Hong Kong Wealth Management: HNW Investors 2019

Hong Kong Wealth Management: HNW Investors 2019



Hong Kongs HNW investors - who skew heavily towards professional and entrepreneurial males - show strong demand for most forms of wealth advice and tax planning. A multi-service proposition, underpinned by proven expertise in investment, will be key to tapping into the growing HNW population. A burgeoning appetite for novel options such as robo-advice, the upcoming transfer of wealth between generations, and the growing female segment provide arguably the most significant growth opportunities for Hong Kong-based wealth managers in the foreseeable future.

This report analyzes the investing preferences and portfolio allocation of Hong Kongs HNW individuals. It profiles HNW investors in terms of their demographics, examines the allocation of HNW investors portfolios, analyzes their propensity to invest offshore, and explores product and service demand among UK HNW investors.

Scope

- While currently small, the proportion of the HNW market made up of women will grow significantly as intergenerational wealth transfers propel many into the ranks of the HNW and the older-age structure of local HNW men means more churn in their numbers.
- A little less than a quarter of HNW individuals in Hong Kong are expats, and providers that understand the distinct needs of this lucrative segment will be able to achieve higher margins.
- Hong Kong HNW individuals use an average of 5.5 wealth managers and invest just a quarter of their managed wealth with their main wealth manager, highlighting the crowded nature of the market.
- A fifth of HNW wealth is placed in execution-only mandates, with a desire to maintain control and save on fees being key drivers.
- HNW individuals in Hong Kong invest an average of 50% of their total managed wealth offshore.

Reasons to Buy

- Develop and enhance your client-targeting strategies using our data on HNW profiles and source of wealth.
- Give your marketing strategies the edge required and capture new clients using insights from our data on HNW investors preferences for the various styles of asset management.
- Tailor your investment product portfolio to match the current and future demand for different asset classes among HNW individuals.
- Develop your service proposition to match the service and product demand expressed by HNW investors in Hong Kong and react proactively to the forecast change in demand.

1. EXECUTIVE SUMMARY
1.1. Hong Kongs HNW investor base is in flux, requiring shrewd targeting
1.2. Key findings
1.3. Critical success factors
2. SIZING AND FORECAST
2.1. The proportion of HNW individuals in Hong Kong is forecast to rise after years of anemic growth
2.2. The majority of Hong Kongs liquid assets are concentrated among HNW individuals
3. DEMOGRAPHICS
3.1. HNW professionals employed in the financial services industry represent a lucrative target market
3.1.1. The majority of HNW individuals have reached or are approaching retirement age
3.1.2. Earned income followed by entrepreneurship account for the majority of HNW wealth
3.2. The financial services industry is the main (and growing) HNW wealth generator
4. HNW EXPATS
4.1. Expats are an above-average but rapidlyshrinking segment of the HNW market
4.1.1. Expats constitute 23% of the local HNW market, which is high compared to other high-immigration nations but represents a sharp decrease
4.1.2. HNW expats from the US, Japan, and (of course) China represent an attractive target segment
4.1.3. Intergenerational opportunities and lifestyle factors are the biggest drivers for expats
5. HNW INVESTMENT STYLE PREFERENCES
5.1. A lack of expertise and the expectation of better returns drivethe uptake of advice
5.1.1. Wealth managers are still seen as having expertise worth paying for in Hong Kong
5.1.2. Hong Kong HNW investors are promiscuous, catered to be the ample local wealth market
5.1.3. The largest proportion of HNW wealth is kept in advisory mandates
5.1.4. A sophisticated proposition is becoming increasingly importantin order to attract HNW investors
5.2. Automated investment and execution-only servicesoffer opportunities fortraditional wealth managers
5.2.1. The strongest growth in demand will be for advisory asset management, ensuring its continued dominance
5.2.2. HNW investors self-direct to cut costs and retain control over their assets
6. HNW ASSET ALLOCATION PREFERENCES
6.1. A desire for further diversification will drive the uptake of alternatives among HNW investors
6.1.1. Equities and bonds have reduced in terms of exposure and the portfolio looks defensive
6.1.2. Equities constitute almost a quarter of HNW investors managed wealth
6.1.3. Equities to show the strongest growth over the next year supported by mainland links
6.1.4. Investmentsare driven by expected higher income or risk aversion
7. OFFSHOREINVESTMENT DRIVERS AND MOTIVATORS
7.1. Hong Kong investors offshorehalf their own wealth
7.1.1. Much of the HNW opportunity is captured offshore
7.1.2. Offshore asset allocation favors equities
7.1.3. Singapore captures the greatest share of offshored HNW Hong Kong wealth
7.2. HNW individuals business interests drive offshore investment
8. HNW PRODUCT AND SERVICE DEMAND
8.1. HNW investors have moderate demand for most wealth services
8.1.1. Socially responisible investments and philanthropy provide an opportunity for wealth managers to stand out
8.2. Enduring market growth will drive demand for basic financial planning
8.2.1. Demand for financial and tax planning is set to increase
8.2.2. Life insurance represents a growing opportunity
8.2.3. Inheritance planning will continue to grow
9. APPENDIX
9.1. Abbreviations and acronyms
9.2. Definitions
9.2.1. Affluent
9.2.2. HNW
9.2.3. Liquid assets
9.3. Methodology
9.3.1. GlobalDatas 2019 Global Wealth Managers Survey
9.3.2. Level of agreement calculation
9.3.3. Service level of demand score
9.3.4. Forecast level of demand calculation
9.4. Secondary sources
9.5. Further reading

List Of Figures


Figure 1: The proportion of HNW individuals in Hong Kong will rise at a slower rate in the short term
Figure 2: Hong Kong affluence will rise at a slower rate in the future - but rise it will
Figure 3: HNW individuals are predominately older males but a wave of younger women is coming
Figure 4: HNW individuals mainly derive their wealth from earned income followed by entrepreneurship
Figure 5: Tech and telecoms have helped power the current generation of HNW investors
Figure 6: Expats represent an above-average proportion of the Hong Kong HNW population
Figure 7: HNW expats are drawn to Hong Kong for the intergenerational opportunity
Figure 8: Lack of expertise and better returns through advisors drive demand for professional advice
Figure 9: Hong Kong HNW individuals use a larger number of wealth managers than the regional average
Figure 10: Advisory mandates remain key in Hong Kongs HNW space
Figure 11: Higher demand for advisory services should keep it as the dominant asset management type in Hong Kong
Figure 12: Demand for advisory asset management remains strong, with smaller growth expected in execution-only and automated investment services
Figure 13: HNW individuals self-direct in order to maintain exclusive control and avoid management fees
Figure 14: Hong Kong HNW individuals have a balanced but rather defensive asset allocation
Figure 15: Equity funds are the single most popular product among HNW individuals
Figure 16: Equities will experience the highest net increase in demand with a potential Ant Financial bump
Figure 17: Risk aversion, a desire for regular income, and diversification benefits strongly affect asset allocation preferences
Figure 18: Hong Kong HNW offshore holdings are above the Asia Pacific average
Figure 19: Equities dominate offshore portfolios, reflecting both the ease of investing in China and global links
Figure 20: Classic offshore booking centers command most of the offshore portfolio; near shore, Singapore is rising
Figure 21: HNW individuals are offshoring wealth mainly due to their international business links
Figure 22: Demand is most pronounced for socially responsible investments along with inheritance and tax advice
Figure 23: Basic financial planning and life insurance will see the strongest growth in demand

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