According to a report by Shanghai Advanced Institute of Finance (SAIF) and Charles Schwab, 64% of Chinese in a new survey get investment-related information from friends, colleagues or family, while only 15% seek professional advice. The survey reveals that only a quarter of respondents actually had experience engaging with financial advisers with the majority of those who did seeking financial advice with investment professionals of a domestic bank. A few of them also went to foreign banks or domestic wealth management companies.
Lisa Hunt, executive vice president, international services and special business development at Charles Schwab, was quoted by The Asset as saying:
“It’s clear that there is distrust because they are seeking advice from family and friends primarily… There is this sense of isolation around where they can go. It goes back to the need for education. I also think there is a need for transparency around not only the fee structure (of financial advisers), but also around product creation.”
“The environment in China is very product-focused so the adviser is perceived as maybe selling a product. In the US, we are upfront on what the goal is and (we) really understand what the client risk tolerance is. This is before we even get into the product discussion.”
With that said, the rising costs of healthcare and education in China have been weighing on Chinese’s minds and they see investing as means to build their assets. Forty two percent of respondents said they invested to improve their living standards, while 33% did so as a way to save for their retirement. Twelve percent said they invested as a way to fund their children’s or grandchildren’s education, while 6.5% said they sought short-term gains.
Meanwhile, 4 out of 10 respondents said they hold 45% of their assets — excluding property — in cash or cash equivalents. Respondents also said they hold about 20% of their assets in stocks with just 8% saying they invest in overseas markets as the majority lack the know-how.
The respondents were all from Shanghai, Beijing, Guangzhou and Hangzhou and had said their annual income after tax was between 125,000 yuan (US$19,000) and 1 million yuan (US$152,000).
It should be mentioned that CITIC Ltd (OTCMKTS: CTPCY) is the largest securities firm in China while US investors looking to tap into the Chinese wealth management sector could look at Noah Holdings Limited (NYSE:NOAH) – a wealth management service provider with a focus on global wealth investment and asset allocation services for high net worth individuals and enterprises in China.
To read the whole article, China’s new rich distrusts financial advisers and Business school polls investors, go to the websites of The Asset and SAIF. In addition, check out our China closed-end fund list and China ETF list pages.
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