China and Japan led the way in driving up the number of high net worth individuals in Asia-Pacific in 2013. Asian HNW individuals are more likely to have more than one wealth manager, and are keener on tech, a report says.

In a report adding further regional detail to a global survey issued earlier this year, RBC Wealth Management and Capgemini noted that China and Japan led the way in driving up the number of high net worth individuals in Asia-Pacific in 2013. Separately, the report found that Asian wealthy persons are, among other details, keener on using technology and more likely to have several wealth managers than is the case globally.

In the firms’ Asia-Pacific Wealth Report 2014, it said the number of HNW individuals in the region expanded 17 per cent to 4.3 million people, while their wealth rose 18 per cent last year to stand at $14.2 trillion, beating growth rates of 13 per cent and 12 per cent respectively in other parts of the world.

While the data was collected before the latest market turmoil across the world – including Asia – it was also, it should be noted, gathered before the record-breaking IPO of Asia e-commerce giant Alibaba of a few weeks ago, also one of the largest liquidity events that the wealth management industry has seen.

Japan and China, which hold over two thirds of Asia-Pacific’s HNW individual population, drove 85 per cent of the population growth of such persons in 2013, increasing their number of HNW individuals by 22 pe rcent and 18 per cent respectively to reach 2.3 million and 758,000. They also saw HNW individual wealth increase at the region’s highest rates of 24 per cent to $ 5.5 trillion (for Japan) and 20 per cent to $ 3.8 trillion (for China).

Singapore grew its HNW individual population and wealth at lower than regional average rates of five per cent to 105,000 and seven percent to $523 billion in 2013, as a result of challenged equity markets, the report continued.

The report notes that Asia-Pacific’s ultra-HNW individuals grew their wealth at about twice the rate of their peers in the rest of the world, both in 2013 (20 per cent vs. 10 per cent) and in the five-year period from 2008-2013 (average annual growth rate of 17 per cent vs. eight per cent).

HNW individuals in Asia-Pacific (excl. Japan) have the highest trust and confidence levels globally in all aspects of the wealth management industry: 85 per cent have high trust in wealth managers, 87 per cent in wealth management firms, 78 per cent in financial markets, and 80 per cent in regulatory institutions.

Singapore HNW individuals’ trust in wealth managers and markets increased slightly to 72 per cent (up three percentage points) and 66 per cent (up one percentage point), while trust in firms and regulatory bodies declined to 68 per cent (down two PP) and 73 per cent (down five PP).

Looking ahead, 88 percent of Asia-Pacific (excl. Japan) HNWIs (77 per cent of those in Singapore) are confident in their ability to generate wealth in the near future.

High trust and confidence levels may have contributed to a greater focus on wealth growth (41 per cent) rather than preservation (31 per cent) among Asia-Pacific (excl. Japan) HNWIs.

In seeking growth, they significantly increased foreign investment allocations to 43 per cent in early 2014, up from 30 per cent a year prior, with Europe attracting the largest share at 15 per cent, followed by North America at 14 per cent.  Looking at the make up of their portfolios overall, real estate remains the preferred asset class of Asia-Pacific (excl. Japan) HNWIs (at 23 per cent of portfolios), which differs from a preference for equities (27 per cent) in the rest of the world.

Are you being served?
Asia-Pacific (excl. Japan) HNWIs have distinct preferences in how they want to be served by firms, as they are more inclined to seek professional advice (45 per cent, the highest globally) and pay for customised services (37 per cent) than HNW individuas in the rest of the world (36 per cent and 30 per cent).

While wealthy persons globally share a preference to work with a single wealth management firm, those in Asia-Pacific (excl. Japan) differ in preferring to work with multiple experts (39 per cent) versus a single point of contact (26 per cent).

They also have the highest demand globally for digital interactions, with 82 per cent (versus 61 per cent for those in the rest of the world) expecting most or all of their wealth management relationship to be run digitally in five years.

Despite rising wealth and trust levels and a desire for advice, Asia-Pacific (excl. Japan) HNWIs increased their performance scores of wealth managers by only half a percentage point to 68 per cent in early 2014, although this compares to a drop by five percentage points to 66 percent in the rest of the world