Research Overview
- This presentation provides an overview of the latest trends in Hong Kong's wealth management industry; from increasing customer demand for digital solutions to the competitive challenges being faced by incumbent providers, many of whom are failing to keep pace with a rapidly evolving industry landscape.
Key Takeaways
- The wealth management market in Hong Kong is vast, with HKD 9 trillion in AuM as of the end of 2022. While high net worth individuals (‘HNWIs”) and ultra-high net worth individuals (“UHNWIs”) constitute crucial segments of the market, the mass retail (< USD 1 million) and core affluent (USD 1-5 million) segments together represent 50% of Hong Kong’s total wealth pool.
- Digital delivery of wealth management services is increasingly favoured among Hong Kong customers. The mass retail segment (78%) showed a strong preference for fully digital channels, with core affluent (38%) and HNWI / UHNWI (49%) customers leaning towards hybrid models.
- However, Wealthtech adoption in the city is not keeping pace with investor expectations; 67% of financial institutions in Hong Kong have either not yet adopted - or are still in the process of implementing - Wealthtech solutions.
- At the same time, on the self-directed front, the market is being disrupted by discount / zero-commission online brokerages, driving a growing number of traditional brokers out of business amidst ongoing margin compression. On the guided front, a spate of robo-advisors has also entered the market in recent years, servicing nearly 350,000 customers and managing HKD 54 billion in AuM by the end of 2022. And with HKD 7.7 trillion in local retail deposits up for grabs, competition is rapidly heating up.
- Numerous incumbents are actively acquiring Wealthtech capabilities through mergers and acquisitions, in-house development, and partnerships with external solution providers. The lines between self-directed and guided-discretionary servicing models are also increasingly blurring, with brokerage and wealth propositions coalescing as providers look to offer a one-stop-shop investment and wealth solution for their customers.
