providers that offer financial planning and focus on lending products are likely to increase their share of wallet and retain more clients
  • Providers need to ensure they are offering financial planning and focusing on the lending business in order to enhance their share of wallet
  • Hong Kong HNWs will stick with providers that offer lending products as well as asset management and those who resolve all problems quickly and completely

• Hong Kong wealth managers have more frequent contact with their clients compared to the Asia Pacific average
  • Hong Kong wealth managers contact their clients over the phone more frequently than their Asia Pacific counterparts
  • Hong Kong wealth managers see their clients in person more frequently than their Asia Pacific counterparts
  • When clients meet with their wealth manager they most want to discuss where the investment opportunities 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

• Bibliography
• Definitions
  • Asia Pacific

• Further reading
• Ask the analyst
• Datamonitor consulting
• Disclaimer

TABLES

• Table: What proportion of your HNWs' portfolios is allocated to the following five asset classes?
• Table: HNWs' portfolio allocation now versus in 2 years' time
• Table: HNW attributes on a scale of 1 to 4 (1 = very low, 2 = somewhat low, 3 = somewhat high, 4 = very high)
• Table: HNW attributes on a scale of 1 to 4 (1 = very low, 2 = somewhat low, 3 = somewhat high, 4 = very high)
• Table: What are HNWs demanding today?
• Table: Over the next two years, how much demand do you expect from HNWs for the following product areas?
• Table: What product areas will your wealth management service focus most resources on over the next 2 years?
• Table: What will determine HNWs' choice of wealth management service over the next two years?
• Table: What are your company' s biggest strengths and weaknesses today?
• Table: What is the most effective means of increasing share of wallet today?
• Table: What is the best way to retain clients today?
• Table: On average, how often do your relationship managers speak by phone to each HNW client?
• Table: On average, how often do your relationship managers speak in person to each HNW client?
• Table: When speaking with clients, what do they most want to talk about today?

FIGURES

• Figure: The global financial crisis negatively influenced the Hong Kong labor market
• Figure: Like most developed economies in the Asia Pacific region, Singapore' s stock market declined sharply in 2008
• Figure: Growth in the Hong Kong property market turned negative in 2008
• Figure: The majority of HNW wealth in Hong Kong is invested in the ' cash or near cash' asset category, with this accounting for 27% of all investments
• Figure: Over the next two years the majority of HNW wealth in Hong Kong will be invested in the ' cash or near cash' asset category with this accounting for 27% of all investments
• Figure: HNW investors in Hong Kong have a higher risk appetite than the average Asia Pacific HNW investor
• Figure: There is a greater risk of HNW clients in Hong Kong leaving to find another wealth manager than the average Asia Pacific HNW investor
• Figure: In Hong Kong, HNW investors' greatest demand is for execution-only asset management services
• Figure: Over the next two years, the greatest demand amongst HNW investors in Hong Kong will be for advisory asset management with 96% of HNW investors demanding this category of product
• Figure: Wealth managers in Hong Kong will be focusing most of their resources on deposits and savings products over the next two years
• Figure: HNW investors in Hong Kong are most influenced by ability to identify investment opportunities in the downturn when selecting a wealth manager
• Figure: Personal relationships were viewed as the greatest strength of Singaporean wealth managers
• Figure: The best way for wealth managers in Hong Kong to increase share of wallet is to target relationship managers on cross-selling products
• Figure: The best way for wealth mangers in Hong Kong to retain HNW investors is to provide lending products as well as asset management
• Figure: In Hong Kong the Wealth Management relationship managers speak to clients by phone approximately once a week
• Figure: In the Wealth Management relationship managers speak to in person to clients approximately once a month
• Figure: The majority of clients in Hong Kong want to speak to their wealth manager about where the investment opportunities are now

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