With China now being the fastest-growing wealth market in the world, wealth management lawyers are very much in demand, providing advice on succession planning, inheritance, trusts and more. As a result, Chinese law firms have begun to specialise in this fast-growing practice area, as well as beef up their wealth management teams.
There is an increasing number of wealthy people in China now who require professional assistance to manage their sizeable resources, and the legal industry is gearing up to fulfil this growing need.
The total amount of individual wealth in China exceeded 146 trillion yuan ($21 trillion) last year, according to a report by digital wealth management platform Yiren Wealth.
And that number has maintained an impressive average annual growth rate of 20 percent in the past decade. Though times have become more volatile of late due to various tensions, the growth in the last 10 years bodes well for the wealth management industry.
There are now 30 million individuals in the “mass affluent” category, which refers to those in the wealthier end of the mass market. And as for the fabulously wealthy, the number of high-net-worth individuals (HNWIs) reached 1.67 million last year.
According to the China Private Banking Report 2019 released by China Construction Bank and Boston Consulting Group, each of these 1.67 million people has individual investable financial assets of 6 million yuan and above.
CLEAR TRENDS
Zhang Jun, senior partner at Dentons, believes that the wealth management market is changing rapidly, and the trends are clear.
“What clients need are lawyers who can understand wealth management needs, who have studied this matter in-depth and can execute the plans, and who can integrate service resources,” says Zhang.
Clients need services beyond private wealth management. “They also need legal services for families to grow their wealth and manage their businesses with top-down structural design. Hot areas these days include the top-down structural design for foreign tax residents, simultaneous planning for domestic and foreign equity trust, ownership restructuring for family business, compliant tax planning, foreign grantor trusts under U.S. laws, non-resident trusts under Canada laws and offshore ‘Granny’ trusts,” says Zhang.
Zhu Tengfei, partner at Tian Yuan Law Firm, sees wealth succession and tax planning as particularly important areas for the wealthy.
“The wealth of these cross-border high-net-worth individuals has become more transparent, which makes wealth succession and tax planning important for them. The planning we emphasize is not the one in traditional sense. It comes with two levels based on the current trends: first is compliance, second are measures to reduce risks and avoid double taxation,” says Zhu.
But almost all the high-net-worth individuals are exposed to wealth management risks.
Xiao Wei, founding partner at JunHe, thinks some of it could be tricky with so much at stake.
“There’s a lot to consider, such as how to get succession done, how the children’s marriage impact the family, how to pass the wealth across generations. If it involves shareholding of a family business or a listed company, they need to think about how to control and distribute the shares. Offshore assets also involve laws and regulations of different jurisdictions,” says Xiao.
Another related trend is the protection of their wealth.
“What I mean here is protection of the ownership of their wealth, but not protection from investment risks,” says Xiao.
He says factors to consider include if the risks are separated. For example, if the entrepreneur has separated the risks of his/her family asset from his/her corporation and if the assets were acquired legally, such as tax compliance to reduce risks from non-compliance.
“The third trend is that more families and individuals are willing to donate part of their wealth to charities. This requires lawyers to make planning in terms of structure and operation,” explains Xiao.
CHALLENGES FOR LAWYERS
Dentons’ Zhang sees the service model as the biggest challenge in wealth management for lawyers and clients.
“There is a mismatch between a lawyer’s practice area and a client’s need for an integrated solution. It is thus essential for lawyers to combine resources and capabilities to serve the clients,” he says.
Another major challenge is the ability to provide cross-border services regarding the clients’ business development, asset allocation and residency status, and simultaneous planning is always needed.
“What is more important is that such cross-border services involve multiple jurisdictions. How to solve the legal differences among the jurisdictions to ensure compliance is undoubtedly a big challenge for lawyers,” says Zhang.
Tian Yuan’s Zhu points out that when asset allocation is put in a global context, wealth management lawyers are required to have a high level of proficiency in foreign languages. Not only that, equity adjustment could mean corporate restructuring and merger and acquisition.
Additionally, the mix of personal and professional matters that is commonplace amongst the wealthy can also prove challenging.
