Axa China Region Insurance, the Hong Kong arm of global insurance giant Axa, will focus on growing a budding wealth management operation in Hong Kong in 2005, says Mark Wilson, CEO.
Globally the firm is big in life insurance, non-life and fund management. In Hong Kong and Asia, it has traditionally emphasized just the life insurance business, based on a large agency sales force. But that has changed over the past few years, as the firm has brought in expertise on wealth management, employee benefits and pensions, Wilson says.
This has resulted in broadening the distribution channel from relying 90% on agents to 60%, and building a 300-strong team of salaried financial planners. The firm has also broadened its product range to include unit-linked and more sophisticated choices. It now manages HK$45 billion ($5.8 billion) from Hong Kong-based business.
Wilson says the firm has identified wealth management as a big opportunity because today there is little service available. "Consumers have become more sophisticated, but providers haven't," he argues. "People are unhappy with the lack of advice." He notes that since the Asian financial crisis, Hong Kongers have lengthened their investment horizons and become a little less speculative, having lost money in property and stocks.
The majority of the market today comprises 'balanced' investors, people who have reduced their expectations of returns and recognize they need professional help. This is a new development, because until recently, the bulk of Hong Kong investors were either wild, get-rich quick speculators, or completely avoided the capital markets. While there are still many people who got burned and remain wary of any kind of investing, the numbers in the rational middle are swelling.
As a result, Axa China Region is planning a series of product launches for next year, although Wilson declined to get into details. The firm is also leveraging off of Australia-based independent financial advisor iPac, which Axa acquired in 2003.
"We're looking at the mass affluent, those people with investable assets, but we're not trying to become a private bank," Wilson says.
When asked if the firm's plans include launching its own line of mutual funds, Wilson says, "I can't say, but we'll cover a wide range of wealth management products in the near future."
In addition to going after the Hong Kong market, Axa China Region is also setting its sights on the growing market of mainland Chinese visiting Hong Kong. Although it is forbidden to market or sell products across the border, the firm has built teams to engage mainlanders in Hong Kong, and relies on family referrals and word of mouth to grow the business. Wilson says the government now estimates 1 million mainlanders enter Hong Kong every month, with a total of 20 million expected throughout 2005 - and up to 1 million a week by 2010.
