I have the privilege of being one of the 44 ambassador delegates on the Financial Planning Association's People to People Ambassador trip to mainland China. One of the many goals of the trip is to share and gain an understanding of the Chinese financial planning profession, the FPSB (Financial Planning Standard Board) China, our fellow Chinese practitioners and the Chinese people.
During our visit to Beijing we were treated as honored guests at the 2011 Annual Financial Planning Conference of FPSB China. In addition to three other more specialized designations, FPSB China confers the CFP mark in China as the gold standard of planning credentials. The Chinese were clearly excited to have us visiting. In fact, I learned that the date for this conference of 500 Chinese practitioners was changed to coincide with our visit.
On Thursday, May 26, we spent the afternoon in roundtable discussions with 40 of our Chinese peers. Most of the Chinese participants were in their 30s: the average age of the Chinese CFP is 32 versus 56 in the United States.
Financial planning in China is in its infancy; it is a fairly new concept and practice. The FPSB China strongly believes in the CFP designation. Unlike in the U.S., the Chinese are using the CFP designation as the standard for delivering financial planning in their country. This should eliminate the confusion experienced by the public in our country.
I will attempt to summarize some of the other differences I have noted.
In China, financial planning services are:
- focused on products and investment returns
- delivered through banks, period (there are no independent CFP practitioners yet)
- not commonly sought out by the Chinese people and are just beginning to be accepted and provided to the wealthy
- the relationship is with the bank, not the individual CFP (the bank owns the relationship)
- most Chinese have more than one banking relationship (the other relationships are not known to the CFP banker).
In China, it appears that a solid foundation is being developed to define financial planning as a value-added service to the Chinese people. Just as is the case in the United States, the people receiving comprehensive financial planning services in China are the wealthy.
In the U.S., delivering financial planning is built on trust between the CFP and the client, but in China the relationship is with the bank, not the individual CFP planner. The bank owns the relationship, but since Chinese people prefer to have relationships with more than one bank, which poses a major challenge to planners in that it is difficult if not impossible to provide comprehensive financial planning services when one does not have all of the information about your client and their investable assets
So I ask myself, is this a lack of trust on the part of the Chinese people, the system or a cultural difference? I think it is a combination of the three.
The Chinese are a private and self-reliant people. Through the centuries their culture has been focused on providing and taking care of the family first. They have the "habit of saving," and provide their own safety net. We learned that most Chinese save at least 30% of what they earn. Because they have enough money in their possession which provides a safety net they have been happy to earn 4% on their money. We learned that all fixed income investments in China are generally one year or less and the yield is roughly 4%. The Chinese typically invest only 15% of their investable assets in the capital markets. Real estate and gold are the other preferred investment vehicles.
One of the main questions from our Chinese CFP peers was asking us how we develop trust with our clients. Our response was that you ask many private questions about the client's goals, values and lives. Unfortunately for our counterparts, in China it is culturally difficult to ask these types of questions. In the United States, we have intimate relationships with our clients, so this will be a challenge for our Chinese colleagues.
In summary, I found my Chinese peers to be open and enthusiastic about the future of the financial planning profession and their own futures.
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