'Time is ripe' for wealth management

A leading financial services expert has highlighted the urgent need for more investment products aimed at the wealthy, as Chinese incomes rise and people look forward to enjoying longer retirements.

Wang Lianzhou, a former deputy director of the financial and economic affairs committee of the National People's Congress, the top legislature, told China Daily that the opportunities for professional wealth management firms have never been better.

He said the situation has become more apparent since the Chinese economy started to slow, meaning reduced investment returns have forced many high-income earners to seek more efficient and stable investment methods to maintain the value of their assets.

Wang added that about 90 percent of Chinese stockholders have lost money as the benchmark index has dropped more than 6 percent this year, meaning there is an urgent need to improve the range of wealth management products on offer, particularly those offering lower risk.

"Professional wealth management institutions face good opportunities for development in China," said Wang, adding that since the Chinese economy started to slow, many high-earning investors have become more conscious of the fact they could be facing a longer retirement than previous generations.

A recent survey from Taylor Nelson Sofres, the leading market research and market information group, showed that in 2011 about 300 Chinese families had disposable assets valued at more than $1 billion, a number now exceeding some European countries, such as the United Kingdom, Germany and France.

One company that has announced its intention of targeting this growing market is CreditEase Co Ltd, the first peer-to-peer micro-credit platform in China. It has disclosed plans for a range of wealth management services forming a key part of its future strategy.

Tang Ning, the founder and CEO of CreditEase, said he will be targeting the middle class, and also high net-worth individuals with investable assets of $1 billion to $10 billion, as the main customers of its push into wealth management.

"Besides selling bonds, securities and insurance as an agent, CreditEase will also research and develop our own customized products and services," said Tang.

So far, there are still relatively few independent wealth management companies operating in China, providing advice on investment portfolios and selling financial products.

The best known include MyFP Wealth Advisory Co Ltd, Noah Wealth Co Ltd and Hang Tang Wealth Co Ltd.

But foreign companies have been quick to recognize the potential gold mine existing for these specialist types of investment product.

UBS Securities Co Ltd, for instance, is promoting its own wealth management products and portfolio plans for Chinese millionaires.

Compared to smaller, local wealth management rivals, the global financial giant has been able to set high thresholds for its investment clients, said Zhang Qiong, an executive director of the Wealth Management Department at the UBS Securities.

Zhang added that its high-end clients prefer robust investment portfolios, rather than short-term, high-return and high-risk tools.

"More structured financial products are being developed for investors, including forwards and options, along with the improvement of the domestic regulatory system."

Gu Shengzu, an economist and a member of the National People's Congress Standing Committee, added that as domestic manufacturing industries come under continued pressure amid the global headwinds, large amounts of their idle investment capital cannot find high-quality investment projects.

The middle class now accounts for 23 percent of China's population, according to Gu.

"However, many private and small-scale business are lacking any capital to expand."

He said that by launching professional wealth management institutions using such funds, money could be better channeled into the real economy, which could in turn help private sector development.

He said more money could be channeled into equity investment vehicles, including "angel investment" products, where private equity and venture capital could be combined to help companies expand their business both at home and overseas.

Zhang Yujun, president of the Shanghai Stock Exchange, said in August that listed companies could be encouraged to provide - with help from the financial services industry - wealth management and investment products, and support the launching of professional wealth management companies.

"When conditions allow, wealth management companies could issue IPOs and list on share trading boards," Zhang said.

Earlier this year, Guo Shuqing, chairman of the China Securities Regulatory Commission, urged fund companies to expand their services further into wealth management institutions.

chenjia1@chinadaily.com.cn