PWMA: Hong Kong’s Private Wealth Management Industry remains positive on growth momentum
Hong Kong’s Private Wealth Management Industry remains positive on growth momentum Clients continue to favour HK as a key PWM hub.
Hong Kong’s private wealth management (PWM) industry remains robust despite a challenging macro environment, according to the seventh annual Hong Kong Private Wealth Management report. The report found that 67% of member institutions expect annual growth in the industry’s Assets Under Management (AUM) to be in the 6-10% range over the next five years, while a further 22% predict a compound annual growth rate (CAGR) of 11-20%.
Jointly authored by the Private Wealth Management Association (PWMA) and KPMG China, the report also noted that penetrating the Mainland China market has overtaken targeting the next generation and family offices as the number one growth driver for the industry. That growth is expected to further accelerate as cross-border travel activities between Hong Kong and the Mainland are eventually resumed.
Despite market volatility, Hong Kong private wealth management industry recorded net fund inflows amounting to HKD 638 billion in 2021 according to data from the SFC1. PWM clients surveyed in this year’s report also ranked Hong Kong as the preferred PWM hub in Asia across many wealth management capabilities and attributes despite strong competition, proving the city’s resilience as a leading PWM hub and Hong Kong’s advantages as an International Financial Centre.
Amy Lo, Chairman, Executive Committee of PWMA, said, “We are delighted to see that PWM clients continue to see Hong Kong as an attractive wealth management hub across several key dimensions in terms of proximity to mainland China and integration with the Greater Bay Area (GBA), ease of trading and onboarding, and investment options. As the city gradually lifts its COVID-19 pandemic regime, particularly in relation to travel restrictions, we are confident that the PWM industry will see accelerated growth, particularly in attracting new clients.”
Mainland China is now the top growth theme for industry practitioners. Surveyed member institutions expect the proportion of AUM sourced from mainland China to rise from the current 38% to close to 50% in five years’ time. In particular, 86% of firms see the GBA as being either a “very important” or “important” part of the growth story. The Wealth Management Connect (WMC) pilot scheme launched last year represents a key milestone, but members indicated that changes will be needed to make the scheme more relevant to the industry, including quota size, range of products, etc.
To attract next-generation clients, the majority of whom are digital natives, PWM firms will need to focus on enhancing the range of services that can be provided digitally. Digital transformation will play a critical role, and 89% of surveyed members are expected to increase spending in technology and transformation.
“As more wealth is being passed onto the next generation, it is important for our industry to evolve with our clients and understand the preferences and priorities of the next generation,” said Peter Stein, CEO and Managing Director, PWMA.
The Hong Kong Private Wealth Management Report is largely based on an online survey of PWMA member institutions and a client survey, as well as interviews with industry executives, regulators and other industry stakeholders in Hong Kong. Both surveys and the interviews were conducted from June to August 2022.
VIEW the report