Is Hong Kong nonetheless a horny consulting market?

The wealth management sector in Hong Kong is changing. The very lucrative expat market is declining and being replaced by a growing indigenous affluent population.

The political battles between China and the UK over the Special Administrative Region (SAR) have not made it easy to determine the future potential of the Hong Kong consulting industry.

Some companies have left, like BNY Mellon Wealth Management; But others, like Cambridge Associates, an investment firm that serves high net worth and family offices, have opened offices.

International Adviser spoke to several Asia-based companies to understand how companies are strategically assessing the future of the Hong Kong advisory market.

Growth area?

Phil Neilson, general manager of Just Service, had a Hong Kong-licensed insurance company, Just Service HK, but sold the company and now has Just Service Global, based in Malaysia, serving Asian customers.

“I don’t see Hong Kong as a growth area for the expatriate market in the short term.

“With the Greater Bay Area initiative, there are niche opportunities for the local market. Access to a population of around 70 million versus 7.5 million in Hong Kong. “

But big players like The Fry Group and Quilter International still see the opportunities Hong Kong offers.

James Sutton, Hong Kong Director of The Fry Group, said, “While it’s been a year of uncertainty, our Hong Kong office has received one of its best new client and asset deals. Regulation in Hong Kong, Singapore, Dubai and the UK gives us a unique opportunity to attract customers in Asia and give them security and continuity as they move elsewhere.

“We have to keep looking forward, but the outlook is positive.”

Mark Christal, Hong Kong General Manager and Head of Northeast Asia Region at Quilter International added, “Hong Kong remains an important, well-established and recognized international financial center that supports a range of growth opportunities and a broad demographic.

“There is a significant wealthy population in the region, which increases the need for quality financial advice and flexible wealth solutions.”

Effects of Political Relations

Political tensions between China and Britain over Hong Kong are not easing.

IA reported that more and more people are using the UK visa system to flee China’s security measures.

Sutton said: “Unfortunately, any political tension or change creates uncertainty for the average Hong Kong citizen, but this has increased the need for high quality, transparent advice that customers can rely on.”

Oliver Wickham, Hong Kong general manager for St. James’s Place Wealth Management added, “Geopolitical tensions between these countries have affected both expatriates and locals in Hong Kong alike.

“However, given the uncertainty, there is a growing demand for more expert advice, especially as many are weighing their options. This includes understanding potential moves and managing your cross-border investments in the UK, US and China. “

Expat versus domestic

The makeup of the Hong Kong market 25 years ago was largely due to the wealth of expats.

Now, a great deal of inland Chinese wealth is pouring into Hong Kong.

Is the British expat no longer valuable to businesses?

Neilson said, “There is still expat demand in Hong Kong, but a reducing market.

“The regulatory market in Hong Kong also remains confusing to the public with four regulators. The demand for consulting services in Hong Kong is declining. Financial planning services in Hong Kong. “

Christal disagrees and believes that “the traditional expatriate market is still in high demand”.

“However, there is increasing recognition and demand for international asset solutions from a national and regional customer base who consider themselves internationally mobile or who hold international assets.”

He added, “Our customer demographics have evolved over a number of years, and not just in recent months.

“When we opened our Hong Kong office in 1991, most of our customers were British expats. Since then, it has grown into a mix of traditional expats from different countries such as Australia, Great Britain and South Africa as well as internationally mobile local wealthy and wealthy clients.

“This shift is due to globalization, which in turn has increased customer mobility and the likelihood that they will hold and invest their wealth internationally.

“This creates a need for wealth solutions that can help mitigate the tax consequences of global mobility, consolidate wealth and simplify reporting.”

For Just Service’s Neilson, “the feeling of security in Hong Kong” has changed.

“Now foreigners and locals alike are trying to lead the move away from freedom and protection that comes with the English rule of law to one of the measures that ‘as long as I keep my nose clean – no problem – we’ll be fine’. This is a massive change in headspace. Therefore, many are insecure. “

Future of the consulting market

With all of these moving parts, Hong Kong may not fit every business.

However, with the Wealth Management Connect (WMC) pilot project in the Greater Bay Area of ​​Guangdong-Hong Kong-Macau, the SAR seems to have a future.

Neilson said, “It’s dark in the short term. The assumption is that once the people of Hong Kong become familiar with a one-china system, they will see the current changes. a new Hong Kong will emerge.

“For expatriates who look more like being posted to Shanghai or Beijing.”

Sutton of Fry Group said, “There will always be a need for advice on financial services, especially for high net worth individuals. Despite the current uncertainties for Hong Kong, it’s still a great place to live, work and make a career. So we see the business outlook as positive. “

SJP’s Wickham added, “It is difficult to say exactly what the future holds, especially as events continue to develop in 2021.

“What we are still seeing is that Hong Kong’s foundations as a China gateway, Asian financial center and expat destination will not weaken in the short term and awareness of the importance of personal advice will be increased.

“This bodes well for the future of the Hong Kong financial advisory market.”

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