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Financial Planning / Wealth Management

Proactive measures create financial certainty

by Mabel Sieh

Phoebe Wong, senior vice president and head of wealth management and strategic planning, CITIC Ka Wah Bank

The principles of wealth management can be applied by everyone

Giving a child HK$100 pocket money, presents a number of choices. The full amount can be spent immediately on candies or comic books; it can all be put towards buying an expensive toy in a few weeks' time; or it can be divided into different "pots", using some for current needs and saving the rest for later. The third of these options reflects one of the most basic principles of wealth management-maximising assets to cover a range of short- and long-term interests.

However, managing wealth involves far more than just deciding how to spend your money. It begins with understanding your goals in life and knowing which choices will best help you to achieve them. "We all have certain assets and should be clear how to optimise the return by putting them into different pots," says Phoebe Wong, senior vice president and head of the wealth management and strategic planning department for CITIC Ka Wah Bank.

Ms Wong says that awareness of wealth management has increased in Hong Kong in recent years for a variety of reasons. Firstly, the population is ageing and, with longer life expectancies, people are thinking more seriously about how to provide for themselves financially during a lengthy retirement. Secondly, the government's MPF scheme has caused the public to consider the investment options available for accumulating wealth. And finally, the low interest rate environment of the past 18 months has made people realise that they must be proactive if they want to maximise their investments. Advertising campaigns and seminars arranged by financial institutions offering wealth management services have also helped to educate members of the public about the subject.

Clarify goals

"As custodians of our customers' assets, we aim to serve them with honesty and integrity by providing knowledge of a range of products and offering up-to-date financial information," says Ms Wong. She explains that this is a highly customer-centred service, which is based on understanding client needs and helping them to clarify their goals. "Only then do we provide them with information about the different products available and help to select those which really match their goals," she says. "It is a comprehensive and interative process intended to find the best options for each client."

To ensure customers receive the best level of service, staff are trained extensively in all areas of product knowledge and are supported by the bank's systems and experienced back-office team. They are also encouraged to sit the relevant examinations to become registered financial planners.

Ms Wong says that one crucial characteristic for a good financial planner is to be "customer-sensitive". This entails understanding how context-the client's stage of life, appetite for risk and accumulated assets-will have an impact on individual investment choices.

For example, since financial needs change over time, the priority for someone starting their career will usually be to balance expenditure while maintaining a healthy cash flow. Once they are better established, wealth accumulation becomes more important and a greater degree of risk may be contemplated. As people reach middle age, they can then choose to concentrate on the accumulation of additional wealth or the preservation of assets. The assets available and various financial obligations will influence the decisions made at each stage. According to Ms Wong, the interpretation of the triangular relationship between customers, products and the market is what defines an outstanding financial planner.

Rational approach

When commenting on the characteristics of Hong Kong investors, she says that many still act like opportunists, tending to favour short-term returns even when they involve the trade-off of higher risk. "Sometimes, people need to be more rational, understand the risk in the product they buy and not only listen to talk about the upside," she says.

However, she also thinks that Hong Kong people have learned the lessons of the economic downturn, and seen how some investments can quickly lose their value. With that experience, people are now more interested in taking control of their assets and making sure they understand each investment product. She believes that this is a healthy development and will allow the bank and its customers to share a common understanding of what is going on.

Whatever the relative strength of the economy, Ms Wong believes that wealth management is always important. If things are going not so well, it is necessary to take care to minimise the negative impact, while if things are going well, people should make the most of the chance to accumulate assets wisely. Everyone can apply the principles of wealth management and it is never too early to start.

"You learn to understand yourself, your needs and goals, and you learn to use assets as a means to achieve your objectives," says Ms Wong. "The earlier you start to manage your money, the more stable your future will be. Financial certainty can only be an advantage."

Long-term vision

  • Wealth management is important no matter how strong the economy
  • Professional relationship managers must understand that client needs vary as they go through life
  • There is a triangular relationship between customers, products and the market
  • Wealth managers should fully understand a client's appetite for risk when introducing suitable investments



Taken from Career Times 07 October 2005

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