Serving fee-based financial advice to high net worth clients in China via an internet distribution model is one option that should be seriously considered before the decade is out, according to research company dragondata.
With $1.3trn in domestic savings and some 114 million persons already of sufficient wealth to fit the high net worth label in the UK, the opportunities are expected to grow substantially once the Chinese banking sector opens up further to foreign businesses in 2007.
And UK businesses are well placed, according to a survey of some 4,000 Chinese HNWIs.
Most lack trust in the domestic financial services industry, and that they are unable to provide high quality good value products, with sufficient levels of service.
Association with foreign providers is seen as a way to improve these issues, and increase the chances that these consumers will buy financial products.
The UK is rated highest of any European country, and was named as first choice by 8% of those surveyed. About half those surveyed put the UK in the top-5 preferred countries for dealing in financial services.
UK businesses ranked second only to US ones in terms of perceptions of quality, value and service levels.
A spokesman for dragondata says this is obviously good news for larger providers such as Prudential, in terms of their plans for growing in Asia.
However, it also opens up the possibility that larger adviser networks or IFA firms could find significant business opportunities among this fast-growing customer group.
Although there are still significant question marks over which type of business model will best be able to take advantage of the growing hunger for financial products and services in China, the use of the internet should not be ruled out any more than a desire among Chinesese consumers to deal directly with UK-based providers and distributors.
Another survey by dragondata has found the level of English language skills among Chinese HNWIs is sufficiently high in many cases to eliminate the language barrier – with English in any case rapidly becoming a de-factor second language for this consumer group.
Questions of practicality, such as how respective regulatory regimes might treat provision of financial advice across borders between the UK and China where adviser and client are located in different countries could still “strangle” any opportunities, the spokesman says, but it is too soon to tell whether this will become an issue.
The top three products that Chinese HNWIs will buy in the next 12 months are: bank account (63%), credit or debit card (60%), and insurance (50%), according to daragondata.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Jonathan Boyd on 020 7484 9769 or email [email protected].IFAonline
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