Issue Brief: Asian Private Wealth Management to Serve the Real Economy
Posted on Monday, December 23, 2013
Developing the most effective wealth management sector for Asia's future will require ongoing dialogue and cooperation at both the national and regional levels.
Asia's economic growth is on track to make Asia home to the largest pool of private wealth in the world by 2017. China will be home to 60 per cent of the projected US$48 trillion in private financial wealth.
Ownership of this wealth is highly concentrated and the share owned by millionaires is set to increase. Ninety per cent of wealth is currently held through banks or managed personally.
Asia must harness this wealth to support its long-term growth and so:
Deepen and strengthen capital markets
Provide early-stage business financing
Provide better returns to those who created the wealth
Pave the way for steadily greater Asian integration
Developing Asia's nascent wealth management industry to meet Asia's long-term needs means that:
Financial institutions must develop business models that win the trust and confidence of Asia's wealthy, who are often first-generation entrepreneurs. The largest opportunity is onshore, though achieving near-term profitability is a challenge outside of home markets. Offshore is profitable but with intense competitive pressures.
Policymakers must balance compliance and regulatory issues with more attention on how to develop private wealth funds to drive innovation and deepen capital markets. This will in turn create profitable opportunities for financial institutions with the right capabilities.
Policymakers and financial institutions need to work together to ensure a regulatory framework consistent with meeting customer needs, earning sustainable profits and managing risk. Priority should be given to attracting and retaining capital through appealing investment opportunities rather than preventing cross-border flows primarily through hard-to-police capital controls.
Disclaimer: The views expressed in this report are those of the author and do not necessarily reflect those of the Fung Global Institute. The author is solely responsible for any errors or omissions.