Tailored private banking services

Understanding the changing dynamics and characteristics of the rich is critical for wealth managers and private banks that want to retain their clients and succeed in today’s increasingly competitive �business. But client segmentation �analysis is still relatively �unsophisticated, too often done on �current assets or potential assets only. The evolution of attitudes, needs and �behaviours of high net worth investors has made some of the clichéd views of wealthy individuals – traditionally seen as owning a portfolio of Bentleys and yachts – simply out-of-date, according to global research commissioned by BT. Presenting the conclusions of the study at the second PWM/FT annual private banking summit in Geneva, Markus Hickman, managing director of London-based consulting firm Davies Hickman Partners, stressed that high net worth investors seek to emphasise their �individuality and look for brands that support their ideas and lifestyles. Assigning private bankers who are in tune with their needs is essential. “In the UK, quite a lot of private bankers come from a traditional public school (prestigious fee-charging). Yet, quite a lot of the new money in the country is from a less �traditional �background, and sometimes there is a clash of cultures,” he said. Those private banks that are able to segment the rich on the communication forms they prefer and the amount of contact they seek will be able to enhance the service they offer to clients. Technology also sets investors apart, according to the research. On the one side there are the old-fashioned, 1950s-style banking investors and technophobes; on the other are those who make transactions on mobile handsets. Investors are demanding choice and private banks should be able to offer it. Sources of wealth generation are much more varied today than in the past. �Today’s private banking clients may be �footballers, hairdressers or artists, in addition to self-made �entrepreneurs, but the picture that is painted of high net worth investors is still excessively City-oriented. Also, although the growth in the number of wealthy women has been well �documented, the private business is still perceived as dominated by a male culture. Opportunities lie in the ability to offer more �suitable �services to women, who are not always motivated by the traditional culture of financial services providers, said Mr Hickman. Generally, a wide range of �cultural �backgrounds for the wealthy require focused targeting and offer development opportunities to private banks. The research identified that wealthy individuals can be divided into three broad groups: the accepters, those who are rich enough to have a wealth �management service but choose not to; the rejecters, those who would qualify as private banking investors but have chosen not use �private banking �services; and the unawares, who are simply unaware of the existence of �private banking. “A major challenge is to attract those who qualify for wealth management but have chosen to reject it, and those who are unaware of what is available,” said Mr Hickman. “There are �opportunities for private banks to increase their �market share of wealth management.” The Geneva Summit was sponsored by BT and Barclays Capital. Presentations can be viewed on ftglobalevents.com