It far exceeded the official estimate of 7.8 per cent and was second only to India, which saw its wealthy population grow by 22.7 per cent.

This is good news for Hong Kong's wealth management sector since the city, with a money managing industry that is quickly catching up with mature markets, such as Switzerland, is expected to capitalise on the boom of the affluent.

'I would say we are no more than five or six years away [to catching up]. We are close. In some products, such as deposits, we are even more aggressive,' said Cindy Fu Man-yee, Standard Chartered Bank (Hong Kong) general manager for wealth management.

Whereas just a decade ago, the primary form of investment activity was the direct purchase of properties and a handful of stocks, retail investors were now far more sophisticated and were beginning to consider longer-term options, such as insurance, as a pillar of the wealth management process, she said. However, she expects Hong Kong's wealth management sector to develop differently from the well-trodden paths of other countries.

Traits that would probably set Hong Kong investors apart from those in other parts of the developed financial world were propensities towards shorter-term trading and risk taking, she said.

Ms Fu also expects the range of financial products for investors to continue to grow in the near future. This will mean a greater number of products in the existing categories available to the public, from plain vanilla mutual funds to more exotic types of deposit products, and those not yet available.

Of the more exotic types, she predicts that private equity funds, which invest in companies that are not traded on stock exchanges, will be allowed to be sold to the investing public in the near future, as the market becomes more educated.

Ms Fu added that more retail hedge funds, which employed higher-risk strategies such as arbitrage and short selling, would be available.

She expects the wealth management sector in Hong Kong to continue to grow steadily for at least the next 10 years, leveraging on the faster-than-average pace of economic expansion in Asia compared with the rest of the world.

Figures compiled by accounting firm KPMG showed the proportion of operating income generated by institutions authorised by the Hong Kong Monetary Authority from fee or non-interest sources, such as the sale of investment funds, had climbed from 30.6 per cent in 2001, to 46.7 per cent in 2006 - the most recent year for which the numbers were available.

William Leung Wing-cheung, general manager for personal financial services and wealth management at Hang Seng Bank, said the best that could be hoped for, for traditional banking services which comprise products such as mortgages, credit cards and personal loans, was to maintain their market share and profit contribution.

He said that cut-throat competition had slashed profit margins for these traditional personal banking products and this would continue to heat up year after year.

'What we are hoping to depend on to deliver phenomenal growth is wealth management. [It is] the future of the business,' Mr Leung said.

He said last year Hang Seng Bank doubled its profit from wealth management. However, because traditional banking services did not grow as quickly, personal financial services as a segment only grew by 42 per cent.

He said for banks to take advantage of this growth area they would have to meet three challenges. The first was they must be able to acquire customers who had the means to invest. When they had this, they needed to ensure their sales and distribution networks were well trained. And banks must have the product range for customers to choose from.

He noted that for Hang Seng Bank, the move from traditional banking business was evolutionary. The first steps towards what was wealth management took place in 2002, with the sale of the bank's first guaranteed funds.

Mr Leung expects insurance products, which are longer-term, to be more important this year as a result of market volatility.

An added benefit to selling insurance products is its 'stickiness', defined as the ability for any product to keep the customer with the bank.

Unlike mortgages, where people in Hong Kong easily switched to another bank after two years, policies lapsed if the holder stopped paying the premiums, he said.