Everyone knows there is a lot of wealth in China, but few have considered how much is unadvised. Wealth managers able to reach out to the vast market with tiered advice propositions will be in a strong position for the future.
The proportion of unmanaged wealth in China is considerably higher than in the wider region, especially when compared to wealth hubs such as Singapore and Hong Kong.
On paper this means there is a significant opportunity. A mere 0.1% of the Chinese population are considered HNW, suggesting there is plenty of room for growth. But this market is already fiercely contested, with four out of five investors already in an advice relationship.
We suggest looking lower down the wealth scale. A significant proportion of individuals still considered mass affluent will progress to HNW status within only a couple of years, with more than 190,000 individuals likely to enter the HNW segment over the next four years according to our Global Wealth Markets Analytics. 76% of mass affluent wealth in China is currently up for grabs, which is a sizable opportunity that offers less competition than the HNW space.
Once mass affluents move up the wealth spectrum they will have more wealth to invest, and providers with tiered advice propositions will benefit from having built loyalty at an early stage. Of course, not every mass affluent investor will move all the way up to the HNW segment, but providers reaching out to investors early on will find their chances of seizing the growing Chinese HNW opportunity much easier than those battling for the smaller pool of existing HNW wealth, much of which is already in the hands of competitors.
By Heike van den Hoevel, Senior Wealth Management Analyst