© 2018 by Integrale Advisors

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Wealth Management: China

April 6, 2018

 

Discussed earlier, the US wealth management industry is adapting to changing demands. This is also the case in China but under different circumstances. The Chinese industry is in the hands of the younger 30s-40s demographic. With the cultural emphasis on savings adapting towards investment, the Chinese have driven worldwide investments in recent years, allowing its country to be an investment powerhouse. These factors lead to a rapidly growing industry for wealth managers. The growth is part of Chinese incredible pace in digitization. Hence, in this industry the transition went from savings accounts to digital wealth management, skipping the personal advice from financial advisers. Generally, only individuals higher up in the wealth segments request personal advice, but in China, that trend isn’t quite clear; pure technological familiarity seems to be the indicator, and the differentiation between digital wealth management and personal wealth management is not differentiable based on an account balance. Investment-wise, Chinese investors in the Wealth Management space have been focused on fixed income. They seek after products in the 3-6 percent yield range.

 

Another major differentiation in the Chinese Wealth Management market is its regulatory limits. Capital controls of the renminbi have created Chinese wealth-management firms that focused on local investments. With optimism about the markets opening up, such as connections with the Hong Kong markets, allows the wealth-management market to grow outside of China.

 

Keith Knutsson of Integrale Advisors commented, “It remains to be seen how the Chinese will respond to the ambitions of bigger banks from Europe and North America establishing a presence in China. An often-overlooked factor is that the loosening regulation might open up Chinese banks to become global players. “

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