Laying the foundations for continued strong private wealth management growth
With assets under management expected to double to USD 2 trillion by 2022,[1] the growth outlook for the private wealth management (PWM) sector in Hong Kong remains strong. Opportunities in mainland China and the rise of family offices are expected to be the primary drivers of growth, with the next generation and other Asian markets also key.
Each of these opportunities will have far-reaching impacts on the business and operating models of private wealth management firms. To capitalise on the mainland China opportunity in 2019, wealth management companies will have to conduct a holistic assessment of what these customers need and how to win them. This will include tailoring their propositions (including updating product shelves), customising their advice to account for differing investment objectives and levels of customer understanding, revamping digital propositions, and setting up appropriate cross-border infrastructure to attract and serve these clients.
Governance, risks and controls will also be key considerations – for example, onboarding to account for sources of wealth, suitability to account for the relative sophistication of investors, compliance with the Common Reporting Standards, and the impact of social media (WeChat in particular). Forward-looking organisations will lay the groundwork to transform their organisations in 2019.
Industry-wide opportunities to transform and grow are highlighted in a recent joint KPMG and Hong Kong Private Wealth Management Association white paper. 2 We have already seen significant progress and collaboration between the government, regulators and the PWM industry on some of the recommendations in the white paper, and in 2019 we expect the groundwork to be laid to achieve many of them.
In particular, there continues to be significant interest from the government and the business community in how the Greater Bay Area (GBA) can drive growth in the PWM sector. In 2019, we expect to see further discussion on how to capitalise on these opportunities on Hong Kong’s doorstep, and possibly some developments around implementing a new mutual wealth management scheme in the GBA.
Hong Kong is also considering a range of tax policy options to make the city more competitive as a wealth management hub. With the right tax environment, Hong Kong will have a more compelling offering to attract family offices.
The growth of the industry is also creating greater demand for PWM professionals. Coupled with the increasing focus on technology and digital solutions, the PWM industry is expected to use the year ahead to work towards hiring the right talent to effectively innovate, transform and grow.
2019 will be a year of evolution rather than revolution, but we hope to see continued collaboration between the government, regulators and the business community to lay the foundations to transform and achieve the PWM industry’s five-year growth objectives.
For more views and predictions on what could happen in Hong Kong’s banking sector in 2019, please read the full report here.
Notes:
1. ‘Hong Kong Private Wealth Management Report 2018’, KPMG China and Private Wealth Management Association, September 2018, https://home.kpmg.com/cn/en/home/insights/2018/09/hong-kong-private-wealth-management-report-2018.html
2. ‘Hong Kong: A leading global wealth management hub of the future’, KPMG China and Private Wealth Management Association, September 2018, https://home.kpmg.com/cn/en/home/insights/2018/09/hong-kong-a-leading-global-wealth-management-hub-of-the-future.html