Hong Kong Maintains Competitive Edge in Private Wealth
The eight annual Hong Kong Private Wealth Management Report (“the Report”) sees much optimism in the wealth management space as family offices continue to grow and regulatory reforms further strengthens the market.
The overall sentiment is positive even in the face of decreasing asset under management (“AUM”), which is expected given the difficult few years the world has recently experienced. The positive sentiment is due to Hong Kong’s many core advantages as a leading private wealth management center, as it is home to a wide range of financial institutions and companies that offer private wealth management services. These include global banks, local banks, private banks, asset management firms as well as independent financial advisory firms. Furthermore, the range of investment options and solid investor protection cement Hong Kong competitive edge in private wealth.
The city’s strengths are massively augmented by the huge Mainland China market, the Report finds that 18% of members surveyed expect annual growth in the industry’s AUM to exceed 10% over the next five years, while the proportion of Hong Kong-based AUM sourced from Mainland China is expected to grow from 36% to 46% within the same time frame.
Mainland Chinese client should no doubt be attracted to Hong Kong’s wealth managers’ multi-currency capabilities and the wide range of currency options and opportunities to diversify their investment portfolios and manage currency risk.
The Report recommends that Hong Kong’s private wealth management industry must actively leverage the expanding market and business prospects of the Greater Bay Area; enhancing the capabilities and offerings of the Wealth Management Connect Scheme, such as increasing the range of “Southbound” investment products available to Mainland Chinese clients, is imperative.
Hong Kong is home to a growing number of family offices, which provide comprehensive wealth management services. Family offices often offer a large range of services beyond investment management, including financial planning, tax advisory, philanthropic initiatives, succession planning, and lifestyle services tailored to the needs of ultra-high-net-worth families. The convenience and range of professional services on offer, especially when enhanced with technology like online functions and real-time reporting, ensure Hong Kong continues its role as an important wealth hub, attracting both new clients and businesses.
The Greater Bay Area, next-generation clients and family offices, will remain the top three growth drivers. Hong Kong’s unique advantages, including the crucial role as a ‘super-connector’, its financial infrastructure and timely initiatives, support the city to further benefit from the wealth creation across the region. At the same time, there must be continuous efforts to promote the city’s many advantages as a wealth management center as new market opportunities emerge.
Attracting family offices to establish a presence in Hong Kong is another key trend for the industry, with 94% of member firms agreeing that family offices are an increasingly important source of business for their organizations. Recognizing its importance, the HKSAR Government has announced a series of proactive measures to create a more vibrant ecosystem for the growth of family offices. These include the introduction of tax incentives, a dedicated family office team, talent development, and the promotion of philanthropy and art storage.
Regulatory changes and compliance remain critical, the regulatory landscape for private wealth management is subject to continuous changes and enhancements. Regulatory bodies such as the Securities and Futures Commission continuously monitor and adjust regulations to ensure investor protection, transparency, and market integrity. Clients and wealth managers must stay abreast of regulatory developments to affirm compliance with the latest requirements.