On the evening of July 6, 2016, Co-author of “Wealth Management for China’s New Elite”, Founder of Kochis Global and Co-Founder of Aspiriant Tim Kochis came to the Forum of Masters as a guest, and made a keynote speech. Director of the Department of Finance of our School Prof. Qian SUN moderated this forum.

At the beginning of the lecture, Tim Kochis elaborated the concept of “China’s new elite”. He pointed out: now there are millions in the group of China’s new elite who grow up in cities, are younger and have status consciousness, so they hope to improve their self-reliance ability by adopting best practices. In this course, they aspire to manage their wealth with a more comprehensive and mature financial strategy.

However, on the road of the new elite’s wealth management, there are obstacles to success. Tim Kochis briefly introduced the deviation and irrationality of China’s elite in wealth management from the five aspects of familiarity deviation, anchorage, recency effect, excessive confidence (excessive expenditure/excessive risk) and loss aversion (excessive economization/insufficient return). Then, he suggested managing wealth on the basis of goals and plans, e.g. wealth management should be oriented towards consumption and balanced overall, and have a time limit and order of priority.

However, wealth management is inseparable from the tax system. He pointed out that China’s tax system is “relatively simple and the tax rates in most forms of economic activities are also relatively low”. He made an analysis, saying that now China’s tax revenue is mainly based on the following aspects: the biggest source is employment income, accounting for 45%, the next one is individual services, accounting for 40% of the total, family enterprises and dividends or interest account for 35% and 20% respectively, and related profit from real estate such as low-income individual residences account for 20%. In view of this, China’s elite has great advantages in investment activities.

In terms of wealth management, proceeding from charity is a point of departure that elite groups can consider. Besides, they should also establish a proper investment strategy. First, they should establish consumption-oriented, measurable and time-limited goals: they should design investment portfolios rationally according to the time limit and priority of goals, have market-related “efficiency” and give attention to the influence of inflation, etc. He emphasized that diversification is the key to risk management.

Wealth management not only is about the present, but also focuses on the future. Today more young people have become more self-reliant, so Tim Kochis proceeded from retirement, an issue that young people cannot avoid, to introduce future wealth management plans. At the level of specific practice, he suggested that they should firstly optimize property right transfer and secondly maintain business continuity and seize some cross-border investment opportunities.

In the future, wealth management will face greater challenges, but meanwhile there will also be more opportunities. At present, irrational wealth management is a very arduous challenge. Therefore, formulating rational wealth management strategies can optimize the final effect. China’s new elite is the country’s future. The wisdom of wealth management is not limited to one country, and wise wealth management will benefit the whole world.