Diversity pays dividends
A dynamic wealth management firm is thriving after starting out as an offshoot of a local property company
One of Hong Kong's largest property agencies has carved a niche in the city's competitive financial advisory sector by tapping into its ready pool of real estate clients.
Midland Wealth Management, an affiliate of publicly listed property giant Midland Holdings, was able to break even within six months of its launch in 2004, and last year profits doubled.
Midland Holdings, whose core business is real estate and which has 367 property agency branches under two brand names, has been recognised as one of Forbes Asia's most successful public companies and has won numerous property industry awards.
But with the sticky property market in Hong Kong in recent years bringing a decline in profits, Midland's foresight to diversify its activities is paying handsome dividends.
'It's a more steady business,' said Patrick Chu, deputy chairman of Midland Wealth Management.
'The stock market is doing very well but unfortunately it fluctuates a lot. People have learned the lesson of [the financial crisis in] 1997 and they know they need to invest. When you make money you should diversify investment to a long-term growth strategy,' said Mr Chu.
'The property market is getting more competitive. Hong Kong is dynamic and we have to be competitive. We always have to think of ways we can diversify.'
At the turn of the century, Midland Holdings began moving into immigration consultancy for those investing in Hong Kong. It then launched a joint venture called mReferral Corp to refer homebuyers to banks for mortgage loans.
'You can see the change in Hong Kong,' Mr Chu said. 'It has changed from a manufacturing and trading centre, but it is very strong in the financial services sector.' He believes Beijing wants Hong Kong to be the New York of China, a concept which he says has 'big potential'.
The company's clients include those who may not have the US$1 million required to be served investment products by private banks. The company offers an array of investment-linked products and financial planning services.
'People in Hong Kong are more conscious of investment,' said Mr Chu. 'Maybe it's the Chinese way, they like to invest for their future and the next generation. The economy is good, so they need more than just savings with a little interest.'
Midland Wealth Management was launched in late 2004 with 13 financial analysts and has already mushroomed to 200 staff. Managers are looking to move from their Central headquarters to bigger offices to make room for the 300 staff they expect to employ by the end of the year.
Mr Chu said securing attractive offices in Central and establishing a good IT infrastructure helped them to lure established consultants. 'We wanted to recruit people with experience and a proven track record,' he said.
Results bore out the strategy. 'We broke even in six months. Every month we break a record. Profits have doubled so far this year.'
'We're successful because we have a good company culture. We are aggressive and very customer oriented,' said Mr Chu.
Mr Chu said staff have strong career progression, beginning as a consultant and, if good enough, rising to senior sales director.
'We treat them as a business partner,' he said. 'We share the commission and they get the bigger part of it. When they work here they are their own boss. We encourage entrepreneurship and in turn they are more enthusiastic and devoted.'
The company works with universities to hire graduates who are trained in-house, but experienced candidates are preferred. 'In the IFA [independent financial adviser] business people have to know a lot about the economy and investment.'
Midland has its own training programme, Midland University, and employees are trained for qualifications such as Registered Financial Planner or Certified Financial Planner.
While Hong Kong's financial service industry is booming, including many mainland clients seeking to invest through wealth management companies, China remains the ultimate target. 'We are waiting for the market to open,' Mr Chu said. 'In the future China is the market.'
The company has staff in Beijing and plays a role in financial education at universities in the capital and Shanghai. 'As an IFA, the sky's the limit,' he added.
Midland Wealth Management is an affiliate of Midland Holdings, which means its shares are owned by the same majority shareholders, with only small fraction being directly held by the holding company.
As one of Hong Kong's largest residential property broking companies, Midland Holdings employs 6,085 full time employees, of whom 5,224 are sales agents, working in 367 branches in Hong Kong, Macau and the mainland.