China Wealth Management Market Has Huge Potential

from URL: http://www.wallstreetandtech.com/showArticle.jhtml?articleID=217701274

Wealth management services from Chinese banks have huge potential, according to a new report from Celent.

The market is expected to reach US$700 billion in 2014, almost doubling what it was in 2007, according to the Boston-based financial research and consulting firm.

Growth in the wealth management market is being driven by a rapid increase in personal wealth. Other factors include an aging population increasingly concerned over their retirement, and a very high domestic savings rate.

According to a recent report in China Daily, economists estimate that the percentage of savings in a person's disposable income in China has remained between 30 and 40% in recent years " at least twice as high as in the U.S.

Growth in wealth management has also been fueled by the development of the financial markets, the opening of overseas financial markets to China, relaxed policies on mixed operation, and improved laws and regulations for the wealth management industry, Celent said in a release.

Still, the wealth management industry does face a number of challenges that are currently impeding it from growing even faster. These include undifferentiated products, lack of awareness of global asset allocation, customer privacy protection, customer wealth management and risk management, and the lack of high-caliber wealth management professionals.

Celent noted that at the end of 2007, there were 415,000 individuals in China with assets over $1 million, up 20.3% compared to 2006. There were 6,038 ultra-high net worth individuals in China, whose assets were beyond US$30 million.

Overall, China's wealthy population possessed 22.3% of wealth in the Asia-Pacific region, second only to Japan. Their aggregate wealth amounted to $2.1 trillion.