An already-stretched wealth management talent pool in Hong Kong is expected to be further drained over the next five years, with the region’s private wealth expected to grow 10 to 20 percent annually during this period.
This is one of the key findings from the Hong Kong Private Wealth Management Report 2018, published by KPMG China and the Private Wealth Management Association (PWMA), which surveyed 37 of PWMA’s 45 members, alongside a series of 28 qualitative interviews.
Two-thirds (66 percent) of respondents said a “limited talent pool” was the biggest supply-side constraint, with relationship managers (RMs) the most in-demand with 76 percent citing a talent gap, while compliance and product specialists were also in demand (53 percent).
The Hong Kong private wealth management market is worth just over $1 trillion. In the past year, the number of (USD) billionaires increased 29 percent year on year from 72 to 93, second behind New York. The number of high net worth individuals (investible assets of $1 million or more) grew 15 percent year on year from 148,000 to 170,000. This data was taken from Capgemini’s 2018 World Wealth Report.
Paul McSheaffrey, KPMG China’s Hong Kong head of banking and capital markets, said the report indicated the industry’s assets under management (AUM) would double in the next five years.
“To address this opportunity, wealth managers will need to think ahead to invest in line with key market trends, upgrade their technology platforms, and execute a long-term talent strategy,” he said.
Technology was expected to lead to a significant change in the role of RMs. Respondents said RMs presently spend about 42 percent of their time on administration and execution activities, 25 percent on existing clients and 16 percent acquiring new clients. However, a number of senior executives expect that with new technologies, at least three-quarters of an RM’s time should be spent servicing clients in five years’ time.
“This will help RMs to spend more time understanding client needs, and also help with employee retention because ‘relief from administrative burden’ is considered the number one way to make the role more attractive,” the report said.
Only 18 percent agreed that current industry practices are suitable for the next generation of clients, and 54 percent said they were “falling behind” with their digital offering and “not meeting client expectations”.
Family offices and the next generation were ranked second and third respectively as the most important sources of business for Hong Kong wealth managers over the next five years. In first place was Chinese customers.
Almost 80 percent of respondents agreed China is the main driver of growth. Fifty-seven percent of the industry’s AUM come from non-Hong Kong investors at present, and it was predicted that by 2023, about half of AUM would come from China alone.