“A direct challenge is how to gain your clients’ trust. As family and individual wealth are often kept as secret, it is different from working as an external lawyer to solve legal matters. So trust is the first and the biggest challenge,” says Xiao from JunHe.
A lot of the wealth management lawyers started with practicing marital and family law. To close this gap could be difficult for them.
“Combining commercial law and family law is the strongest legal protection for ensuring wealth succession and planning. It is expected that some competent foreign-focused commercial lawyers and family law lawyers will form the best group in the wealth management sector in just a few years,” says Zhu.
He feels this could prove to be a lucrative career path for foreign-focused commercial lawyers.
China’s regulatory framework for wealth management is still taking shape. And Zhu observes that although the regulatory is still being improved upon, it is possible to use the necessary legal tools to achieve wealth management goals under the current legal system.
“With that said, China still needs legislation for laws such as the trust law. The lack of legislation has to do with the failure to solve certain theoretical issues regarding the trust law and the legislature’s understanding of the social values of these laws,” says Zhu.
He suggested drawing from various wealth management tools such as banking, insurance, trusts, tax planning and wills to offer the best service for clients.
“Wealth management lawyers must have capabilities to learn as the legal framework in this regard is still being developed and improved. They also need to think about how to coordinate the laws and legal framework of other countries with China’s, which will require forward-looking thinking,” says Xiao.
“Only in this way can they help clients solve not just today’s problems but also tomorrow’s.”
LOOKING TO THE FUTURE
The development of the wealth management industry will inevitably promote and advance legal services in this area. Zhang says it is an industry consensus that wealth management will be a regular business with great potential.
And he foresees that the breadth and depth of wealth management will eventually lead to segmentation of legal services.
“Law firms vary in terms of their brand image, management model and business. The most effective way to stand out is to find your position based on your resources and capabilities and to establish a system for this business,” says Zhang.
And after establishing your tools and resources, the best strategy is to be specialised in one area to expand your market in this legal industry ecosystem.
“A better approach is to lead the market segment and stay competitive overall,” says Zhang. “The knowledge management skills and the ability to combine services of the lawyers are keys to developing your business.”
And, of course, no single lawyer or law firm would always have all the things necessary. To this end, Zhu suggests looking at the big picture and seeking partnerships.
“Private wealth management is a complicated task that involves the overlapping of different business areas and collaboration with clients and partners. To offer quality legal service, we must uphold the concept of win-win cooperation and work with lawyers from first-tier cities to maximise the clients’ interests,” says Zhu.
“We can cooperate with other outstanding private wealth management teams that have a big platform, resources and reputation to satisfy the clients’ needs for cross-border and multidisciplinary services.”
And it is a capable pool to draw from. Wealth management lawyers are a group of professionals who are fluent in foreign languages, specialised in commercial and family law and capable of using various legal tools to offer family businesses a one-stop solution to wealth protection and succession. Zhu stressed that lawyers in wealth management cannot afford to be operating solo.
“The competition will be on your ability to improve your reputation, integrate your resources, become more specialised and build your team and core values,” he emphasized.
Zhang says wealth management lawyers must look at four areas to stay competitive, namely: their professionalism, perspective, organisation and technology.
“Professionalism, of course, is the fundamental requirement. Perspective means they need to think from the family’s perspective and prioritise their needs in wealth management, as balancing the family business and the family is a key requirement,” says Zhang.
“As good actions come from good organisation, it is a core requirement to establish a ‘small organisation’ that can integrate into the wealth management ecosystem. Meanwhile, knowledge management skills and the ability to apply technology in your services are requirements under the current trends.”
Some say Chinese families’ demand for wealth management lawyers is still in an initial stage and there is room for more development.
As Xiao sums it up: “Overall, there need to be highly professional lawyers with a high standard of ethical conduct who are dedicated to serving the clients, to keeping clients’ information confidential and to providing clients with an integrated solution by combining resources at home and abroad.”
