Wealth Management in China 2009

Table of Contents

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

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
  • Over the next two years, equities are expected to become an increasingly important asset class for HNWs
• 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
  • Chinese HNWs are more demanding when it comes to their wealth management service
• 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

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
• Bibliography
• Definitions
  • Asia Pacific
  • Onshore
  • Liquid Assets
• 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: 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: 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: Conditions in the Chinese labor market showed first signs of weakness in 2008
• Figure: The global financial crisis had a negative effect on business conditions and confidence in 2008
• Figure: Chinese stocks tumbled in 2008, underperforming most other Asia Pacific markets
• Figure: After a strong year in 2007 the Shanghai property market cooled off in 2008
• Figure: The largest share of Chinese HNW wealth is invested in cash with this accounting for 25% of all investments
• Figure: Over the next two years, Chinese HNW investors are expected to hold a higher share of the portfolio in equities
• Figure: HNW investors in China have less knowledge of financial products compared to the average Asia Pacific HNW investor
• Figure: Chinese HNWs want to develop personal relationships and have face to face contact with their wealth manager
• Figure: In China, HNW investors' greatest demand is for tax advice
• Figure: Wealth managers in China will be focusing most of their resources on property and deposit products over the next two years
• Figure: HNW investors in China are most influenced by ability to identify investment opportunities in the downturn in their choice of wealth manager
• Figure: The strongest performing wealth managers have a real advantage over the competition as the global financial crisis made investment returns harder to achieve
• Figure: The best way for wealth managers in China to increase share of wallet is to increase face to face contact with clients
• Figure: In China most wealth management relationship managers speak to clients by phone approximately once a week
• Figure: Typically, wealth management relationship managers see most of their clients either once a month or once a quarter
• Figure: The majority of clients in China want to speak to their wealth manager about where the investment opportunities are now