How to attract investors in the Greater Bay Area

Pascal Wengi April 08, 2022 09:38

The Greater Bay Area (GBA) is made up of nine cities along the Guangdong Pearl River Delta, as well as Hong Kong and Macau. The region has established itself as a node for technological development, industrial innovation and business, resulting in a dynamic market with strong economic momentum. The region’s economy is now valued at almost RMB 11 trillion (USD 1.7 trillion), making the GBA the world’s richest megalopolis. If China continues to foster wealth creation in the region, the pool of private investable money may more than double over the next decade – which presents an extraordinary opportunity for private banks and wealth managers.

Striking the balance between digital offerings and traditional service

Modern investors expect their investment adviser to offer a seamless and intuitive digital experience. According to a recent Avaloq study of affluent to UHNW individuals from the GBA, 28% of respondents stated that they would dismiss an adviser who was unwilling to pursue modernization and did not keep up to date with technological innovation.

It is crucial to understand that demand for a modern digital experience should not be equated with a desire to interact only with a slick app. Interaction through apps and websites is important, but these investors still want the traditional white-glove service that most established firms have built their reputations upon. An incredible 93% of investors want the personalized, high-touch service that has long been the cornerstone of private banking.

Investing towards long-term goals

GBA investors tend to be younger and describe their risk appetite as aggressive. The motivation behind this risk-on attitude is based on long-term goals, such as future healthcare costs, retirement income, and taking care of family – demonstrating a high degree of financial responsibility. Unsurprisingly, given the vibrant business scene in the GBA, 43% of respondents said they invest to fund their own entrepreneurial ambitions.

ESG is also an important consideration for investors – reflecting the region’s long-term mindset – with almost a third saying they would utilize their wealth to support charitable organizations. 91% of respondents consider this a must-have or would switch adviser to gain access to portfolios that serve their ESG goals. Over two-thirds of them said they were already ESG investors.

While robust ESG planning is necessary for attracting and retaining these investors, offering access to the next generation of financial products – i.e. digital assets – is also critical. When asked about their portfolios, 85% of survey respondents described cryptocurrency as a must-have or a reason to switch adviser. Two out of five GBA investors would consider including NFTs or tokenized non-bankable assets like fine art in their portfolio. ESG goals and blockchain technology are fresh and innovative approaches to investment, and they are in line with the region’s desire to leapfrog rather than mimic existing methods of wealth accumulation.

The role of artificial intelligence

As China pursues greater market fluidity across this dynamic region, private banks will face intense competition to attract and retain GBA investors. The complexity of the solutions and portfolios that advisers must offer to compete effectively will increase as opportunity grows.

Advisers will need to visualize the performance of these sophisticated investment solutions in a way that is clear and engaging. Investors expect their advisers to be able to model a wide range of scenarios, including market volatility. While it is impossible to perfectly anticipate the performance of one investment or an entire portfolio, artificial intelligence can enhance the accuracy and personalization of such predictions while improving turnaround times. Importantly, the majority of survey respondents stated that they would feel comfortable with their adviser using AI for portfolio analysis and recommendations.

By combining the automation and speed of technology with personal service, advisers will be in a strong position to win over GBA investors.

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Pascal Wengi

Managing Director North Asia at Avaloq