(China Daily)
Updated: 2007-11-14 07:09

Wealth management culture among mainland investors is at the level of Hong Kong in 1997, but it could take less than a decade for them to catch up, according to analysts.

Hongkongers have become more savvy about financial planning in recent years, as the percentage of investors making long-term fund purchases reaches the level of Western countries.

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But wealth management is still a fledgling concept for mainlanders. Analysts say there is a lack of long-term perspective among mainlanders and not enough risk awareness to manage their assets.

According to the Institute of Financial Planners of Hong Kong (IFPHK), there are about 10,000 registered certified financial planners (CFP) in Hong Kong - far from enough to satisfy market demand.

"Hong Kong investors' risk awareness was greatly enhanced in the wake of the Asian financial crisis," says Sally Wong, executive director of the Hong Kong Investment Funds Association.

Now about 20 percent of adults in Hong Kong, excluding mandatory provident fund (MPF) subscribers, invest in funds, against 3 percent 10 years ago, she says.

"The proportion is in line with developed European countries," says Wong. "It reflects the fact that Hong Kong people have become better at financial planning."

Funds are one of the most common investment tools. "They withstand market volatility compared with other financial products, as well as give a stable return yield," Wong says.

"The idea of financial planning cropped up in Hong Kong when the government introduced the MPF in 2000," says Ricky Tam, chairman of the Hong Kong Institution of Investors.

For mainlanders, however, the concept of financial planning is not widely known.

"Investors might know how to make money out of stocks, but they don't have long-term financial objectives. It will take time for them to realize that managing wealth is not just trading stocks for quick returns," Cheung says.

This lack of a mature investment culture is part of the reason some Hong Kong financial planners are deterred from heading north.

Convoy Financial Services, one of the leading Hong Kong personal finance consultancies, is taking a wait-and-see approach when it comes to exploring the mainland market.

"The market is huge there," said Quincy Wong, chief executive officer of Convoy. "But it is highly volatile ... you can tell from the equity market, which is similar to Hong Kong's in 1997.

"But we believe the fluctuating stock market won't serve as a long-term harbor for excessive savings and that the personal financing market will take off soon.

"The market isn't yet ripe. The legal and monitoring systems are not fully developed and these are some of our concerns. We might wait for a few years until the picture gets clearer."

(China Daily 11/14/2007 page15)