Editor’s Note: From May 25 to June 4, a delegation of 44 financial planners from the Financial Planning Association and 15 guests will spend a week in China, but sightseeing is definitely a secondary goal. AdvisorOne is partnering with the FPA to tell the story of this trip, with daily dispatch blogs from a number of those planners that will be posted on a special AdvisorOne FPA in China home page. With additional news and feature articles, the FPA in China Special Report will provide advisors with in-person and expert commentary on the world’s second-largest economy.
Prior to the trip, AdvisorOne spoke in mid-May with the FPA in China’s delegation leaders—former FPA Presidents Dan Moisand and Richard Salmen. In Part II of this interview, we explore what they seek to learn about investing in China and the Chinese consumer. Look for continuing coverage during the trip, and wrap-ups following the trip, on AdvisorOne. (See Part I of the interview here.)
AdvisorOne: Each of you actually has a day job [Moisand at the Florida planning firm of Moisand, Fitzgerald and Tamayo; Salmen at GTrust in Kansas City]. so why—beyond the desire to sightsee—are you taking the time and effort and money to go on this trip?
Dan Moisand: We will be ambassadors of our country, of the profession, of FPA, and on a personal level, I do subscribe to the Mark Twain quote about travel being the enemy of a closed mind [the precise quote: "Travel is fatal to prejudice, bigotry, and narrow-mindedness.").
Richard Salmen: Having spent time in the military, including several years in Germany, I appreciate that sentiment. Also, you know the predictions about how China may eclipse the size of the U.S. economy in a certain number of years? I want to get a look at exactly how vibrant, dynamic and growing the Chinese economy actually is. I’m curious about how the average Chinese citizen deals with money, how they manage risk.
AdvisorOne: What do you know about China now—what are your impressions about the Chinese economy, the Chinese consumer, the Chinese financial planner?
Salmen: I hope I learn something; I’m intrigued by the opportunity. I was not on the Russian trip [FPA's 2008 People-to-People trip to Russia]; but others who were have said this is a more diversified schedule, especially our meetings with Chinese financial planners.
Moisand: We provided the Chinese with a laundry list of topics that our people want to know more about. The same on the Chinese side—it’s amazing how many questions [Chinese financial planners] are asking us about how we as planners foster trust, How do we deal with risks. I can’t say [the interest constitutes] a life planning approach, but it might be.
AdvisorOne: You’re both financial planners and investment advisors—so what are your takes now on the best ways to invest in China. Is that part of the reason for the trip?
Salmen: I don’t want to have too many expectations coming into this; it’s more about absorbing the whole experience, to be open to the experience and go where the conversation takes us. There will be value to understanding the culture, the economy, how money works in China, how they’re dealing with this rapid growth. Is it sustainable? Here at
home, we get asked all the time about our own markets by clients and others—I expect these will be topics of conversation.
AdvisorOne: The United States and China have different political and economic structures. Do you have concerns that some of those differences are so serious that a true dialogue is impossible?
Moisand: What we found leading up to the Russia trip was that some people on the trip remembered ducking under their desks as kids. [In the 1950s and 1960s, for those too young to remember, schoolchildren regularly had drills in anticipation of a Russian nuclear attack—Ed.]
When we got over to Russia, though, it was all about learning. I don’t anticipate any issues regarding any of that stuff. What we found is that there’s something about actually talking to people face to face in a respectful way [that eliminates preconceptions]. it was interesting what the Russians would say to you once they understood you were just another person.
I came away not fearing Russia any more. Not just from talking, but also from the free time we had on the street.
AdvisorOne: What about the Chinese people themselves—is there sufficient wealth and freedom to choose investments, to plan for retirement, to pass on legacies to children and grandchildren?
Moisand: One of the primary questions we have is that we’re interested in the most common financial decisions Chinese families have to make. In Japan [a previous trip taken by Moisand under the auspices of the FPA], while the Japanese were very friendly, you could tell how appalled they were about how we take care of our elderly. We [tried to explain that in our country when it comes to elder care] have options—it’s not that we don’t care, but we do.
AdvisorOne: Are you worried about the language barrier?
Moisand: The first interaction we’ll have is small-table discussions with 45-50 financial planners, many of whom were invited to that meeting because of their high level of English [fluency]. Distinguishing feature of FPA’s People to People trips is the peer-to-peer connection, that’s what People to People was founded to do.
Salmen: One of the other things that will be interesting will be participating in their financial planning symposium, to learn how how they structure their educational gatherings…
Moisand: …there could be 200 to 300 Chinese financial planners at that symposium. We’re also going to a university to talk to faculty and students that will be discussing the political and financial structure of China, to the stock exchange in Shanghai, and to a private banking group.