SBI to provide Wealth Management Services in Japan

Two major financial companies in Japan — Sumitomo Mitsui Financial Group (SMFG) and SBI Holdings — have announced a new partnership to provide wealth management services in the country. This means they will help wealthy individuals manage their money, investments, and financial planning more effectively.

What is the goal of this new joint venture?

The main aim of this partnership is to serve high-net-worth individuals — people who have large amounts of money and assets. Together, SMFG and SBI plan to manage around ¥10 trillion (about $69 billion) worth of assets in the next five years. This new company will be jointly funded by:

• SMFG’s two group companies: Sumitomo Mitsui Banking Corporation and SMBC Nikko Securities
• SBI Holdings and its key brokerage firm, SBI Securities

The joint venture is expected to start making profits within three years. The target is to earn a pre-tax profit of ¥10 billion over the first five years of operations.

Why are they doing this now?

According to SMFG’s CEO, Toru Nakashima, the increasing use of mobile apps and digital financial tools is creating more opportunities in the “digital affluent” segment — people who are wealthy and prefer to manage their money online. This is seen as a growing market in Japan.

Also, there is a steady rise in the number of wealthy households in Japan. A report by the Daiwa Institute of Research shows that the number of households with financial assets of ¥50 million (around $347,000) will rise from 5% in 2019 to 6.1% by 2035. These households are expected to grow their total financial assets from ¥714 trillion in 2024 to ¥953 trillion by 2035, an increase of about 33%.

What is the government’s role?

The Japanese government is encouraging citizens to move their money from savings accounts into more productive investments, like stocks and mutual funds. This is part of a larger strategy to make people’s money work harder for them — and reduce the country’s dependence on government support programs, especially as the population ages.

However, Japanese households have traditionally been very cautious when it comes to investing. As of March last year, about 51% of their financial assets were still kept in bank savings accounts, which offer low returns.

A rising trend in Japan’s financial sector

This partnership between SMFG and SBI is not the only one of its kind. Several financial institutions in Japan are forming similar alliances to tap into the growing wealth management market.

For example, Rakuten Securities launched a joint venture with Mizuho Securities in April last year. Their target customers are households with at least ¥20 million in financial assets, especially people in their 40s and 50s who are already Rakuten users and prefer face-to-face financial advice.

What does it all mean?

In short, this move by SMFG and SBI shows that wealth management is becoming a major focus in Japan’s financial sector. As more people become wealthy and technology becomes a bigger part of financial planning, companies are racing to serve these customers with specialized investment advice, digital tools, and financial services.

This new joint venture hopes to take advantage of that growing demand and help more people grow and manage their wealth smartly in the years to come.