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Survey: Chinese UHNWIs warm to family offices

As generational change continues in China, ultra high net worth investors are much more concerned about wealth preservation and inheritance than before, according to a joint survey by Bain & Company and China Merchants Bank.

Around 80% of the 3,300 survey respondents said they are more aware of family office services, compared to around 65% in 2015.

However, a majority of them are not yet using these services.

The most used services are asset allocation management and wealth preservation and inheritance.

Usage and interest in family offices among Chinese UHNWIs

Source: Bain & Company, CMB

“Wealth inheritance has always been an important topic for HNWIs and they are now paying much more attention to developing younger generations, in the hope of continuing this philosophy and the success of the wealth creation process,” the study said.

Indeed, a majority of them said that wealth preservation and inheritance and asset allocation management are their main needs.

Main needs for wealth inheritance

Source: Bain & Company, CMB

It noted that some HNWIs, especially UHNWIs, who have investible assets exceeding RMB 100m ($15.09m), have gradually grasped the concept of family governance, which is helping deepen the meaning of inheritance.

With regard to wealth management objectives, wealth inheritance and wealth preservation has become the top priority for Chinese HNWIs and UHNWIs this year, which is a huge change from 2009 when wealth creation was the top priority.

Wealth objectives of HNWI and UHNWIs

 Source: Bain & Company, CMB

In 2016, there were 1.58 million HNWIs (with investible assets of RMB 10m). The number of HNWI has grown at 23% annually from 2014-2016, according to the survey. The number is expected to reach more than 1.87 million by 2017.

PE on the rise

Separately, the study noted that HNWIs in China are becoming more familiar with equity and alternative investment products and are increasingly investing in these asset classes.

 Source: Bain & Company, CMB

When choosing private equity funds, HNWIs often check track records and the reputations of the fund managers, according to the survey.

China’s private fund industry, which includes private equity funds, has surged 21% this year to RMB 10.21trn as of the end of August, according to data from the Asset Management Association of China.

However, the survey noted that the returns of the private equity investments made by HNWIs vary significantly, with the largest number receiving a 10%-30% annualised return.


Estimated PE fund performance invested by HNWIs during 2015-2016 (annualised internal rate of return)

 Source: Bain & Company, CMB

Part of the Mark Allen Group.