财富带来的机遇
随着中国成为世界上增长最快的财富市场，对财富管理律师的需求也逐渐增加，针对传 承规划、继承、信托等方面的问题提供建议。因此，中国的律师事务所开始专注于这个 快速增长的业务领域，并加强其财富管理团队的建设。
现在中国有越来越多的富人需要专业人士来帮助 他们管理其可观的资源；法律行业看到了这种
趋势，因此准备好满足这种日益增长的需求。 根据数字财富管理平台宜人财富的一份报告显示，去 年中国个人财富的总额超过了146万亿元（约合21万亿 美元）。
在过去的十年里，这一数字保持了惊人的年均增长 率，高达20％。尽管近来由于各种紧张局势，但过去10 年的增长预示着财富管理行业良好的发展势头。
目前大约有3000万人处于“大众富裕”的群体类别，即大众市场中较为富裕的人群。而关于非常富有的人群， 去年高资产净值人士的数量达到了167万。
根据中国建设银行和波士顿咨询公司发布的《中国私人银行2019》报告称，这167万高净值人士人均拥有600 万元及以上的个人可投资金融资产。
趋势清晰
大成律师事务所高级合伙人张钧认为，财富管理市场正在发生着快速变化，其趋势亦很清晰。
“客户需要的是能够理解其财富管理需求的律师。这些律师已经对这一课题进行了深入的研究，并且有能力执行财富管理计划，同时能够整合服务资源，”张律师表示。
客户需要的服务不仅仅是个人财富管理。“他们还需要服务于家族的法律服务，通过总体结构设计来增加其财富和管理其业务。目前的热点领域包括：外国税收居民总体结构设计，国内外股权信托的同步规划，家族企业的所有权重组，合规税收筹划，美国法律规定的外国委托人信托，加拿大法律规定的非居民信托，以及离岸‘祖母信托’ ，”张律师说。
天元律师事务所的合伙人朱腾飞认为，财富传承和税收筹划等领域对富人们来说尤其重要。
“这些跨境高净值人士的财富变得更加透明， 因此财富传承和税收筹划对他们来说变得非常重要。我们所强调的筹划不是传统意义上的规划， 而是基于当前的趋势分为两个层次：首先是合规，其次是降低风险和避免双重征税的措施，”朱律师说。
但几乎所有高净值人士都面临财富管理的风险。
君合律师事务所的创始合伙人肖微认为，因为面临的风险很多，其中一些可能会非常棘手。
“需要考虑很多方面的问题，例如如何完成传承，孩子的婚姻会给家族带来哪些影响，代际财富传承的问题等。如果涉及家族企业或上市公司的股份，他们还需要考虑如何控制和分配股份。离岸资产还涉及不同司法管辖区的法律法规问题，”肖律师说。
另一个相关趋势是对于他们财富的保护。
“我的意思是保护他们财富的所有权，而不是保护他们免受投资风险，”肖律师解释说。
他表示，要考虑的因素包括风险是否隔离。例如，企业家是否将其家族资产的风险与其公司隔离，以及资产是否是合法获得的，包括税务合规，以降低违规风险。
“第三个趋势是，越来越多的家族和个人愿意将他们的部分财富捐赠给慈善机构。这就要求律师在结构和运作方面进行规划，”肖律师解释说。
律师们面临的挑战
大成律师事务所的张律师认为，服务模式是律师及其客户在财富管理中的最大挑战。
“如果律师的执业领域与客户对综合解决方案的需求不匹配，就要求律师必须将资源和能力结合起来为客户服务，”他说。
另一个重大挑战是要有能力提供与客户业务发展、资产分配和居住状态相关的跨境服务，并且能够进行同步规划。
“更为重要的是，这种跨境服务涉及多个司法管辖区。如何解决不同司法管辖区之间的法律差异以确保合规性，这无疑是律师们所面临的一大挑战，”张律师表示。
天元的朱律师指出，如果在全球范围内进行资产配置，财富管理律师必须具备较高的外语水平。不仅如此，股权调整可能还意味着企业重组和并购。
此外，富人中普遍存在的个人事务与职业问题混合在一起的情况，这也会是相当棘手的问题。
