China Merchants Bank (CMB) and Bain & Company jointly published the 2009 China Private Wealth Report, providing the first in-depth look at China’s private banking sector. The report used rigorous statistical modeling to measure China’s private wealth market and reflected pioneering research into the investment attitudes of high-net-worth individuals (HNWIs) by drawing on CMB’s private banking customer resources. CMB cooperated once again with Bain to conduct research on China’s private wealth market in 2011.
Since our 2011 study, Chinese HNWIs have a more mature attitude toward investing and more rational expectations. They prefer to undertake lower-risk investments while continuing to be active in diverse wealth management activities. A growing number of HNWIs are aware of private wealth management, and a majority are turning to various institutions that can help them better manage their wealth. Chinese banks, with their huge customer base, diversified products and comprehensive financial service platforms, have more advantages than foreign banks in this regard. These advantages give Chinese banks a leg up, particularly among clients who desire diversified products. Not surprising, the competition within China’s private banking industry is fierce, and the entire industry landscape is shifting.
China’s private wealth market has transformed from a time of opportunity in the early days to a period of fiercer competition in 2011, and now it is in a new phase of building a solid foundation. Compared with 2009 and 2011, China’s HNWIs have more complicated demands for investment and wealth management, stronger awareness of mid- and long-term wealth management planning, and increasing demands for wealth preservation and inheritance planning. Given these factors, HNWIs have a more conservative attitude as they face market fluctuations, and they pursue moderate returns by diversifying their investments. Meanwhile, in an era of global capital, demand for overseas asset allocation is increasing among HNWIs.
Previously, financial institutions in China focused primarily on establishing their brand image. Now, they are more focused on their clients—understanding and exploring clients’ short-term and mid- to long-term wealth management needs. Financial institutions would like to underscore their professionalism and build strong service platforms by providing differentiated services and wealth management advice.
This year marks the third time CMB and Bain have embarked on a joint wealth report. Producing our 2013 China Private Wealth Report depended on many resources, including experience gained from our 2009 and 2011 reports, CMB’s abundant experience in the retail banking industry and access to its high-end client resources, as well as Bain’s data analysis tools and research experience in the private banking industry. The analysis in this report relies on authorized statistical data and rigorous methodology, which was used to create China’s private wealth curve. We calculated the number of Chinese HNWIs and the total amount of their private wealth. We also compared 2008 data with 2010 data to infer this growth trend and offer predictions for 2013. Finally, our study is based on findings from nearly 3,300 surveys with HNWIs and interviews with more than 100 industry experts, relationship managers and HNWIs.
Our 2013 report is aimed at providing an accurate description of the major trends in China’s current market and a clear picture of HNWIs’ investment attitudes, to maximize the synergy between wealth management institutions and specialized advisory firms. We believe this report provides the high-end private wealth market with unique, sustainable and authorized research. We hope to spread information, share ideas and promote the prosperous development of financial institutions.
China’s private banking industry has entered a critical stage of development. The key to future success in China’s private wealth market is to build a strong brand image, provide a comprehensive service platform and adopt professionalism (i.e., improve the ability to provide services). The final goal of private banks is to build deeper relationships that produce stronger ties in the long run.
For a copy of Bain's "2013 China private wealth report", please contact Pinky He.