By Stuart Rutledge, Head of Global Trust RBC Wealth Management
Asia-Pacific has now passed North America and is home to more wealthy individuals than any other region, according to the Asia-Pacific Wealth Report 2012, recently released by RBC Wealth Management and Capgemini. Despite a tough year of volatile markets, the number of high net worth individuals (HNWI) in Asia-Pacific grew by 1.6% in 2011 to 3.37 million.
The region's population is still largely concentrated in just three countries - Japan, China and Australia – which together account for over three quarters (76.1%) of the population. Despite experiencing a difficult year, Japan remains the largest market, accounting for over 54% of the region's HNWIs. China, which has witnessed growth of 5.2% in its HNWI population, now makes up 16.7% of the region's individuals with at least $1 million at their disposal and it remains the single largest opportunity for wealth managers in the region.
While the number of wealthy individuals in Asia-Pacific grew in 2011, their aggregate wealth actually declined marginally. This was due to losses amongst individuals with more than $5 million. This group is typically committed to higher-risk and less-liquid assets, such as hedge funds, private equity or commercial real estate markets, that can lose value quickly in declining markets and can be hard to sell amid the volatility that characterised much of 2011.
The rise in the HNWI population in Asia has also driven the development of Singapore and Hong Kong as offshore wealth centres of course. However the increasing internationalisation of wealth means that these locations are more likely to complement, rather than rival, Jersey's activities. Jersey HNW clients are already demanding more exposure to the emerging Asian economies and greater diversification of overseas holdings - both of which can be easily provided via centres such as Hong Kong and Singapore.
Jersey firms looking to enter the region obviously need to give a great deal of thought as to how they approach the business to maximize the opportunities available. They will need to set realistic and sensible targets based on factors such as resource capacity, understanding the market trends and client profile, and tailor offerings accordingly. Many clients from the region are entrepreneurs who require liquid or near-liquid investments and particular products to meet their short-term business needs. Many of these same clients have also only recently qualified as HNWIs and expect a highly hands-on approach to managing their portfolios. The succession planning opportunities for Jersey in terms of these first-generation HNWIs are considerable.
There is no doubt that increasingly HNW assets are going to be held in Asia-Pacific offshore wealth centres in future. There is a huge opportunity for Jersey to act as a welcome partner to these centres thanks to its reputation for stability, rule of law, access to the UK market and history of innovation.
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