China and India are regarded as presenting the greatest wealth management opportunities in Asia. However, because the private banking market in both countries is still in its early stages, companies face several challenges. China The mainland has the second-largest number of high-net-worth individuals in Asia-Pacific, after Japan. However, according to Andrew Tung, Citi Private Bank's managing director and global market manager for China, despite the brisk growth of high-net-worth individuals there, only a few understand what private banking can offer because the sector is still in its infancy. The mainland market is also regulated and limited in possibilities for service range and products. According to Anuj Khanna, managing director and head of private banking North Asia, Credit Suisse, the mainland is a priority market. And it is likely to increase in importance thanks to market liberalisation, which will allow international private banks to establish their businesses there, leading to greater demand for new investment opportunities. Finding professionals appears to be a major issue facing private banks operating on the mainland. The main players are looking for people with the language skills and local knowledge who can then be trained to acquire the knowledge of financial markets and other wealth management skills. India In the 2007-2008 Forbes Billionaires Report, India had the most billionaires in the region, outranking China and Japan in both years. Of the country's high-net-worth individuals, 75 per cent are entrepreneurs who increasingly need to think about their wealth preservation and succession planning. Anuratna Chadha, managing director and global market manager, Citi Private Bank, India, expects India's wealth management market to grow faster than the Asian average, at a rate in the 15 to 30 per cent range over the next few years. Some of the challenges in India are the capital and exchange control regulations. These limit products and services of private banks. Another interesting dimension of the Indian market for private banks is the huge population of non-resident Indians. Many non-resident - even second or third generation Indians - have links to the country. They are interested in Indian-flavoured investment ideas and investments with a strong onshore Indian cultural link. Puneet Matta, head of wealth management at Credit Suisse in India, said: 'Indian families and individuals are demanding a more sophisticated approach to asset allocation. We are basically witnessing a maturing of the private wealth management space in our country.' Thailand The nation is considered an interesting market for private banks - though a smaller but fast-growing player. Private bank RBS Coutts considers the critical mass too small to have an onshore business for the foreseeable future. But Thai clients are important to the firm's business in Asia. Assets under management stood at US$223 billion last year, with a compound annual growth rate at 12.4 per cent between 2002 and last year, according to a report by consulting firm Boston Consulting Group. It also found that clients in Thailand were moving beyond basic domestic investments. Again, local knowledge and language skills are important for those dealing with Thai clients. Confidentiality is also important. It is not unusual for Thai clients to be reluctant to share details of their wealth with family members, and a general desire to remain inconspicuous makes referrals unlikely. Some banks, however, have tried to work around this by generating referrals through intermediaries such as lawyers and accountants. Thailand is strict about capital transfers and, according to Hanspeter Brunner, RBS Coutts International chief executive and executive chairman, it is important to follow the rules and regulations of the countries in which the bank is active. This makes it more difficult to grow volume. Japan Japan has an enormous amount of accumulated wealth and is one of the largest private banking markets in the world. However, it is seen as a local business in which it is difficult for a non-Japanese organisation to succeed, and local players have not gained a dominant position. Described by some as 'a nut which is very difficult to crack', Japan is therefore a low priority. Credit Suisse, though, has been operating successfully there for nearly 40 years and recently launched its private banking operations to complement the bank's existing investment banking and asset management activities in this market. Target clients are wealthy Japanese individuals, families and corporations that are becoming increasingly sophisticated and are demanding more individually tailored products and services. The Japanese market is characterised by low growth but high expectations, with a compound annual growth rate for assets under management at just 3.1 per cent between 2002 and last year, according to the Boston Consulting Group. Wealth has traditionally been kept as cash, but equities have been gaining ground in the form of interest in mutual funds. Most of the wealth is held by people more than 50 years old, and is concentrated in the Kanto region, which includes Tokyo. Clients there tend to ask for Japanese relationship managers to make sure their needs are understood, and are anxious about foreign institutions. They place emphasis on corporate brands. With the turmoil in global financial markets, what is the outlook for wealth management opportunities in Asia-Pacific? For Uwe Parpart, chief economist and strategist, Asia at Cantor Fitzgerald, it means that the regional growth model, fuelled by demand for Asian exports, is dead. However, he sees the possibility of a bright future for Asia. 'If countries use their accumulated reserves and the savings of their populations in a concerted effort to develop domestic demand, then Asia, from depending on the world for its growth, could become, over five to 10 years, the principal engine of world economic growth.' He said that Asia should concentrate on the development of social and physical infrastructure and fixed income style capital markets. If could then turn itself from an entity dependent on world growth to one that the world could depend on. Whether the financial services sector plays a part in this, industry insiders concur that there is opportunity for real organic growth of wealth in Asia. Contributing factors include a young and talented population, a strong work ethic, high savings rates, continued modernisation of the financial sector, strong entrepreneurial culture and a growing affluent middle class. Mr Brunner predicted that this year would see dramatic changes in client patterns. He sees them becoming less active, more cautious and less interested in the more adventurous 'Formula One' investments and products. They will move more slowly over the next six to 12 months as they start feeling their way forward again and carefully position themselves. Sam Tse, managing director and region head - North Asia, Citi Private Bank, said: 'The wealth management sector in Asia will continue to be the most dynamic sector in the financial services industry. 'For many private banking clients, the global financial turmoil and market volatility underscores the key benefits of asset diversification and risk management, and the importance of a having a trusted wealth adviser.' The shortage of professionals is the biggest challenge facing wealth managers in Asia. To meet the demand for qualified and experienced professional wealth managers, particularly in the emerging markets, firms use a range of strategies. These include inducting staff from other parts of the financial sector, training bankers, recruiting bankers from overseas markets, and bringing in people from other professions and training them to be private bankers. Kirstie Ellard, head of human resources, Credit Suisse, Asia-Pacific, said: 'Quality not quantity is essential in hiring staff and building up a talent base in personal wealth management across Asia-Pacific.'