Private Wealth Management Practice

Author: Xu Chun
Publisher:
Publish Date: 2006-09-01
Features: In the past few thousand years, humanity's efforts to "get rich" have truly succeeded to an extreme. Not only has the ability to create wealth reached an unprecedented level, but the development of securities and finance has also made it easy for people to securitize future income streams in advance, turning them into cash. As a result, the liquid wealth in the world today—or what we call "money"—has indeed reached an unprecedented level, with the development of securities and finance significantly increasing the supply of "money." With so much liquid wealth in hand, opportunities and challenges in financial management also arise: where to invest all this "money"? Fortunately, as we just discussed, after 800 years of development, the world's financial securities, funds, and insurance products have become thousands upon thousands, forming a true financial supermarket globally. So, how is the investment portfolio of Chinese households today? According to a 2001 survey by the People's Bank of China on the financial asset structures of families in 50 major and medium-sized cities, 84.5% of Chinese households' liquid assets are invested in bank savings accounts, 7.7% in stocks, 5.8% in bonds, and 1.7% in various types of insurance. In comparison, 23.6% of American households' liquid assets are invested in bank savings accounts, 70.8% in stocks (including retirement fund investments), 5.2% in bonds, and 2.8% in various types of insurance. This shows that, compared to American households, Chinese households' asset structure is highly unfavorable for appreciation (due to insufficient equity investments) and also unfavorable for mitigating future risks (due to low investment ratios in insurance and retirement funds). This difference is naturally related to the overall level of financial development, but it is also somewhat related to people's awareness of financial management. For this very reason, professional financial management services are even more necessary.