Rising middle class pushes wealth management potential in Vietnam
The personal financial assets (PFA) market in Vietnam Financial is forecast to reach hundreds of billions of US dollars in the next few years, providing significant opportunities for wealth management services.
Latest
The personal financial assets (PFA) market of Vietnam Vietnam Financial is projected to reach 600 billion USD by 2027, growing at a rate of 11 per cent per year from a baseline of 360 billion USD as of the end of 2022, according to insight by McKinsey.
 |
| The personal financial assets market in Vietnam is forecast to reach hundreds of billions of US dollars in the next few years, providing significant opportunities for wealth management services. (Source: VNA) |
Director of AFA Capital Nguyen Minh Tuan estimated that the PFA market could reach thousands of billions of US dollars if gold and real estate assets were included.
Knight Frank’s Wealth Report from this year predicted that the number of ultra-high-net-worth individuals (UHNWIs) in Vietnam with net assets of 30 billion USD or more will grow to 978 in 2028, meaning an increase of around 30per cent in the next five years – the fifth fastest growth rate in the Asia-Pacific region, after India (50.1 per cent), China (47 per cent), Turkey (42.9 per cent) and Malaysia (34.6 per cent).
The middle class in Vietnam is expected to account for 26 per cent of the country’s population by 2026, up from 13 per cent in 2023, according to the report by the Ministry of Labour, Invalids and Social Affairs.
The rapid increase of the affluent and middle class generates tremendous opportunities for wealth management services.
In Vietnam, wealth management services providers include commercial banks, securities companies, insurance companies, and fintechs, of which banks dominate because of their established and extensive network and perse products.
However, wealth management services are still in their nascent stages. A large number of individuals are still investing following crowd psychology, such as buying gold, property, or securities, rather than working with wealth management services providers.
According to financial and banking expert Le Xuan Nghia, wealth management should be used from an early stage, first by saving, followed by accumulating, and then investing.
Although the rate of people using wealth management services is low, the market potential is huge because Vietnamese inpidual investors tend to like investing and have a high tolerance for risk-taking.
With a population of 100 million people, the wealth management market of Vietnam can top in Southeast Asia in the next decade, Nghia believes.
Currently, most individual investors lack knowledge about personal financial planning – a reason why many lose money and get scammed when investing on their own.
A survey by the Vietnam Financial Consultants Association in Hanoi found that 80 per cent of citizens in the capital city can not accurately identify what individual finance is.
Nghia estimated that Vietnamese individuals participating in financial investments currently account for around 7-8 per cent of the country’s population, compared to the rates of 40-80 per cent in many other countries.
Despite its huge potential, the wealth management market in Vietnam remains sluggish due to a lack of synchronized legal measures, a lack of trust, and a lack of a party of products, according to Nghia.
Wealth management services providers must be professional and offer tailored financial advisory solutions to capitalize on the huge wealth management opportunities in Vietnam. The sector also needs a framework in which to operate to grow, for example, policies to encourage inpidual investors to participate in open-ended funds.
According to Tuan, the number of individuals with assets of 1-5 trillion VND will grow exponentially in Vietnam.
Economist Can Van Luc said that inpidual finance education should be popularised, even at high school levels.
(Source: VNA)
