We talk to the Chinese wealth management house about its recent move into the "health management" arena via its majority stake purchase of Life Infinity. It sharpens a focus on how firms such as Hywin are changing the value-add propositions for clients and making more use of client links.

The pandemic highlights how for many high net worth individuals, the boundaries between wealth and health are increasingly blurred. There’s no point in building a big portfolio if one cannot enjoy life.

When Shanghai-based Hywin Holdings said two weeks ago that it was taking a controlling stake in Life Infinity as part of a push into the country’s health management sector, it represented what appears to be a logical step in the wider financial industry. The Chinese firm argues that its wealth advisors have a strong position to guide clients on health management, so embedding a health offering in the business makes sense.

It also speaks to how wealth firms must innovate to provide that “X-factor” differentiation that people are willing to pay for. At a time of intergenerational wealth transfer, a rising cohort of HNW individuals need to be courted to replace those who pass on.

Private bankers/wealth managers are well placed to foresee the events and challenges in people’s lives that are going to affect their health as well as wealth, Nick Xiao, CEO at Hywin International, based in Hong Kong, told this publication in an interview. “Private bankers are probably the most listening and attentive animals in the financial services business.”

“We see what fundamental needs clients have that could be easily expanded or upgraded. We can build it [solutions]. We bring organisation and structure to any new things we do.”

“Post-covid, people pay much more attention to health and continuity in a family. People have a heightened sense of urgency that `I, my family must be well’,” Xiao continued. 

He argued that healthcare is a “megatrend”. The needs for diagnostics, preventive programmes, rejuvenation solutions, and trained specialists who understand health issues are why Hywin acquired Life Infinity to obtain these intellectual assets and skillsets. Under the terms of that deal, Hywin will deploy more than RMB140 million ($20.7 million) to consummate share transfer agreements and a capital increase agreement with Life Infinity.

Hywin’s move is not a completely isolated example but appears to be one of the most integrated cases to date of blending health and wealth as a key business model. In the UK and US, lawyers and other wealth advisors have been urged for some time to be alert for when older clients develop cognitive decline problems such as Alzheimer’s, which have a serious bearing on lasting power of attorney, for example. (In 2017, Julius Baer started a programme to train all its client-facing staff in how to flag up signs that their clients’ cognitive abilities were declining, i.e. affecting the ability to absorb information and act on it. In the US, a number of health concierge services, such as Black Bag, are pitched at HNW families. It is possible that one reason why the Hywin model isn’t widely adopted elsewhere yet is because HNW clients have typically handled healthcare privately or have tended to put it into a separate category unrelated to wealth. That may eventually change. 

Times change
As China matures as an economy, the generation of entrepreneurs that has grown up is not so focused on just getting rich but wants to focus more on health and wellness.

Travel and access to new ways of life also prompted people to reconsider what matters in life. 

“Clients travelled extensively before Covid and they know that life can go at a different pace,” Xiao said.

“Hywin wants to view health as a value proposition, and it is a new dimension in client engagement and not an afterthought.”

The term “health management” relates to lifestyle advisory, health guidance, preventive screening, medical advice, anti-aging regimes, and the delivery of solutions and programmes through inhouse resources or through referrals to carefully selected providers in China, US, Japan, and other countries. 

Xiao agreed that health management is also part of the risk management approach that is essential for a smart wealth management firm.

The firm’s 137,000 wealthy clients create a lot of demands for this sort of service.

Xiao said that a preventative approach is important part of the new approach: “Your health requires management because you can otherwise have an issue that needs intervention.”
 

Preparation
Hywin has examined the healthcare sector for more than two years to get its strategy right, analysing a mass of sub-sectors and business models. For example, it is working with FactSet to build a healthcare index.

“We have got a large base of substantive and validated in-house knowledge,” Xiao said. 

“Clients will say that `you already have so much info about my family’. We can therefore map out a family’s members, their footprint, their health situations, and their life aspirations. Wealth managers are gatekeepers.”

Why is Hywin taking this step when other wealth firms don’t appear to be doing so?

“This is a technical domain, and you cannot do it in a superficial manner. It takes a level of ownership and conviction and learning efforts about a new domain,” Xiao said. Some private banks have referral programmes around healthcare, but don’t get more closely involved in tracking or talking about healthcare requirements and ideas with clients, and even less in delivering real solutions, he explained.

“A health conversation is not an Art Basel conversation. Once client interest is ignited, you must follow through. You must genuinely care.” (He referred to the global programme of arts exhibitions under the Art Basel programme. UBS, among other firms, has worked with it.) 

One benefit of being a wealth manager is that they can talk to HNW clients about health issues, perhaps, in ways that might ironically be harder for a person with a doctor because a client advisor has spent so much time knowing their family and the empathy and trust would be natural and strong. And privacy will be guarded with the same discretion that wealth managers are known for, Xiao said. 

Hywin is training staff to look out for health issues with clients, how to frame conversations and explain solutions. They can compare activity plans of clients. It makes them better informed bankers and advisors, he said. “I see lots of opportunity for learning and collaboration.”

Adding value
Hywin is confident in the systemic client value to be created through Life Infinity’s proposition.

“Life Infinity has been dealing with demanding and discerning clients for a decade and was applauded for its excellence and devotion,” Xiao said. 

This news service asked Xiao how, given the added complexity that comes with such an acquisition, it aims to keep the structure as simple as possible?

“Hywin Holdings already has businesses across wealth management, asset management, insurance brokerage, fiduciary services, and financial technology. The new element of health management extends the firm’s scope but is still guided by the Hywin values: client centricity, humility, passion, and teamwork. Every new business will be a strategic module, with its characteristics, but always part of a vibrant and collaborative eco-system,” he added.