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How to win and keep wealth clients in China’s Greater Bay Area?

This is a sponsored article from Avaloq.

Pascal Wengi, Managing Director, North Asia at Avaloq

The Greater Bay Area (GBA) – comprising nine cities in Guangdong’s Pearl River Delta plus Hong Kong and Macau – is an initiative by the Chinese government to better integrate trade and market dynamism, drive economic development and establish the region as a global hub for business, technology, and industrial innovation. An economy as vibrant as the GBA’s is conducive to wealth creation. The amount of private investable wealth belonging to UHNW individuals in the region may more than double over the course of the next decade, presenting a substantial growth opportunity for banks and wealth managers.

What GBA investors want

Results from an Avaloq study conducted among affluent to UHNW individuals hailing from the GBA revealed that one of the most pertinent expectations that investors have of their advisers is a seamless digital experience – 28% of them even stated that they would drop an adviser who didn’t keep up with the rate of technological innovation.

However, having an innovative app is not enough. Of investors, 93% demand the tailored, traditional, high-touch service that has been a core tenet of private banking for a long time, and 46% of them said they would switch away from an adviser who failed to adapt to their changing situation or needs.

Investing with purpose

Investors in the GBA tend to have higher thresholds for risk. However, that risk is bundled with good intentions. Funding future healthcare needs, income to live out their golden years, providing for their offspring and elderly family members — these are some of the goals that warrant these investors’ aggressive risk appetite. Mirroring the burgeoning entrepreneurial scene that has contributed to the GBA’s booming economy, 43% of them indicated that they invest to fund their own entrepreneurial goals.

When we talk about purpose, we cannot overlook the weight that ESG carries. Nearly a third of respondents indicated that they would utilise their portfolio to support charitable causes. 91% of our respondents consider this topic as a must-have or said they would switch adviser to incorporate ESG goals in their portfolios.

The GBA is poised to be a hotbed of ESG investment activity. Hong Kong has taken tentative steps to establish itself as a green finance hub. China too has strengthened its ESG regulatory framework, which will spark wider adoption among investors in the country.

Advisers too should pay close attention to these developments and investor expectations. Advisers who can combine their analysis of ESG goals and investments with keen insights will create more attractive value propositions for their clientele. With GBA investors prioritising ESG investments, the onus is now on advisers to deliver sound, data-driven ESG analyses to attract and retain clients.

Download Avaloq’s full The Greater Bay Area Wealth Report

The rise of digital assets

There is no denying that cryptocurrencies and NFTs are rapidly gaining traction in the GBA. Regulations governing investment in cryptocurrencies are steadily taking shape, and many of the world’s largest crypto-exchanges have a presence in the region, especially in Hong Kong.

Investors seem to have fully embraced this trend. Of survey respondents, 85% describe crypto as a must-have or said that they would switch financial service providers to have crypto-offerings included in their portfolios. Two out of five GBA investors are equally open to holding NFTs or tokenised non-bankable assets (such as fine art) in their portfolios. This optimism is tempered by the recent regulatory scrutiny governing these assets, concerning issues such as the rate at which they consume energy and the role they might play in money laundering. Advisers must be cognisant of such developments and provide sound counsel to their clients.

Communicating clearly

Communication is a key pillar of the adviser-client relationship. Nearly half of the survey respondents indicated that a lack of communication would warrant a switch of adviser. Technology has normalised instant gratification — whether it’s hailing a taxi, ordering food or shopping online: everything is a swipe or click away and should problems arise, in-built chat functions or bots are at hand to address these almost instantly.

The modern, digitally savvy adviser should respond to clients promptly to help build trust and a stronger relationship. This can be facilitated using apps and artificial intelligence as part of a conversational banking strategy. According to the Avaloq survey, half of investors in the GBA are excited about this approach to client engagement.

Seizing opportunities

The competition to attract, retain and grow clientele across the GBA will only intensify. Advisers must be able to offer portfolios and solutions that meet investor needs if they wish to continue competing effectively. The real battle, however, lies in how advisers present their ideas and solutions to clients.

Visual modelling is a highly effective method to present portfolio recommendations to investors in a way that is engaging and easy to understand, which in turn creates trust in the adviser’s abilities. Advisers need to be able to simulate different scenarios — such as market volatility — to clients. While it is impossible to perfectly predict the performance of an investment or an entire portfolio, bringing into play technology such as artificial intelligence and machine learning can increase the accuracy, personalisation and speed of performance forecasts.

The key is to blend the best that technology can offer with the expertise of a financial adviser. Add to this a high degree of personalisation and the ability to make rapid, data-driven recommendations, and you have the necessary tools to win the heart, mind and wallet of GBA investors.

This is a sponsored article from Avaloq.

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