“一个直接的挑战就是如何赢得客户的信任。由于家族财富和个人财富往往被视为是秘密，因此与解决法律问题的外部律师不同。如何赢得信任是首要的、也是最大的挑战，”君合的肖律师说。
许多财富管理律师的执业起点是婚姻法和家庭法。要缩小其间的差距对他们来说可能会相当困难。
“将商法和家庭法相结合是确保财富传承和规划的最有力的法律保障。预计在今后的短短几年内，一些有实力的外国商业律师和家庭法律师将成为财富管理领域的顶尖群体，”朱律师说。
他感觉，这对于以国外业务为重点的商业律师来说可能是一条利润丰厚的职业道路。
中国的财富管理监管框架仍处于成型阶段。朱律师认为，尽管监管体系仍处于不断完善中，但在现行法律制度下，利用必要的法律工具可以实现财富管理的目标。
“尽管如此，中国仍然需要制定信托法等相关法律。由于未能解决有关信托法的某些理论问题以及立法机关尚未充分认识到这些法律的社会价值，导致了相关立法的缺失，”朱律师表示。
他建议借鉴银行、保险、信托、税务筹划和遗嘱等各种财富管理工具，为客户提供最好的服务。
“财富管理律师必须具备学习能力，因为这方面的法律框架仍在发展和完善中。 他们还需要考虑如何协调其他国家与中国的法律及法律框架，这需要具有前瞻性的思维，”肖律师表示。
“只有这样，他们才能够帮助客户解决眼前和将来的问题。”
展望未来
财富管理行业的发展必然会促进和推动这一领域的法律服务。张律师表示，业界一致认为，财富管理将成为具有巨大潜力的常规业务
他预计，财富管理的广度和深度最终将带来法律服务的细分。
“律师事务所的品牌形象、管理模式和业务各不相同。最有效的脱颖而出的方法是根据自身的资源和能力找准自己的定位，并针对该项业务建立起一套体系，” 张律师建议道。
创建好自己的工具和资源之后，最好的策略是专注于某一个领域，在法律行业的生态体系中经营和拓展你的市场。
“还有一个更好的方法，就是引领细分市场，保持整体竞争力，”张律师说。“知识管理技能结合律师服务能力是发展业务的关键。”
当然，没有任何一个律师或律师事务所能够随时拥有所有必需的东西。为此，朱律师建议着眼大局，寻求建立合作伙伴关系。
“私人财富管理是一项复杂的工作，涉及不同的业务领域的重叠以及与客户和合作伙伴之间的协作。为了提供优质的法律服务，我们必须坚持合作共赢的理念，与一线城市的律师合作，使客户的利益最大化，”朱律师说。
“我们可以与其他优秀的私人财富管理团队合作，这些团队拥有大型的平台、资源和声誉，从而满足客户对跨境服务和多领域服务的需求。”
这就像一群有能力的人聚集在一起。财富管理律师是一批精通外语的专业人士，他们专注于商业法律和家庭法律，能够使用各种法律工具为家族企业提供财富保护和传承方面的“一站式”解决方案。朱律师强调，财富管理领域的律师无法独自运营。
“竞争力取决于你提高声誉、整合资源、更加专业化以及建立团队和核心价值观的能力，”他强调说。
张律师表示，财富管理律师要保持竞争力必须着眼于四个方面：专业化，视角，组织架构和技术力量。
“专业化当然是基本要求。视角是指律师们需要从家族的角度看待问题，并优先考虑客户在财富管理方面的需求，在家族企业和家族之间找到平衡点是一个关键性的要求，”张律师解释道。
“良好的行动来自良好的组织，因此建立一个能够融入财富管理生态系统的‘小型组织架构’是一项核心要求。此外，知识管理技能和在服务中应用技术的能力也是当前趋势下的要求。”
有些人表示，中国家庭对财富管理律师的需求仍处于起步阶段，还有进一步发展的空间。
正如肖律师总结的那样：“总的来说，需要一些高度专业的律师，他们具有高标准的道德操守， 致力于为客户服务，对客户信息保密，并通过整合国内外资源为客户提供综合性解决方案。”
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